Reddit AI Venture: $60 Million Deal with Google Ahead of IPO

Reddit struck a deal with Google allowing the tech giant to use Reddit content for training it’s AI models, estimated to be worth $60 million annually.

According to three sources familiar with the situation, social networking site Reddit has reached an agreement with Google, which opens a new tab, to allow the search engine giant to use Reddit material to train its artificial intelligence models.

An insider estimates that Google, which is controlled by Alphabet, will pay around $60 million annually for the contract.

In light of the intense competition for advertising revenues from platforms like TikTok and Meta Platforms, opening new tab on Facebook, the transaction highlights efforts to earn additional revenue as it prepares for a high-profile stock market launch.

The sources spoke anonymously because they were not permitted to do so. Google and Reddit both chose not to comment. Bloomberg did not identify the buyer when it first reported on Reddit’s content purchase.

The application programming interface (API) is Reddit’s distribution mechanism; last year, the company announced that it will start charging businesses for access to it. Its rumoured partnership with Google marks its maiden partnership with a major AI firm.

Reddit, headquartered in San Francisco, has been considering a stock float for over three years. This week, the company is gearing up to file for an initial public offering (IPO), which would provide prospective investors with detailed financial information. According to two of the individuals, the file might be ready as soon as Thursday.

According to Media, the company is looking to sell approximately 10% of its shares in the offering. This comes after a funding round in 2021, when the company was valued at around $10 billion.

The initial public offering (IPO) owould be the first by a significant social media firm since Pinterest’s 2019 stock offering.

In an effort to broaden their training material beyond massive internet scrapes, AI model makers have been actively negotiating arrangements with content owners in the past few months. Many content creators have claimed that their work was used without their consent, which could lead to copyright difficulties with that practice.

An entrepreneur named Alexis Ohanian and a web developer named Steve Huffman started Reddit in 2005. The site has tens of millions of members in its various niche discussion groups.