Reddit Faces FTC Investigation Over AI Data Deals Ahead of IPO

Reddit has announced it's being investigated by the Federal Trade Commission (FTC) for its AI data licensing practices, a statement made public in its latest SEC filing as it gears up for an IPO.

This inquiry follows a significant $60 million deal with Google, where Reddit agreed to provide Google with access to its vast amount of user data for AI training purposes.

This partnership is intended to bolster Google's AI capabilities with more accurate and relevant Reddit data.

The social media platform, home to over 100,000 communities and millions of daily interactions, sees its user data as a vital asset for training large language models (LLMs), pointing to new monetization pathways.

However, the move has attracted scrutiny due to the delicate nature of data privacy and protection in today's digital age, with regulations constantly evolving.

Reddit maintains that its operations have not violated any laws concerning unfair or deceptive practices, despite the FTC's growing interest in its data-sharing agreements.

The investigation's outcome remains uncertain, and Reddit admits it could lead to financial, reputational, or operational impacts.

In addition to its AI initiatives, Reddit is exploring the cryptocurrency space, having invested in Bitcoin and Ethereum as part of its financial strategy for the IPO. These investments are aimed at supporting transactions for virtual goods on the platform, showcasing Reddit's engagement with digital currencies.

With the global AI market projected to hit $1 trillion by 2027, Reddit is positioning itself at the intersection of AI and cryptocurrency. However, the FTC probe serves as a reminder of the regulatory hurdles companies face when venturing into these innovative territories.

Reddit acknowledges the potential for significant costs and changes to its business operations due to regulatory actions, underscoring the complexities of navigating the tech landscape.