● Covered by 4 sources · 6 reportsMedium impact3 negative2 neutral
Reddit shares drop 9% amid potential end of Google AI content deal
Key points
- Reddit shares down 9% following report on Google deal.
- Current $60 million deal with Google is up for renewal.
- AI content deal negotiations are ongoing.
Reddit's Stock Drop
Shares of Reddit declined by 9% following a Wall Street Journal report concerning its negotiations with Google. The report indicated that Reddit may shut off Google's access to its content for AI purposes. This decline contributes to a 19% drop in Reddit's stock value for the year.
Background on the Google Deal
In 2024, Reddit and Google entered a deal that allowed Google to use Reddit's content for training AI models. However, Google’s AI summaries have reportedly reduced traffic to Reddit and similar sites, prompting Reddit to reassess the arrangement. Multiple news organizations have experienced significant traffic drops attributed to AI-related changes.
Financial Context
Despite the current concerns, Reddit recently posted strong financial results, exceeding expectations with a revenue increase of 69% from the previous year. Earnings per share for the first quarter reached $1.01, surpassing estimates of 58 cents. Reddit's data licensing, including AI partnerships, was a crucial factor in this performance.
CEO's Reassurances
Reddit CEO Steve Huffman emphasized the importance of existing partnerships with Google and OpenAI during an earnings call, stating these collaborations are mutually beneficial. The negotiations regarding the Google deal are ongoing as Reddit approaches its second-quarter earnings report scheduled for July 30.
Impact on the Tech Landscape
The potential ending of Reddit's deal with Google highlights ongoing concerns over traffic reduction in the context of AI content utilization. This situation is reflective of the broader challenges for content-based platforms navigating partnerships with major tech companies, raising questions about data access and monetization in the AI landscape.
✨ This summary was generated by AI from the outlets' reporting listed below. It is not independently verified and may contain errors — check the original sources. How BrevFeed works →
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How outlets covered it
Reddit CEO Steve Huffman voiced concerns about Google's AI Overviews feature, stating it has not positively impacted the broader ecosystem and reduces the value of original content. This criticism comes as Reddit and other publishers reportedly consider ending licensing deals with Google due to the feature's impact on traffic referrals.
Reddit CEO Steve Huffman stated that Google's AI Overviews have not positively impacted Reddit's traffic, unlike traditional search results. This comes as Reddit's search traffic has declined, leading the company to re-evaluate its relationship with Google and its $60 million licensing deal.
Reddit reported strong second-quarter financial results, exceeding revenue and net income expectations, but its stock dropped over 10% after hours due to investor concerns about "choppy" search engine traffic attributed to AI's impact on search. The company's U.S. daily active unique users also saw a slight decline, raising questions about future growth and its data licensing agreements with AI companies.
Reddit CEO Steve Huffman stated that Google's AI Overviews are creating uncertainty regarding search-derived referral traffic, which has historically benefited Reddit. This shift in Google's search results, prioritizing AI summaries over traditional blue links, is changing the economics for sites that rely on search referrals, despite Reddit's strong ad revenue growth and data licensing deals.
Reddit reported second-quarter earnings that surpassed analyst expectations for revenue and EPS, with revenue increasing 61% year-over-year. However, the company's stock fell 11% after it disclosed "choppy" search referrals, raising investor concerns about its reliance on Google for user acquisition.
Reddit's shares fell 9% after reports indicated it may not renew its $60 million AI content deal with Google. The deal, struck in 2024, has been reconsidered due to declining traffic from Google's AI summaries, reflecting broader trends affecting various news sites.