As Reddit prepares for IPO, sale of user generated content draws FTC's attention

[Bubbajim]

In a nutshell: Reddit is preparing for its upcoming IPO, aiming to become a publicly traded company on the New York Stock Exchange under the symbol "RDDT." In anticipation of this, the company has announced a new licensing agreement to sell user generated content for the purpose of training AI models. Google has been identified as the partner in this arrangement and the FTC would like to have a closer look.

Reddit is going public in the coming months, but before it hits the NYSE, their newly signed licensing deal with Google has attracted the scrutiny of the U.S. competition regulator, the Federal Trade Commission (FTC).

Following an update to their IPO filing, Reddit disclosed that it received a letter from the FTC outlining the agency's plan to conduct a non-public inquiry into Reddit's practices concerning the sale, licensing, or sharing of user-generated content.

In their response, Reddit stated, "We are not surprised that the FTC has expressed interest in this area," acknowledging that content deals for AI training are a relatively new thing. They also mentioned that they do not believe they "have engaged in any unfair or deceptive trade practices." But that will be up to the FTC to decide.

The FTC has so far refused to comment on the news.

Reddit is seeking for a valuation of roughly $6.5 billion, looking to sell roughly 22 million shares at an expected value of between $31 to $34. This latest update on the FTC inquiry is valuable information for anyone looking to invest at the time of the IPO.

Reddit cautions (as they are likely legally obligated to do so) that regulatory investigations can be protracted and unpredictable, posing a risk of significant additional costs or reputational damage depending on the FTC's findings or disclosures.

Despite the FTC's interest, the content deal with Google is likely to be a net positive for Reddit's stock prospects. While Reddit primarily generates revenue through advertising, the agreement with Google is expected to secure around $200 million over the next three years, which is no small sum.

For their part, Reddit users have so far not been up-in-arms about the latest news. Given Reddit's penchant for mass protests, like over the 2023 API changes or even 2015's firing of a beloved Director, there has been relatively little chatter on the platform about the deal with Google. It remains to be seen whether this latest FTC development will change that.

Permalink to story.

https://www.techspot.com/news/102293-reddit-prepares-ipo-sale-user-generated-content-draws.html

 

[Theinsanegamer]

Aw heckerino, friendos! How is this going to affect the Gold I got from the Kind Stranger for saying the most banal answer?

As if Google's Bard/Gemini wasnt already the most trash option out there, they're gonna poison it with reddit sludge. I cant wait to see the passive aggressive fedora-tipping responses to simple questions.

Also my god is reddit a failure. How do you lose money hosting a basic forum? Hundreds of millions to your CEO, multiple times that in R+D, with nothing to show for it.

 

[Squid Surprise]

A valuation of 6.5 billion yet $200 million over 3 years is considered a lot of money?!?

I’d be very wary of sinking any money into the initial stock offering…

 

[brucek]

I can't see how training its AI on reddit posts is going to help Google gain ground in AI services. If anything this sounds like a competitive marketing advantage for everyone else.

 

[hahahanoobs]

"For their part, Reddit users have so far not been up-in-arms about the latest news."

That's the real story here. Here too. Only 2 comments here other than mine.

 

[Theinsanegamer]

"For their part, Reddit users have so far not been up-in-arms about the latest news."

That's the real story here. Here too. Only 2 comments here other than mine.

Redditors have no issue selling their soul to a major corporation. I mean, they work for reddit for free! The only "issue" they had with the API thing was drama over two things, first their mod tools all relying on third party services because Reddit's tools suck arse, and third party apps being the preferred way to browse because Reddit's official app is trash and the site is unusable on browsers nowadays without multiple extensions cleaning the trash up.

The privacy loving, free speech valuing Redditors were driven out nearly a decade ago. Today's Redditors are so pathetic that even facebook users look down on them.

 

[BuckarooBonzaii]

If this works and proves to be successful who will be next?

 

[Uncle Al]

Might be very attractive but since these kinds of stocks don't / won't pay a dividend I am very leery of them ....

 

[erickmendes]

Well 200m seems like pocket money for Google... I think Google is spraying it's bet on user content for AI.

"For their part, Reddit users have so far not been up-in-arms about the latest news."

That's the real story here. Here too. Only 2 comments here other than mine.

Well... One thing we can agree is that the law speaks in favor of where the money is... So IMHO we may see regulatory fights for some time but I think as more and more big techs buy user content this will soon become bussiness as usual, and just another line in the fine print that nobody reads on ULAs.

 

[BeadMystic]

Selling to Google for AI training means comments by Reddit users will become AI material available to the public. This means the loss of any copyrights to the Reddit users which in turn means potential loss of revenue to the original Reddit writer.

What are the copyright rules regarding user content at Reddit? Does it become Reddit property? If I remember correctly, as I try to read the TOS for this particular reason, Reddit is one of the few places I, as a writer, retain my copyright.

At the present time, legally, an entity other than the AI, cannot legally hold a copyright on AI generated material. So, if somehow my content became AI generated content, my copyright would be violated and nothing I could do about it?

Seems this would have writers flocking to Reddit to remove their content en masse before Google gets a hold of it.

I did check Reddit and it is called a User Agreement, not Terms of Service. There is a very clear

Selling to Google for AI training means comments by Reddit users will become AI material possibly available to the public in the near future. This means the loss of any copyrights to the Reddit users which in turn means potential loss of revenue to the original Reddit writer.

What are the copyright rules regarding user content at Reddit? Does it become Reddit property? If I remember correctly, as I try to read the TOS for this particular reason, Reddit is one of the few places I, as a writer, retain my copyright.

At the present time, legally, an entity other than the AI, cannot legally hold a copyright on AI generated material. So, if somehow my content became AI generated content, my copyright would be violated and nothing I could do about it?

Seems this would have writers flocking to Reddit to remove their content en masse before Google gets a hold of it.

I know I'm going back to check the TOS at Reddit and, at the very least, review my writing there. I had published a few unique (and obscure) pieces/comments at Reddit. This will definitely make me think twice about just letting my comments fly free out there.

Well. I didn't know there were time limits to edits. I rewrote it and here it is:
Selling to Google for AI training means comments by Reddit users will become AI material available to the public. This means the loss of any copyrights to the Reddit users which in turn means potential loss of revenue to the original Reddit writer.

Rules in Reddit's User Agreement are clear that Reddit can do whatever it wants to do to with writing posted there. It does imply that user's content retains the original copyright. But if Reddit agrees to let Google purchase content for AI training, that user content could potentially be AI output.

At the present time, legally, an entity other than the AI, cannot legally hold a copyright on AI generated material. So, if somehow my content became AI generated content, my copyright would be violated and nothing I could do about it? Even lawyers are still debating this. I had the original copyright proven by the date I posted in Reddit, but I gave my rights to Reddit by posting.

Seems this would have writers flocking to Reddit to remove their content en masse before Google gets a hold of it. But, alas, another clause states that this data, my, your, user content can be used anywhere, any media, any channel "now known or later developed."

If you or I want to publish, doing it on any forum, public or otherwise, can effectively null our rights to those works, to our own written content and could subject it to becoming AI content in the future. We may have freedom of speech but do we realize we can lose control of our rights, in this instance to our copyrights of that free speech.

It is going to become important that we, as individuals, log the date, place, time, and content of our work. If only I had seen the need to do this when I first started writing over 50 years ago. I have gone off on a tangent here today, but an important one. Social movements can be tracked with social media, like Reddit and other big players (Facebook, Google, X). But ownership of our writing, our works, if it is important (and it should be, IMO) can be lost by posting publicly. Reddit has given us a glimpse of what will happen to our content in the future.