Reddit Cashes In: $60 Million AI Deal with Google Fuels IPO Buzz

According to three people familiar with the matter, social media platform Reddit has struck a deal to make its content available for training the search engine giant’s artificial intelligence models. One source said the contract with Alphabet-owned Google is worth about $60 million per year. The agreement underscores how Reddit, preparing for a stock market launch, is tapping into the hype surrounding AI to boost its value.

Generative AI models, which use machine learning to create things like music or text, require much data to train. Sometimes, generating AIs will take the freely available data online and use it for free. Other times, a company will pay for having its generative AI model trained on its data. The latter is often done to protect proprietary IP and ensures that the resulting model is as accurate as possible.

In this case, the buyer is a large AI company that was not identified. It is the first reported agreement of this nature that Reddit has entered into with a significant AI corporation. Reddit has successfully struck this deal because of its position as an AI training ground. Its communities have long been a resource for data-hungry AI companies. The popular subreddits have provided a goldmine of information to companies developing chatbots and other generative AIs.

While Reddit’s decision to start charging businesses for access to its API — the mechanism through which it disseminates data — caused controversy last year. However, this is the company’s first reported agreement to sell its data for AI-related purposes. The deal is expected to be effective in 2023.

The deal indicates that Reddit is looking to capitalize on the AI buzz as it prepares for its stock market debut in 2023. The company has a valuation of around $5 billion and will bring in $800 million in revenue in 2023. That’s not a lot of money for a tech company, but it shows that Reddit can leverage its position as an AI hub to generate new revenue streams.

Reddit representatives declined to comment on the report. Representatives for Google only responded to a request for comment outside of business hours.

Sabrina Gonzalez

Sabrina Gonzalez is a professional writer who is passionate about writing blogs and website content. With 10+ years of experience in freelancing world, she has gained a wealth of knowledge and insights on various topics. Throughout her career, Sabrina Gonzalez has worked with many popular journal magazine site and has helped with her writing expertise. In her spare time, she enjoys reading, travelling, painting and some more, which she often incorporates into her writing. Through her writing, Sabrina Gonzalez aims to fulfill the writing needs and to share her knowledge on different topics. She believes that readers should be knowledgeable too and hopes to inspire her readers.

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