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Reddit's AI Plans Prompt FTC Inquiry Pre-IPO

Reddit's move to license its platform content to AI companies has caught the attention of the Federal Trade Commission
March 27, 2024

The tech world is abuzz as Reddit, the renowned social media platform, gears up for its much-anticipated initial public offering (IPO). Amidst the excitement, a revelation has emerged that has captured the attention of both investors and regulatory bodies alike. The Federal Trade Commission (FTC) has set its sights on Reddit's groundbreaking plans to license its platform content to artificial intelligence (AI) companies. This disclosure, outlined in a securities filing, sheds light on an unprecedented move that could reshape the landscape of social media and AI integration.

The FTC's inquiry, disclosed by Reddit on Friday, signifies a pivotal moment as the social media giant prepares to make history with its IPO. The letter from the FTC, received by Reddit on Thursday, delves into the intricacies of Reddit's intentions to share user-generated content with third-party AI entities for training purposes.

In response to the inquiry, Reddit affirmed its commitment to transparency and compliance with US consumer protection laws. However, the company's innovative foray into AI partnerships has piqued the interest of regulators, given the uncharted territory of such collaborations.

Notably, Reddit has inked a significant deal with tech behemoth Google, agreeing to share platform data to fuel the development of Google's AI models. Valued at $60 million annually, this partnership underscores Reddit's strategic positioning at the forefront of AI-driven content curation.

As Reddit prepares to debut on the stock market, the spotlight intensifies on its IPO pricing. With shares expected to be priced between $31 and $34 each, Reddit anticipates a substantial influx of capital, potentially reaching up to $748 million from the offering.

Reddit's bold initiatives in AI collaboration have ushered in a new era of exploration and scrutiny. While the FTC's inquiry underscores the regulatory scrutiny accompanying such endeavors, Reddit's resilience and innovative spirit remain unwavering. As the company charts its course towards a historic IPO, the intersection of social media and artificial intelligence promises to redefine the digital landscape, setting the stage for unprecedented advancements in technology and user engagement.

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