Reddit discloses FTC probe into its AI content licensing practices ahead of IPO
Originally Published: 15 MAR 24 17:44 ET
Updated: 15 MAR 24 17:45 ET
By Brian Fung, CNN
Washington (CNN) — The Federal Trade Commission is looking into Reddit’s plans to license its platform content to artificial intelligence companies, the social media company disclosed Friday in a securities filing.
The disclosure emerged ahead of the company’s long-anticipated initial public offering, which comes nearly 20 years after its launch and is set to make it the first social media platform to go public in years.
The FTC sent Reddit a letter on Thursday outlining the scope of the inquiry, Reddit said in the filing.
“The FTC’s staff is conducting a non-public inquiry focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models,” Reddit disclosed. “Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area.”
Reddit added that the company does not believe it has violated US consumer protection law.
“The letter indicated that the FTC staff was interested in meeting with us to learn more about our plans and that the FTC intended to request information and documents from us as its inquiry continues,” the company said.
The disclosure came as an amendment to Reddit’s IPO filing.
The company has entered into an agreement to share its platform data with Google in order to train the tech giant’s AI models. The deal is said to be worth $60 million per year.
Reddit said earlier this week that it expects to price shares between $31 and $34 each when it makes its IPO offering. Reddit, along with some existing stockholders, plans to offer 22 million shares of the company’s Class A stock, meaning the IPO could raise as much as $748 million from those shares, according to a prospectus filed on Monday.
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