Reddit's AI content licensing deal with Google, reportedly worth $60 million per year, is nearing expiration. Talks over renewal are ongoing, but no final decision has been made by either company. The news sent Reddit (RDDT) shares down as much as 5.8% in premarket trading.
The $60M Deal and Its Stakes
The 2024 agreement allows Google to use Reddit posts to train and power its AI models. Reddit also licenses its data to OpenAI, giving it rare pricing power in the content-licensing market. Reddit executives reportedly want usage-based fees that grow as the platform becomes more central to AI-generated results. That's a big ask — and it's the core of the standoff.
Publishers Push Back on AI Overviews
Reddit isn't alone in reevaluating its relationship with Google. Other publishers including USA Today, Politico, the Economist, People Inc., and Reuters are also rethinking their ties over AI content use. The reason: Google's AI Overviews are crushing referral traffic. Users clicked a regular search result only 8% of the time when an AI summary appeared, versus 15% without one. Worse, only 1% clicked a source inside the summary itself. Semrush data shows USA Today's Google traffic fell nearly 50% in a year; Politico's dropped 23%. On June 3, the UK's Competition and Markets Authority gave publishers the right to opt out of Google's AI features without disappearing from search results entirely.
Reddit Users and Crypto Media
Reddit users have complained that Google AI summaries siphon traffic from crypto media — a sore point for a community that drives a lot of the platform's engagement. For a crypto news outlet like GFdaily, the fight over AI content use hits close to home. If Reddit can't secure better terms, the ripple effects could reshape how AI companies access user-generated content.
Alphabet reports Q2 earnings after Wednesday's close. Options traders expect outsized moves. Comments on content costs could affect both stocks. The situation is described as hardball negotiation rather than a definitive breakup. No one's walking away yet — but the clock is ticking. The next concrete thing to watch is Alphabet's earnings call, where executives may address the cost of AI content. Until then, the deal's fate hangs in the balance.
