Reddit, a popular social network platform, is currently facing several challenges, including a decreasing valuation and a battle against OpenAI. Fidelity, the investment firm that led Reddit’s $700 million funding round in 2021, has marked down the value of its Reddit stock by over 40% as of the end of April. Additionally, OpenAI has been using Reddit as one of its sources to train its AI models, which angered Reddit. As a result, Reddit stated that it would start charging fees to developers who use its data, which could be particularly punitive for AI companies that need large datasets for training. Apollo, a third-party app for using Reddit, has already stated that it would have to pay $20 million annually to keep running as is.
Reddit’s declining valuation could be due to the misuse of its content by giant AI models. As a journalist and an avid Reddit user, I have noticed that, while Reddit users can drive readers to the original source media, journalists have also watched as their work has been posted on Reddit in violation of copyright laws. This practice undermines the value of good journalism as well as Reddit’s content. Therefore, Reddit’s decision to charge fees for its data could help prevent the misuse of online content and foster a responsible developer ecosystem that ensures user and data safety.
Reddit’s IPO possibilities are uncertain, as the economic conditions are not favorable. Nevertheless, the company hired its first CFO in 2021 and quintupled its advertising sales team in the past two years to prepare for the IPO. It is critical for Reddit to address its current challenges and ensure that its content is used properly to maintain its value and reputation. As Taylor Swift wisely said, Karma’s gonna track you down.
