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The FTC is probing Reddit’s AI licensing deals

The deals are a key part of the company's strategy to grow its revenue.

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The Federal Trade Commission is looking into Reddit’s AI licensing deals, the company disclosed in paperwork filed with the Securities and Exchange Commission. The company, which is in the midst of its Initial Public Offering, said that the regulator notified Reddit officials that it “intended to request information and documents” about the company’s AI deals.

It’s not clear why the FTC is probing Reddit’s relatively new licensing business, but it seems to be in the early stages of its inquiry. “On March 14, 2024, we received a letter from the FTC advising us that 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 wrote in a filing. “Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area. We do not believe that we have engaged in any unfair or deceptive trade practice.”

Reddit’s deals to license its catalog of user-generated content are a key part of the company’s strategy to grow its revenue as it gets ready to go public. On the day the company filed for IPO, the company announced it had reached a deal with Google, which will use Reddit data to train its AI models. That arrangement was reportedly worth around $60 million. The company said it was in the early stages of “exploring” these types of deals.

According to Axios, other companies have received similar letters from the FTC. The regulator has previously shown an interest in the current wave of generative AI upstarts and their relationships with large tech companies, The FTC is currently investigating Microsoft, Alphabet and Amazon over their investments into prominent AI startups.