Reddit Faces Federal Trade Commission Inquiry Over AI Data Licensing

Reddit Faces Federal Trade Commission Inquiry Over AI Data Licensing

Reddit is under scrutiny as the Federal Trade Commission has opened an inquiry into the social media platform’s practices regarding the sale, licensing, or sharing of user-generated content for use in training artificial intelligence models. This inquiry was disclosed in a filing with the Securities and Exchange Commission, following a letter from the FTC expressing interest in the matter.

The company stated in the filing that, “Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area.” Reddit clarified that it does not believe it has engaged in any unfair or deceptive trade practices, despite the FTC’s inquiry.

Like many other social media platforms, Reddit has been exploring business deals with AI companies where human-written text from its platform is used to train AI models. These models can then enhance their ability to interact, answer questions, and create content based on the data provided. Just a month ago, Reddit finalized a $60 million deal with Google for this purpose. As part of this agreement, Reddit will also gain access to Google’s AI models to improve its internal site search and other features.

The disclosure of the FTC inquiry comes at a crucial time for Reddit, as the company is preparing to go public for the first time. In its recent filing, Reddit projected a price for its initial public offering, valuing the platform at up to $6.4 billion. The timing of the inquiry may have far-reaching implications for Reddit’s IPO and its future business dealings.

Reddit is facing challenges regarding its data practices and relationships with AI companies. The outcome of the FTC’s inquiry could potentially impact the company’s reputation and financial standing as it navigates the complexities of the digital age. As Reddit continues to evolve and expand its business operations, it will need to address these concerns transparently and proactively to maintain the trust of its users and investors.


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