The United States Federal Trade Commission (FTC) has announced that it will investigate Reddit’s licensing deals with third-party companies to avail its content for artificial intelligence (AI) learning, according todocuments filed with the Securities and Exchange Commission (SEC). Reddit, which is in the process of conducting an Initial Public Offering (IPO), has revealed that the FTC has notified them of an intent to request information and documents related to AI deals.
The FTC has not offered specific reasons behind its decision to investigate Reddit’s new business activity. Reddit shared that“On March 14, 2024, we received a letter from FTC informing us that FTC staff will conduct a non-public review related to our selling, licensing, and provision of user content to third parties for AI model training. Given the novelty of these technologies and commercial agreements, we are not surprised that FTC has shown interest in this area. We do not believe that we are engaged in any unfair or misleading trade practices”, according to the company’s statement.
Reddit’s user content licensing deal forms a key part of their strategy to boost revenue ahead of their stock exchange debut. On the day of the IPO application, the company announced a $60 million annual deal with Google, which will train its AI models using Reddit’s content. As it stands, Reddit maintains that they are in the early stages of “exploring” such deals. Axios reported that FTC letters have also been sent to a handful of other companies.
