Reddit revealed in documentation filed with the Securities and Exchange Commission that the Federal Trade Commission is investigating the company’s AI licensing agreements. The regulator “intended to request information and documents” concerning the company’s AI transactions, Reddit officials were informed by the company, which is now in the process of its Initial Public Offering.
Although the FTC’s investigation into Reddit’s relatively new licensing business is still in its early stages, the reason for it is unclear. Reddit said in a filing that it got a letter from the FTC on March 14, 2024, informing them that their team is investigating whether or whether they sell, license, or share user-generated content with third parties for the purpose of training artificial intelligence models. “We are not surprised that the FTC has shown interest in this field, considering the unique nature of these technologies and economic agreements. We don’t think that any unfair or dishonest business practices have been used by us.
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.
