Just days before the company’s expected IPO, the Federal Trade Commission has launched an inquiry into Reddit’s licensing of user data to artificial intelligence companies.Reddit disclosed the inquiry on Friday. The company said it received the inquiry on Thursday. The FTC is also expected to request a meeting with Reddit as well as ask for access to several documents and other information as part of the inquiry, Axios notes.In February news surfaced that Reddit was licensing user content on the site to Google in a deal worth $60 million a year, welcome news for potential investors who were looking for ways Reddit might be profitable.Google has been heavily pursuing generative AI development, including its recently controversial Gemini tool.Initially, Google itself was unnamed in the news; however, it later confirmed it was “deepening” its partnership with Reddit via a “Cloud partnership that enables Reddit to integrate new AI-powered capabilities using Vertex AI.”The deal gives Google access to Reddit’s Data API, which will ultimately make it easier to access Reddit from Google products.Reddit started imposing fees for the use of its API last year after large language models began scraping the site to help train their AI chatbots. That move ultimately led to the shutdown of several independent Reddit clients, including Apollo, who were not able to afford the fees Reddit was charging for that access.
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The FTC’s inquiry into Reddit does not mean that a formal investigation will take place. The company also isn’t the only one doing business with AI companies whom the agency is looking into.In its disclosure about the inquiry, Reddit noted that it does not believe it has engaged in any unfair or deceptive trade practices.
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