Reddit stock dropped because the company might cancel its deal with Google. The deal lets Google scrape Reddit posts to train AI that summarizes content so users never visit Reddit. Somebody got paid to negotiate this.
Google's AI summaries sit at the top of search results and answer questions using text from websites. Traffic to those websites collapses. Reddit signed up to be one of those websites. For money.
The Journal reports Reddit is reconsidering whether getting paid to destroy its own traffic makes sense. Bold strategy. Takes real vision to look at a deal where you give someone your content, they use it to replace you, and think maybe we should pump the brakes.
Retail traders bought Reddit stock because they love the platform. Now they watch the platform debate whether to keep selling itself to a company that makes visiting the platform unnecessary. The AI reads Reddit so you don't have to. Reddit cashes the check. Users stay on Google. Perfect circle.
Stock sank on the report. Investors processed the possibility that Reddit might walk away from revenue. Or they processed that Reddit walked into this deal in the first place. Hard to say which is dumber.
Google trained its bot on millions of Reddit arguments about whether a hot dog is a sandwich. Now that bot can tell you about hot dog sandwich discourse without linking to Reddit. Reddit got paid for this privilege. The bot works great. Reddit's traffic doesn't.
The company that monetized user-generated content by showing ads next to it decided to let Google monetize that same content by making the ads unnecessary. Then the stock moved. Curious.
Reddit's leadership stares at spreadsheets showing revenue from Google next to spreadsheets showing traffic killed by Google and wonders if there's a connection.
Photo by Brett Jordan on Unsplash
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