The Federal Trade Commission is investigating Reddit’s AI licensing deals, as disclosed in paperwork filed with the Securities and Exchange Commission. Reddit, currently in the process of its Initial Public Offering, stated that the regulator informed Reddit officials of its intention to request information and documents regarding the company’s AI deals.
The reason for the FTC’s scrutiny of Reddit’s relatively new licensing business is unclear, but it appears to be in the early stages of investigation. In a filing, Reddit stated, “On March 14, 2024, we received a letter from the FTC informing us that the FTC’s staff is conducting a non-public inquiry focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models.” Reddit added, “Given the innovative nature of these technologies and commercial agreements, it is not surprising that the FTC has shown interest in this area. We do not believe we have engaged in any unfair or deceptive trade practices.”
Reddit’s agreements to license its collection of user-generated content are a crucial aspect of the company’s revenue growth strategy as it prepares to go public. On the day of filing for IPO, Reddit announced a partnership with Google, in which Reddit data would be utilized to train AI models. This deal was reportedly valued at around $60 million, and Reddit mentioned it was in the early stages of exploring similar agreements.
According to Axios, other companies have also received similar letters from the FTC. The regulator has previously demonstrated interest in the current trend of generative AI startups and their partnerships with major tech companies. The FTC is currently investigating Microsoft, Alphabet, and Amazon regarding their investments in prominent AI startups.
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