FTC Investigates Reddit’s AI Licensing Deals

Reddit has disclosed in a Securities and Exchange Commission (SEC) filing that the Federal Trade Commission (FTC) is investigating its artificial intelligence (AI) licensing agreements. The upcoming public company stated that Reddit officials were informed by the FTC about its plan to request details and documents related to the company’s AI arrangements. The reason for the FTC’s investigation of Reddit’s newly-established licensing business remains unspecified, but the investigation appears to be in its preliminary phase.

In their submission, Reddit stated, “On March 14, 2024, we were informed via an FTC letter that agency staff are carrying out a non-public scrutiny focusing on our offering, licensing, or distribution of user-created content to third parties for AI training purposes. Given the innovative nature of this technology and its business model, we understand the FTC’s curiosity. We are confident that we have not engaged in any fraudulent or misleading trading practices.”

As part of its growth strategy prior to going public, Reddit’s licensing of its treasure trove of user-generated content is pivotal. It announced a deal with Google to lend its data for AI training purposes, estimated to be worth about $60 million, on the same day it applied for an Initial Public Offering (IPO). The company also stated that it is currently in the initial phase of exploring similar ventures.

As per Axios, other corporations have received comparable directives from the FTC. The regulatory body has shown past interest in the growing trend of AI start-ups and their connections with major tech companies. The FTC’s current probe extends to Microsoft, Alphabet, and Amazon concerning their investments in renowned AI start-ups.