FTC investigating how Reddit licensed data ahead of IPO

Reddit is planning to go public. But first, the FTC has to check on a few things.

social media According to CNBC, the company revealed that on March 14, the FTC sent them a letter announcing that the commission would conduct a “non-public investigation” into Reddit’s license to use user-generated data to train third-party artificial intelligence models. Data licensing is a young business for Reddit, which currently relies heavily on advertising revenue.

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Reddit finally files for IPO, giving Reddit users first dibs on buying shares

Reddit’s current plan is to go public on March 21. It’s unclear what impact, if any, the FTC investigation will have on those efforts.

As you may or may not know, many generative AI tools (such as ChatGPT, Sora, and Midjourney) require large amounts of data to train. The simplest and most accessible source for the vast data sets required for these tools is the Internet. Some Companies like Tumblr owner Automattic have been willing to strike deals with AI companies to license training data. That’s what Reddit is trying to do here.

Arguably the most notable third-party AI model Reddit has partnered with to train is Google’s, which was announced last month. We’ll see if it bothers Reddit at some point in the future.

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