Reddit weighs blocking Google’s AI access to its content

Reddit ↘ 29.22% shares dropped more than 6% in premarket trading on Wednesday after The Wall Street Journal News Corp ↘ 1.37% reported the social media platform is considering shutting off Google's Alphabet Inc. ↘ 1.45% access to its content for artificial intelligence use, as the two companies negotiate a renewal of their data-licensing agreement.

A $60 Million Deal in Limbo

The current arrangement, first reported by Reuters in February 2024, is valued at approximately $60 million annually and grants Google permission to use Reddit's user-generated content to train its AI models. That deal is now up for renegotiation, and Reddit executives are weighing whether to cut off Alphabet's access if satisfactory terms cannot be reached.reuters.com+3

The dispute reflects a broader reckoning across the publishing industry. According to The Wall Street Journal's reporting, Reddit is not alone in reconsidering its relationship with Google — Politico, Reuters, USA Today, and The Economist are also exploring ways to restrict Google's AI crawlers from accessing their content. Publishers face a difficult calculus: Google's AI Overviews summarize their content directly in search results, reducing the referral traffic that once drove readers to their sites, yet blocking Google's crawlers entirely risks losing visibility in traditional search results as well.tech.ifeng.com+1

Traffic Fears and Earnings Pressure

The standoff comes as Reddit prepares to report second-quarter earnings on July 30. The company has positioned its vast archive of user discussions as a valuable asset in the AI era, licensing content to both Google and OpenAI. But the relationship carries risk in both directions — Reddit depends on Google for a substantial share of its inbound traffic, while Google relies on Reddit's authentic user conversations to improve its AI products.Yahoo+1

The U.K. Competition and Markets Authority moved in June to give publishers the option to withhold content from Google's AI search features, a regulatory shift that could strengthen the hand of platforms like Reddit in future negotiations.The Wall Street Journal

Reddit's stock closed at $185.93 on Monday before the after-hours decline. The premarket drop of roughly 6% underscores investor concern that losing the Google licensing revenue — or the search traffic that accompanies the partnership — could weigh on the company's growth trajectory ahead of its earnings report.MarketBeat