The United States Federal Trade Commission (FTC) is currently investigating Reddit, the popular social media platform, for its data licensing practices related to artificial intelligence (AI) training. This investigation coincides with Reddit’s preparation for its highly anticipated initial public offering (IPO).
Reddit disclosed this investigation in an updated filing with the U.S. Securities and Exchange Commission on March 15, 2024, which was submitted after receiving notice of the FTC inquiry. While Reddit acknowledges the FTC’s interest in light of the unique nature of the technologies and business agreements involved, the company maintains that it has not engaged in any unfair or deceptive trade practices.
This scrutiny from the FTC highlights the regulatory challenges that Reddit faces as AI gains increasing popularity and usage. While Reddit believes it has not violated any laws, it acknowledges that the investigation may be prolonged and uncertain. In its filing, Reddit states:
“As part of a $60 million yearly agreement with Google in February, Reddit has allowed the tech giant to utilize its extensive user data for AI training. This partnership strengthens the relationship between Reddit and Google, with Reddit receiving increased exposure on Google’s platform in exchange for its valuable data.”
The use of user data for AI purposes has raised concerns among privacy advocates and regulators. Reddit acknowledges in its filing that its data licensing initiatives are still in their early stages and subject to evolving regulations.
Reddit’s aspirations in the field of AI have attracted attention previously. In its IPO preparations, the company has disclosed investments in Bitcoin and Ether as part of its financial strategy. Additionally, the filing reveals that Reddit has acquired Ether (ETH) and Polygon (MATIC) for virtual transactions on its platform.
Reddit’s foray into AI and cryptocurrency aligns with its goal of capitalizing on the growing market for these innovations. Citing projections from the International Data Corporation, Reddit emphasizes that the global AI market, excluding China and Russia, is expected to reach $1 trillion by 2027, with a compound annual growth rate of 20%.
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