Reddit Weighs Cutting Google’s AI Access as Licensing Talks Near Renewal
A reported internal debate over Google access raises questions about how Reddit will price data licensing with its $60 million-a-year deal due for renewal.
Overview
- The company's shares plunged about 9% on Wednesday after reports said Reddit had internally discussed ending or restricting Google’s access to its user content for AI model training.
- The Google agreement, signed in 2024 for roughly $60 million per year, is approaching expiration and both sides are in talks about renewal or new usage-based terms.
- Reddit’s core advertising engine remains strong, with Q1 ad revenue up about 74% year-over-year and advertising accounting for roughly 94% of revenue while data licensing contributed about $39 million in Q1.
- Investors are focused on Reddit’s July 30 Q2 results for clarity on revenue mix, guidance execution and whether renegotiated licensing will meaningfully change near-term revenue or margins.
- Industry data show AI-enhanced search can cut referral traffic to publishers, a dynamic that helps explain why Reddit is reevaluating the commercial value of its content and why analysts still see upside to the stock despite recent volatility.