Reddit (NYSE: RDDT) isn’t sure that its current agreement with Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) makes sense anymore.
According to a report from the Wall Street Journal, the social media giant is contemplating a significant move: not making its content available for chatbots
While Alphabet’s Google Search does drive a lot of traffic to Reddit, it has also been declining, with users turning more to artificial intelligence (AI) chatbots such as OpenAI’s ChatGPT or Alphabet’s Gemini for answers. And those chatbots have been trained with online content, including Reddit’s popular online message boards. A possible change in strategy for Reddit would be a bold move, but I believe it’s the right one.
Reddit’s revenue growth remains strong, but AI could pose a serious threat Reddit has a strong brand, with its communities being known for often offering balanced, two-sided arguments on common questions. Unlike a typical search query, which may just provide a direct answer, Reddit can offer more value to people seeking deeper analysis and thought. Due to its popularity, the social media giant has been experiencing significant growth in recent years, with ad revenue accounting for the lion’s share of its top line.