Reddit reveals FTC inquiry into deals licensing data of its users for AI training

16.03.2024 - 06:05 / tech.hindustantimes.com

Reddit said Friday that the Federal Trade Commission has opened an inquiry into the social media platform's sale, licensing or sharing of its users' posts and other content to outside organizations for use in training artificial intelligence models.

The company disclosed the inquiry Friday in a filing with the Securities and Exchange Commission that cited a letter from the FTC dated Thursday.

“Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area,” Reddit wrote in the filing. “We do not believe that we have engaged in any unfair or deceptive trade practice.”

Like many other social media platforms, Reddit has expressed interest in business deals where AI companies pay to access databases of human-written text that AI models can use to refine their ability to converse, answer questions and produce written work and images on request.

Almost a month ago, Reddit a written statement about the deal.

Friday's disclosure comes as Reddit prepares to sell shares to the public for the first time. The San Francisco-based company on Monday filed paperwork that projected a price for its initial public offering valuing the 18-year-old platform at up to $6.4 billion.

Bloomberg Business

Reddit Inc. is telling potential investors in its initial public offering that it expects revenue in 2024 to grow by more than 20% versus the previous year, according to a person familiar with the situation.

The social media company gave guidance at a roadshow event that it was set for a similar revenue trajectory to what it saw last year, the person said. Revenue in 2023 grew to $804 million, according to its filing with the US Securities and Exchange Commission. That's 20.5% above the previous year's figure, data compiled by Bloomberg show.

Reddit is expecting to break even this year in terms of adjusted earnings before interest, taxes, depreciation and amortization, the person said. The company posted an adjusted Ebitda loss of $69.3 million for 2023, the filing shows.

Separately, estimates from some of the offering's underwriters also see Reddit's revenue increasing at similar rates to the company's own projections, a different person said, asking not to be identified as the information isn't public.

A representative for Reddit declined to comment.

The figures are being discussed as part of the marketing to potential investors of the IPO, which could raise as much as $748 million for the company and a group of investors who are employees, according to the filing. Together they are selling 22 million shares in a $31 to $34 price range, the filing shows.

The projections would mark a continued turnaround for Reddit, which turned profitable in the fourth