Reddit (RDDT) is one of the most frequently cited sources in AI-generated answers. Yet its most recent earnings report showed that Google’s AI Overviews have undermined its search traffic.
At Yahoo Finance Invest, Reddit co-founder and CEO Steve Huffman described this dynamic as the “paradox” of AI for the company.
“AI does not exist as we know it without Reddit, ” Huffman said on Thursday. “Every model you’ve heard of trained with or without our permission using Reddit. It’s this paradox which is the more AI there is, the more the human nature of Reddit stands out.”
In a quarterly letter to investors in October, Huffman noted that Reddit’s search traffic “dropped by more than 1 million referrals on average per week” during the month. “Web search is evolving from a gateway to the web to becoming an AI-powered destination itself,” Huffman said.
Huffman added in the company’s third quarter earnings call that “Google is not sending [users] to Reddit the way they used to.”
According to Similarweb, a web analytics platform, Reddit’s traffic is down 13% year over year. Reddit’s $60 million-a-year data deal with Google is up for renewal next year.
The company’s Q3 report showed total daily active unique users increased 12% year over year to 130.3 million (slightly below analyst expectations of 133.7 million), while US daily active users declined 2% year over year. While the company beat earnings per share estimates, it came up short on its Q4 revenue forecast, predicting sales of $1.0 billion to $1.03 billion (slightly below some Wall Street consensus estimates near $1.05 billion).
Huffman told Yahoo Finance that Reddit will begin testing a requirement for users to log in to access content on the platform in the United States starting this quarter.
“We are not the first,” Huffman said, speaking about other social media platforms. “In fact, we are quite literally the last company to go through this transition.” He added that the company, however, does not want to wall itself off from the open web — whether that’s humans or AI.
The ethos driving Reddit, Huffman explained, is that “Reddit is for humans.” The platform is all about “questions that have no answers.”
“‘What should I watch tonight?’ There’s not a factual answer for that — there’s just 100 answers. And all of those answers have a different point of view and context,” Huffman said. “People like the different perspectives. They like the mess. They like the chaos — that’s what being human is.”
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