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Reddit forges pact with OpenAI to bring content to ChatGPT

Reddit Inc. has partnered with OpenAI to bring its content to ChatGPT and other products. This collaboration will also help Reddit add new AI features to its forums.

Reddit’s shares, which debuted in an initial public offering in March, rose 13.7% on Friday morning in New York.

The agreement allows OpenAI’s AI tools to better understand and display Reddit content, especially recent topics, the companies said in a joint statement on Thursday. This deal permits OpenAI to use Reddit’s content and train its AI systems with partner data.

Reddit will introduce new AI-based tools for its users, built on OpenAI models, while OpenAI will place ads on Reddit’s site. The financial terms of the deal were not disclosed.

Reddit content has long been a popular source of training data for AI models, including those by OpenAI. Last week, Reddit implemented new policies on data usage, aiming to boost revenue through licensing agreements with AI developers and other companies.

“Our data is extremely valuable,” Chief Executive Officer Steve Huffman said at the Bloomberg Technology Summit earlier this month. “We’re seeing a ton of interest in it.”

Reddit aimed to find new revenue opportunities in the lead-up to its IPO. In January, the company signed a $60 million deal with Alphabet Inc.’s Google to help train large language models for generative AI.

CEO Steve Huffman didn’t discuss details of the Google deal but mentioned that terms might include how long a Reddit summary appears in a Google search or whether Reddit branding must be shown in AI-generated results. Based in San Francisco, Reddit has signed licensing deals worth a total of $203 million, with terms ranging from two to three years. The company is also negotiating additional licensing agreements.

Meanwhile, OpenAI is forming more partnerships with media companies to train its AI systems and provide more real-time content for its chatbot. This month, OpenAI made deals with Dotdash Meredith and the Financial Times to support these efforts.

Backed by Microsoft Corp., OpenAI has become a major player in AI development. Sam Altman, CEO of OpenAI, has a strong connection to Reddit. He was one of Reddit’s largest shareholders during its IPO earlier this year and briefly served as its interim CEO in 2014.

In their statement, the companies mentioned that OpenAI’s Chief Operating Officer Brad Lightcap led the partnership, which was approved by OpenAI’s independent directors.

Reddit’s shares, which had fallen 5.5% to $56.38 in regular New York trading on Thursday, surged to $64.75 after the partnership announcement. Since its IPO, the stock has increased by 66%.

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BRL Editor
BRL Editor
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