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Reddit’s rough year continued Wednesday, with shares tumbling after The Wall Street Journal reported that the company may end a rocky partnership with Google parent Alphabet.
In 2024, Google agreed to pay around $60 million annually to scrape conversations from Reddit and use them to train and refine artificial-intelligence models. But as negotiations over renewing that contract unfold, Reddit has discussed shutting off Google’s access, The Journal reported, citing people familiar with the situation.
The potential loss of a small but high-margin licensing deal has investors in the social-media site worried. Reddit stock sank 8.7% on Wednesday—its largest single-day decline since March. Alphabet stock was up 0.3%.
“A lot has changed since those first deals were signed, but our goals are the same: making sure any partnerships drive our business and recognize the unique value of Reddit’s data,” a Reddit spokesperson said in a statement. “There is a wide range of ways to do that; those are all things we’ll discuss at the negotiating table.”
Google declined to comment on talks with any single publisher.
Publishers and other sites traditionally reliant on search traffic are contending with changing Google search trends. On top of the growing use of AI chatbots, Google launched AI Overviews in May 2024, which provide automated responses to search prompts with detailed summarizations of website sources. Although the overviews refer to sites such as Reddit, users have less need to click on them.
“Google’s AI Search features send billions of clicks to the web every week, meeting people’s evolving preferences for how they want to find information while driving significant traffic to websites,” a Google spokesperson said. “Our AI features highlight links to the web and help creators and publishers grow their audiences, and we offer clear controls for website owners to manage their content.”
Regardless of Google’s intentions, any search trends that siphon traffic from Reddit are a problem for the company’s advertising business, which accounts for the vast majority of its revenue. Analysts expect Reddit’s daily active user growth to slow to around 12% this year from 19% in 2025 and 40% in 2024.
“We believe that deceleration has been at least in part driven by potential users finding Reddit content within [large-language models],” Wells Fargo analyst Alec Brondolo wrote in a June research note.
Some investors were hopeful Reddit would overcome the traffic deceleration by striking even larger licensing deals with Google and other AI developers. Reddit has a similar arrangement with OpenAI.
Alternatives to renewing both agreements could include finding an exclusive partner or blocking AI developers from scraping Reddit’s forums altogether. But if Wednesday’s stock move is any indication, Wall Street believes Google has the leverage in these discussions.
Write to Nate Wolf at [email protected] and Angela Palumbo at [email protected]
