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Reddit Inc. RDDT shares are trading lower Wednesday after a report suggested the company has discussed shutting off Alphabet Inc’s GOOG‘s access to its content for AI use.
- Reddit stock is showing notable weakness. What’s behind RDDT decline?
Reddit Weighs Cutting Off Google
Reddit struck a $60 million-a-year deal with Google in 2024 that allowed the search giant to use its material to train AI models. With AI-generated answers reducing clicks to outside websites, Reddit executives are assessing what the upside is of continuing to feed content to Google, according to a Wall Street Journal report citing people familiar with the matter.
Reddit shares rallied in June after reports indicated that Reddit could look to convert its Google deal from a flat fee into a usage-based model. This new report suggests that Reddit may not have pricing power in the deal and is now considering walking away. It also raises concerns about Reddit’s traffic metrics.
The companies are reportedly in talks about potentially renewing the deal, which is set to expire soon. Reddit’s reconsideration comes amid a broader wave of publisher frustration with Google, as AI search features eat into traffic and upend traditional revenue models. The report indicates that several companies providing data to Google have seen search traffic fall over the past year.
A Google spokesperson reportedly said its AI search features “send billions of clicks to the web every week” and that the company offers “clear controls for website owners to manage their content.”
Reddit Stock Falls
RDDT Price Action: At the time of writing, Reddit shares are trading 8.39% lower at $170.24, according to data from Benzinga Pro.
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This article Reddit Stock Tumbles Wednesday: What's Happening? originally appeared on Benzinga.com.
