Reddit AI Licensing and Regulatory Inquiries: Insights into Data Licensing for AI Initiatives

According to the platform, it may earn over $200 million from Google and other businesses that want to leverage user feedback to inform AI initiatives in the upcoming years. Regulators have inquiries.

TFD – Explore the complex landscape of Reddit’s AI licensing and regulatory inquiries surrounding user-generated content. TheFoxDaily dives into the implications for AI initiatives and privacy rights.

Reddit said ahead of its IPO next week that licensing user posts to Google and others for AI projects could bring in $203 million of revenue over the next few years. The community-driven platform was forced to disclose Friday that US regulators already have questions about that new line of business.

Reddit stated in a regulatory filing that it was questioned by the US Federal Trade Commission on “our sale, licensing, or sharing of user-generated content with third parties to train AI models” in a letter it received on Thursday. Companies found to be involved in unfair or deceptive trading practices may face sanctions from the Federal trading Commission (FTC), the main antitrust authority in the United States. Lawmakers and rights groups have expressed concerns about privacy dangers, fairness, and copyright when it comes to the idea of licensing user-generated content for AI initiatives.

Reddit is not the first website attempting to profit from user-generated data licensing for artificial intelligence. The Associated Press has a partnership with OpenAI, Stack Overflow, a programming Q&A site, and Automattic, the owner of Tumblr, has announced that it is collaborating “with select AI companies” but that users will be able to opt out of having their data shared. Requests for comments were not immediately answered by any of the licensors. Axios revealed on Friday that Reddit is not the only business that has received a letter on data licensing from the FTC, citing an unidentified former agency officer.

It’s unclear if the letter to Reddit has anything to do with the investigation of any other businesses.

Reddit stated on Friday that it does not think it used any unfair or misleading tactics, but it cautioned that responding to a government investigation may be expensive and time-consuming. The lawsuit states that the letter made clear that the FTC intended to obtain information and documents from us as it continues its investigation, and that the staff would be interested in meeting with us to discuss our plans in more detail. The FTC letter, according to Reddit, explained the investigation as part of “a non-public inquiry.”

Reddit signed an agreement last month to license the content to Google. AI specialists view Reddit’s 17 billion posts and comments as valuable for teaching chatbots how to have a conversation. Requests for comments were not immediately answered by Google or Reddit. The FTC chose not to respond. (Reddit is owned in part by Advance Magazine Publishers, the parent company of Condé Nast, the publisher of WIRED.)

AI chatbots, such as Google’s Gemini and OpenAI’s ChatGPT, are perceived as a rival to publishers, Reddit, and other content-driven, ad-supported companies. One possible benefit of generative AI for some businesses has emerged in the last year: the possibility of licensing data to AI developers.

But there are a lot of concerns circulating in boardrooms, courts, and Congress around the use of internet data harvesting to train AI models. These concerns include who actually owns the content and if it is appropriate to license it out without paying the originator a portion, especially for Reddit and other websites whose user-generated data is involved. Security researchers have found that AI models can leak personal data included in the material used to create them. Furthermore, some detractors claim that the agreements might increase the dominance of strong corporations.

In an attempt to generate interest for the shares it would be selling in its initial public offering (IPO), Reddit has been hawking a “small number” of data licensing victories to investors, including the Google deal. During the investment pitch, Reddit CEO Steve Huffman referred to the company’s data as priceless. He stated, “We anticipate that our data advantage and intellectual property will remain a crucial component in the training of future” artificial intelligence systems.

Google vice president Rajan Patel stated in a blog post about the Reddit AI acquisition last month that using the service’s data will yield insightful new knowledge, though he did not specify how it would be used. In addition to improved signals that will help us better comprehend Reddit content and display, train on, and generally use it in the most accurate and relevant manner, Patel added, “Google will now have efficient and structured access to fresher information.”

The way data is shared in the AI industry has previously alarmed the FTC. The organization declared in January that it was going to ask Microsoft and its partner, ChatGPT creator OpenAI, for details regarding their multibillion-dollar partnership. The FTC added that inquiries concerning their own collaborations were also made to Amazon, Google, and AI chatbot manufacturer Anthropic. The agency’s chair, Lina Khan, stated that one of its concerns is whether collaborations between established businesses and startups may result in unfair competition.

Reddit has been licensing data to other companies for a number of years, mostly to help them understand what people are saying about them online. Researchers and software developers have used Reddit data to study online behavior and build add-ons for the platform. More recently, Reddit has contemplated selling data to help algorithmic traders looking for an edge on Wall Street.

A more recent business venture is licensing for AI-related uses, which Reddit started after learning that the discussions it hosts aid in the training of the AI models that power chatbots like ChatGPT and Gemini. Reddit announced pricing for extensive access to user posts and comments in July of last year, stating that its material shouldn’t be taken for granted.

As a result of that decision, a whole ecosystem of free apps and add-ons for reading or improving Reddit was shut down. A few users went on the offensive, taking down sections of Reddit for several days. Before making its anticipated trading debut on Thursday, the business had warned prospective investors about a number of dangers, including the possibility of more user protests—that is, until the FTC letter arrived.

March 15, 2024, at 8:00 p.m. EDT The ownership of Condé Nast, the publisher of WIRED, Advance, has a stake in Reddit, as was disclosed in an update to this story.