Reddit Faces FTC Probe Over AI Data Practices
The United States Federal Trade Commission (FTC) has initiated an investigation into Reddit's data licensing practices for artificial intelligence (AI) training.
This inquiry comes as Reddit prepares for its anticipated initial public offering (IPO).
Reddit disclosed the investigation in an amended Form S-1 registration statement filed with the U.S. Securities and Exchange Commission on March 15, 2024, following notification of the FTC inquiry.
While Reddit acknowledged the FTC’s interest in its unique technologies and business agreements, it maintained that it had not engaged in unfair or deceptive trade practices.
The scrutiny from the FTC highlights Reddit’s regulatory challenges amid the increasing use of AI. Although Reddit believes it has not violated any laws, it anticipates the investigation may be prolonged and uncertain.
Reddit’s recent $60 million yearly agreement with Google, allowing Google to utilize Reddit’s user data for AI training, has deepened its ties with the tech giant. However, concerns over privacy and data usage persist, with Reddit acknowledging that its data licensing initiatives are still evolving and subject to regulatory changes.
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In its IPO preparations, Reddit has also disclosed investments in Bitcoin and Ether as part of its financial strategy, alongside its acquisitions of Ether and Polygon for virtual transactions on its platform.
This strategic move into AI and cryptocurrency aligns with Reddit’s goal to capitalize on the growing market for these technologies, as indicated by projections from the International Data Corporation forecasting a $1 trillion worldwide AI market by 2027.