Reddit may block Google’s AI from using its content. Their licensing deal, reportedly worth $60 million per year, is about to expire. Reddit (RDDT) shares fell as much as 5.8% in premarket trading Wednesday.

The 2024 deal lets Google use Reddit’s posts to train and power its AI models. Talks over a renewal are ongoing. Neither company has made a final call.

Why Publishers Are Rethinking Google AI Deals

Reddit is not alone. The Journal also named USA Today, Politico, the Economist, People Inc., and Reuters. All are rethinking their ties with Google.

The anger comes down to one thing. Google’s AI Overviews answer questions right on the search page. Readers get the answer. Publishers lose the click.

Pew Research Center data shows how big the hit is. Users clicked a regular result just 8% of the time when an AI summary appeared. Without one, the rate was 15%. Only 1% clicked a source inside the summary itself.

Semrush data cited in the Journal’s reporting points the same way. USA Today’s Google traffic fell nearly 50% in a year. Politico’s dropped 23%.

Regulators are stepping in too. On June 3, Britain’s antitrust watchdog, the Competition and Markets Authority (CMA), gave publishers a new right. They can now opt out of Google’s AI features without vanishing from search.

“It is crucial that content publishers, including news organizations, have appropriate bargaining power over how their content is used,” CMA Chief Executive Sarah Cardell said in the announcement.

Similar complaints about Google stealing publisher traffic now reach crypto media, where AI answers are already siphoning publisher visits.

Will RDDT Stock Crash?

A crash looks far from certain. Reddit’s threat may be a bargaining chip, not an exit. Its human conversations are among the most cited sources in AI answers. It also licenses data to OpenAI. That gives it rare pricing power.

Executives reportedly want usage-based fees that grow as Reddit becomes more central to AI results. A new Reddit Google AI deal could reset prices across the market. AI training data lawsuits are already testing what unlicensed content costs.

Timing adds pressure. Alphabet reports Q2 earnings after Wednesday’s close. Options traders are already pricing outsized earnings moves across big tech. Any comment on content costs could move both stocks, as noted in BeInCrypto’s Alphabet Q2 earnings preview.

For now, this looks like hardball, not a breakup. The renewal terms, and Alphabet’s comments tonight, should soon show what Reddit’s data is really worth.

Source: BeInCrypto