Reddit, the popular online platform, has disclosed that the Federal Trade Commission (FTC) is investigating its AI licensing deals.
In paperwork filed with the Securities and Exchange Commission (SEC), Reddit revealed that the regulator had notified its officials about its intention to request information and documents regarding the company’s AI deals.
Although the reason behind the FTC’s probe is unclear, it appears to be in the early stages of its inquiry.
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In a filing, Reddit stated, “On March 14, 2024, we received a letter from the FTC advising us that the FTC’s staff is conducting a non-public inquiry focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models.
Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area. We do not believe that we have engaged in any unfair or deceptive trade practice.”
Reddit’s licensing deals for its catalog of user-generated content play a significant role in the company’s strategy to grow its revenue as it prepares to go public. On the day it filed for its initial public offering (IPO), Reddit announced a deal with Google.
Under this agreement, Google will utilize Reddit data to train its AI models, with the deal reportedly valued at around $60 million. Reddit also stated that it was in the early stages of exploring similar deals.
According to Axios, other companies have received similar letters from the FTC, indicating the regulator’s interest in the current wave of generative AI startups and their relationships with large tech companies.
The FTC is currently investigating Microsoft, Alphabet, and Amazon over their investments in prominent AI startups. The FTC’s probe into Reddit’s AI licensing deals highlights the growing scrutiny surrounding the use of AI and user-generated content in commercial arrangements.
As AI technology continues to advance, companies are increasingly leveraging user-generated content to train their AI models, enabling them to provide more personalized and relevant services to their users.
However, this practice also raises concerns about privacy, data protection, and the potential misuse of user-generated content.
The FTC’s interest in Reddit’s licensing business suggests that the regulator is keen to ensure that companies are engaging in fair and transparent practices when it comes to the sale, licensing, or sharing of user-generated content for AI training purposes.
By investigating companies like Reddit, Microsoft, Alphabet, and Amazon, the FTC aims to gain a better understanding of how AI startups and large tech companies are collaborating and exchanging data.
This inquiry serves to protect consumers’ rights and ensure that these companies are not engaging in unfair or deceptive trade practices.
