FTC conducting inquiry into Reddit's AI data-licensing practices ahead of IPO

In its updated IPO prospectus, Reddit revealed that it is being investigated by the FTC for its data-licensing practices. The company plans to go public with shares valued at $31 to $34 each, potentially making the company worth approximately $6.5 billion. Reddit’s core revenue comes from online advertising, but it is exploring other avenues such as data licensing. The FTC has sent a letter to Reddit regarding its sale, licensing, or sharing of user-generated content to train AI models. The company believes these inquiries could have significant costs and impact their business. Reddit’s revenue in 2021 was $804 million, with advertising accounting for 98% of sales. It entered into data-licensing agreements with a contract value of $203 million over two to three years.