Reddit reconsiders $60m Google AI licensing deal
Reddit is reconsidering a lucrative $60 million artificial intelligence licensing agreement with Google, casting doubt over a revenue stream that recently helped the social media firm beat earnings expectations.
Reddit is in negotiations with Google regarding the future of a $60 million annual contract that permits the search giant to train its artificial intelligence models on the social media platform's content. The agreement, struck in 2024, is nearing its end, and Reddit is actively reassessing whether the financial rewards outweigh the strategic costs.
The platform's hesitation stems from Google's integration of AI-generated summaries into its search results, a feature that has demonstrably reduced click-through traffic to external websites. Reddit is reportedly evaluating if licensing its data to Google is effectively cannibalizing its own audience.
This traffic erosion is a broader industry phenomenon. Between June 2025 and 2026, Politico saw its Google search traffic fall by 23%, while CNN experienced a 25% decline. Business Insider suffered the steepest drop, losing more than 85% of its traffic from the search engine over that period.
The uncertainty surrounding this lucrative contract has contributed to a rough year for Reddit's equity. The stock is down approximately 19% year-to-date as investors grapple with the sustainability of the company's newer revenue streams. Market attention will now shift to Reddit's second-quarter earnings report, scheduled for July 30.
Losing the Google partnership would remove a key pillar of Reddit's recently established data licensing business. This division was a major factor in the company's surprising first-quarter performance, where revenue jumped 69% from the prior year to reach $663 million. Analysts had only expected $611 million.
The earnings beat extended to the bottom line, with Reddit reporting first-quarter earnings per share of $1.01 compared to the consensus estimate of 58 cents. Beyond Google, Reddit maintains a similar content-licensing arrangement with OpenAI to train ChatGPT.
Speaking to analysts on the first-quarter earnings call, CEO Huffman played down any friction. "We have important partnerships with both Google and OpenAI," Huffman said. "Those are very meaningful to us, and I think it's mutual. We continue to value those."
The internal debate at Reddit underscores a fundamental conflict emerging in the digital economy. Publishers and platforms are discovering that the immediate cash from licensing data to AI developers may come at the steep expense of their long-term traffic and advertising revenues.
