Reddit's $60 Million AI Licensing Deal with Google Triggers Stock Drop

Reddit and Google signed a licensing agreement in 2024 that pays Reddit roughly $60 million a year for the use of Reddit’s content to train Google’s artificial‑intelligence models. The deal has come under renegotiation, with Reddit warning that it may restrict Google’s access unless terms improve. The market reacted quickly: Reddit’s shares fell as much as 8‑9 % after the news broke.

Analysts note that while the licensing fee provides direct revenue, it may not offset the indirect loss of referral traffic caused by AI‑generated answers that bypass traditional search clicks. Reddit’s data is heavily cited by large language models, accounting for a substantial share of external citations and keyword searches, which amplifies its bargaining power but also highlights the tension between licensing income and traffic erosion for online publishers.

The negotiations involve top legal counsel and raise broader questions about how content platforms can monetize their data in the age of AI, and whether similar licensing structures will become standard across the industry.