Reddit allows an unnamed large company to access the content posted by users on its platform in a new licensing deal, as reported by Bloomberg.
Bloomberg reported that the value of the deal, estimated at $60 million annually, may change, as the social media platform’s plans for an initial public offering are still in progress.
Until recently, most artificial intelligence companies used internet data to train their models without obtaining permission.
This practice may raise legal concerns, prompting companies to seek data through reliable means.
The company that Reddit has contracted with has not been disclosed yet. Although its value slightly exceeds the annual deal worth $5 million, which OpenAI is supposed to offer to news publishers for data.
Apple is also seeking to make long-term deals with major news companies that could be worth at least $50 million, according to a report by The New York Times.
This news comes after a story published by The Washington Post in October, which reported that Reddit threatened to ban search engines Google and Microsoft if they did not reach an agreement with artificial intelligence companies.
Last year, Reddit managed to overcome its biggest protest in history after changes in the pricing of access to its external API led to the disruption of popular Reddit applications.
According to Bloomberg, Reddit platform generated revenues exceeding $800 million last year, representing an approximate 20% increase compared to the previous year. However, revenues still fall below the targeted billion dollars, with a gap of about $200 million from the set target for two years.
As per the provided guidance, the platform has been directed to seek a valuation of $5 billion when it opens up for public investment, expected to happen in March.
Reddit’s agreement with the artificial intelligence company sets a model for future contracts that are similar in nature.
The rapid spread of artificial intelligence in the business world contributes to harnessing investors’ enthusiasm for technology and boosting initial public offerings.
