Reddit Faces FTC Probe Over AI Data Licensing Amid IPO Preparations
Summary:
Reddit, the social media platform, has disclosed it is under investigation by the FTC over its data licensing practices for AI training. This follows a $60 million per year agreement with Google, allowing Google access to Reddit's user data. The FTC's scrutiny emphasizes the regulatory issues Reddit may face amid growing focus on AI. Moreover, Reddit, preparing for its IPO, revealed investments in Bitcoin and Ethereum, along with acquiring Ethereum and Polygon for virtual transactions on its platform.
Reddit, the well-known social media platform, has disclosed that the Federal Trade Commission (FTC) is investigating its data licensing methods used for training artificial intelligence (AI). This announcement has been made in the run-up to its highly anticipated public trading debut. The disclosure was officially made public through an updated S-1 registration document submitted to the Securities and Exchange Commission, dated March 15, 2024. This filing happened a day following receipt of the FTC's inquiry.
In its statement, Reddit asserted that it wasn't taken aback by the FTC’s scrutiny due to the distinct properties of such technologies and business deals. The platform, however, resolutely maintained that it had not engaged in any deceptive or unjust commercial activities. The FTC scrutiny nonetheless highlights the regulatory challenges Reddit faces amid a rising focus on AI.
Although Reddit states that it has not breached any laws, it acknowledges the investigation could extend over a considerable period and come with uncertainties. Repercussions could include potential reputational damage, fines, a mandate to alter policies or practices, or a need to adjust or discontinue certain products, services, or features.
The FTC's investigation was launched following a $60 million annual agreement inked between Reddit and Google in February, permitting Google to utilize Reddit's rich user data for AI training purposes. This agreement signifies a deeper bond between the two parties, given that Reddit will enjoy elevated visibility on Google's platform in return for sharing its data.
The use of user data for AI continues to brew concern amongst regulators and advocates of privacy. Reddit accepted in its filing that its data licensing tactics are relatively new and subject to constantly changing regulations.
Reddit's ambition in the field of AI has previously attracted editorials. The company, during its IPO preparations, made public its strategic financial investments in cryptocurrencies like Bitcoin and Ethereum. Additionally, Reddit has acquired Ethereum and Polygon (MATIC) for facilitating virtual transactions on its platform.
Reddit’s pursuit of AI and cryptocurrency is in line with its objective of tapping into the growing market of these technological innovations. According to data from the International Data Corporation referred by Reddit, the global AI market, not including China and Russia, is expected to reach a whopping $1 trillion by 2027, with compound annual growth of 20%.
Published At
3/17/2024 11:33:39 AM
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