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Reddit says it is being investigated by the FTC over its AI data licensing programs

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Reddit has revealed that the online social forum is currently being investigated by the US Federal Trade Commission. The news of this new probe comes even as Reddit is preparing to launch its IPO and become a publicly traded company.

In a filing to the US Securities and Exchange Commission (via CNBC), Reddit said it was informed by the FTC on Thursday, March 14, that the agency was "conducting a non-public inquiry focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models." The filing added that Reddit was "not surprised" that the FTC was looking into this particular area. It also said, "We do not believe that we have engaged in any unfair or deceptive trade practice."

Reddit's announced plans for its IPO filing indicated that the vast majority of its past income has come from advertising. The company says it wants to broaden its revenue model with other methods, and one of them is to monetize its data.

One of Reddit's biggest investors just happens to be OpenAI co-founder and CEO Sam Altman. It would certainly make sense for Reddit to consider selling its data to OpenAI to help train its ChatGPT models.

Unconfirmed reports claim Reddit will seek to set a price of between $31 and $34 a share when it eventually starts trading on the New York Stock Exchange (NYSE). If accurate, that would give Reddit a valuation of up to $6.5 billion. The company is offering its top moderators, along with users with the site's biggest karma scores, invitations to buy shares in Reddit, which is an unusual move for a company that's launching an IPO. Reddit will be traded with the ticker symbol "RDDT" when the IPO goes live.

Reddit has confirmed with its IPO filings it currently has 267.5 million active weekly users, along with 73 million daily users. In 2023, it generated $804 million in revenue but still lost $90.8 million that year.

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