OpenAI Strikes Deal with Reddit to Bring Content to ChatGPT, Boosting Stocks

OpenAI and Reddit announced a partnership on May 16 to integrate Reddit content into ChatGPT, enhancing the chatbot's capabilities and driving Reddit's stock up 12% in extended trading.

Reddit Diversifies Beyond Advertising, Partners with OpenAI to Supply Content and Boost Revenue

According to the New York Post, the agreement highlights Reddit's efforts to diversify beyond its advertising business. It follows a recent collaboration with Alphabet to make its material available for training Google's AI models.

Following the new relationship, ChatGPT and other OpenAI products will use Reddit's application programming interface to distribute content on the platform.

The business also announced that OpenAI will become an advertising partner on Reddit.

Before Reddit's March IPO, Reuters reported that the company had an agreement with Alphabet for approximately $60 million yearly. Investors see selling data to train AI models as a significant revenue source besides Reddit's advertising business.

Earlier this month, the social network giant announced excellent revenue growth and improved profitability in its first earnings after going public, signaling that its Google acquisition and push to develop its advertising business were paying off.

Reddit's stock increased 10.5% to $62.31 after the bell. As of Wednesday's close, the stock had gained about 12% since its market debut in March.

OpenAI and Reddit Partner to Integrate Content into ChatGPT and Enhance AI Services for Users

On May 16, OpenAI and Reddit announced (via Engadget) a partnership that will allow OpenAI to expose Reddit debates in ChatGPT while Reddit will provide AI-powered services to its users. According to a joint statement from both businesses, the collaboration would "enable OpenAI's tools to better understand and showcase Reddit content, especially on recent topics." As part of the partnership, OpenAI will become an advertising partner on Reddit, which means it will place advertisements on the platform.

The agreement is comparable to the one Reddit inked with Google in February, reportedly for $60 million. A Reddit spokesman declined to discuss the terms of the OpenAI arrangement with Engadget, and OpenAI did not respond to a request for comment.

OpenAI is rapidly collaborating with publishers to obtain data for further training its AI models. In the previous several weeks, the company has secured agreements with the Financial Times and Dotdash Meredith. Last year, it collaborated with German publisher Axel Springer to train its models on news from Politico and Business Insider in the United States and Bild and Die Welt in Germany.

Under the new agreement, OpenAI will gain access to Reddit's Data API, which, according to the firm, will give it "real-time, structured, and unique content from Reddit." Due to the cooperation, it is still being determined what AI-powered services Reddit will include in its platform. Reddit's spokesman declined to respond.

Last year, access to Reddit's data, a rich source of real-time, human-generated, and frequently high-quality information, became contentious after the business announced that it would begin charging developers to use its API. As a result, dozens of third-party Reddit clients were forced to cease operations, and thousands of subreddits went black in protest. At the time, Reddit stood firm, claiming that huge AI companies were harvesting its data without payment. Since then, Reddit has monetized its data through partnerships with Google and OpenAI, whose progress in training AI models depends on access to it.

Photo: Solen Feyissa/Unsplash