Reddit’s legal team is in defense mode and that could have implications for shareholders.
The company just filed a lawsuit against Anthropic, an influential name in artificial intelligence and often considered a competitor to OpenAI’s ChatGPT, accusing them of scraping and using Reddit’s user-created content to train their language models without paying. This isn’t the typical corporate lawsuit since it could mark a major battle in the battle for AI industry leadership.
Reddit has spent years becoming one of the internet’s premier message boards where millions of people share, argue and communicate about almost anything. That conversation, including the platform’s posts and comments, is valuable. It’s the kind of potential personal information and natural dialogue that can more accurately reflect how people actually talk and think. That can be incredibly important in training large language models.
Reddit’s argument is that Anthropic, like other AI companies searching for quality training data, essentially helped itself to that website’s information without permission and without paying. The company has signed a number of potentially lucrative licensing deals with other big players in the space. Reddit has basically said, not surprisingly, that if someone wants access to the company’s content for the purpose of teaching machines how to talk like humans, it comes at a price.
For a company still in growth mode, it signals that Reddit is serious about protecting and monetizing their intellectual property. It’s a smart move because the company is sitting on a significant amount of genuine human conversation that few other platforms can really match. If it lets AI companies access it for free, it basically gives away one of its biggest assets.
It also shows investors there’s a strategy beyond traditional ad dollars. Licensing data to AI developers could become a new (and potentially substantial) revenue stream. Reddit would be wise to lean in. This lawsuit serves as a reminder that the company is ready to protect its intellectual property. That could ultimately boost confidence about Reddit’s long-term monetization strategies.
There are a few risks around this lawsuit though. Litigation can be a lengthy process and legal bills can be costly and non-productive. There’s also the chance of bad press if Reddit’s user community feels like they’re being treated like a revenue opportunity instead of a user.
Overall, we feel that Reddit is taking a stand that could define its path for the future. Protecting its content is protecting its value. While court battles aren’t attractive, they might be the price to pay for competing in a rapid growth, revolutionary space, such as AI.
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