Reddit's stock fell 9% on a report it may cut off Google's AI training access
The Wall Street Journal reported Reddit discussed ending Google's access to its content for AI training under an expiring $60 million a year deal. Neither company confirmed it.
Reddit shares dropped 9% this week on a report neither Reddit nor Google will confirm or deny.
Reddit's stock fell as much as 9 percent on July 22 after the Wall Street Journal reported the company had internally discussed cutting off Google's access to Reddit content for AI training. The stock move is real. The underlying claim is not confirmed by either company.
What was actually reported
Per the Journal, and CNBC's follow-up coverage, Reddit and Google have an existing deal, reportedly worth around $60 million a year, that lets Google train its AI on Reddit's content. That deal is expiring, and the Journal's sourcing says Reddit has discussed walking away from renewing it on the same terms. CNBC frames this as Reddit reconsidering the value of feeding a company whose AI Overviews are cutting referral traffic to publishers across the web, Reddit included.
This is not a side deal for Reddit. Selling access to years of forum conversations for AI training became a real, disclosed revenue line after its 2024 IPO, and the Google contract is one of the largest examples of it. A report that Reddit might not renew that specific deal on the same terms cuts closer to the center of the growth story than an ordinary vendor dispute would, which is a reasonable part of why the stock moved on a report rather than a confirmed decision.
What both companies actually said on the record
Reddit CEO Steve Huffman's on-record comment stayed carefully neutral: "We have important partnerships with both Google and OpenAI. Those are very meaningful to us, and I think it's mutual." A Reddit spokesperson told CNBC the company negotiates "just like any business should, by focusing on doing what's best for Reddit." Google's statement did not confirm or deny anything specific, saying only that its AI tools "direct substantial traffic across the web." Nobody on either side said the deal is actually ending.
Notice that Huffman named OpenAI in the same sentence as Google. Reddit has separate licensing arrangements with both, and the report is specifically about the Google side. Investors reading the headline are pricing it as one general 'AI licensing revenue' story, not two independent contracts, which is exactly the kind of gap between a specific report and a broad market reaction that is worth keeping straight.
The market reacted to the headline anyway
Reddit shares are down roughly 26 to 27 percent year to date, and this report knocked another 8 to 9 percent off in a single day, per CNBC and 247wallst's coverage. That is the market pricing in a scenario built on anonymous sourcing, not a confirmed decision. It says less about what Reddit will actually do and more about how nervous investors already are about Reddit leaning on AI licensing revenue.
Why a build studio cares
This is a live version of a problem every product with valuable user-generated or proprietary data now faces: the licensing deals that pay for AI access to your content are also feeding the AI answers that route traffic away from you. Reddit is a visible example because it is public and the number moves a stock price, but the same tradeoff sits underneath any content-heavy product a client asks us to build, a community forum, a review site, a documentation base. Whoever licenses training data has to price in that the buyer's product might be the thing eating their own traffic next, and write renewal terms with that in mind rather than treating year one's number as permanent.
Next step: read CNBC's report and 247wallst's market writeup. If AI licensing terms are part of a product or data deal you're structuring, write to us at hello@gattyworks.com.