Reddit signs pact with OpenAI to bring content to ChatGPT

(Bloomberg) — Reddit Inc. has entered into a partnership with OpenAI that will bring its content to the ChatGPT chatbot and other products, while also helping the social media company add new artificial intelligence features to its forums.

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Shares of Reddit, which had its initial public offering in March, rose as much as 15% in late trading following the announcement.

The deal “will enable OpenAI’s AI tools to better understand and present content from Reddit, especially on recent topics,” the companies said Thursday in a joint statement. The deal allows OpenAI to surface Reddit content and train AI systems based on data from its partners.

Reddit will also offer its users new AI-based tools built on models created by OpenAI, which will place ads on its partner site. Financial terms of the deal were not disclosed.

Reddit content has been a popular source of training data for creating AI models – including those from OpenAI. Last week, Reddit released new policies governing the use of its data, as part of an effort to increase revenue through licensing deals with artificial intelligence developers and other companies.

“Our data is extremely valuable,” CEO Steve Huffman said at the Bloomberg Technology Summit earlier this month. “We’re seeing a lot of interest in this.”

Finding new opportunities to make money was part of Reddit’s proposition before its IPO. The company also signed a deal in January with Alphabet Inc.’s Google worth $60 million to help train large language models, the technology that underpins generative AI.

Huffman previously declined to discuss the details of the deal with Google, but said typical terms could determine how long a Reddit summary can appear in a Google search or whether a licensee must display Reddit’s branding in results generated by AI. The San Francisco-based social network has signed licensing agreements worth a total of $203 million, with terms ranging from two to three years, and is in negotiations to close additional licensing agreements.

OpenAI, for its part, is increasingly partnering with media companies to help train their AI systems and show more real-time content in its chatbot. The maker of ChatGPT also struck deals with Dotdash Meredith earlier this month and the Financial Times in April.

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Backed by Microsoft Corp., the startup has emerged as a driving force in the development of AI. Sam Altman, CEO of OpenAI, has a long history with Reddit. He was one of the company’s largest shareholders at the time of its IPO earlier this year and briefly served as Reddit’s interim CEO in 2014.

The companies noted in the statement that their partnership was led by OpenAI chief operating officer Brad Lightcap and approved by their independent directors.

Reddit shares, which fell 5.5% to $56.38 in regular New York trading on Thursday, rose to $64.75 following the partnership announcement. The stock has gained 66% since its IPO.

(Updates with executive comments starting in fifth paragraph.)

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