Reddit Forges Pact With OpenAI To Bring Content to ChatGPT

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

Shares of Reddit, which had their initial public offering in March, were up 13.7% on Friday at 9:46 a.m. New York.

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

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

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

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

Finding new moneymaking opportunity was part of Reddit’s pitch in the lead-up to its IPO. The company also signed an accord in January with Alphabet Inc.’s Google worth $60 million to help train large language models, the technology underpinning generative AI.

Huffman previously declined to discuss the specifics of the Google deal but said typical terms can govern how long a Reddit summary can show up in a Google search or whether a licensee has to display Reddit branding in AI-generated results. The San Francisco-based social network has signed licensing deals worth $203 million in total, with terms ranging from two to three years, and has been in talks to strike additional licensing agreements. 

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

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 was approved by its independent directors.

The shares of Reddit, which had declined 5.5% to $56.38 in regular New York trading Thursday, soared as high as $64.75 after the partnership was announced. The stock has gained 66% since its IPO.