Reddit’s chief executive says Google is crawling his site as hard as it ever has. Its AI answers, he says, are “just not a traffic driver.”
That was the heart of Thursday’s earnings call, and on Friday Reddit’s stock fell 29.22 percent to $91.73, its worst day since it went public in 2024. The quarter itself was strong: revenue up 53 percent to $895 million, $283 million of net income. The holiday-quarter forecast came in below Wall Street’s, and Reddit warned that daily users, about 130 million, could fall by a low double-digit percentage if search referrals keep sliding. In October those referrals dropped by more than a million visits a week. Steve Huffman’s explanation was Google’s AI Overviews and AI Mode, which answer the question on Google’s own page. Earlier algorithm changes, he said, would “kind of come and go.” This one is “a fundamental shift in how the Google product works.”
What makes it awkward is how many ways the two companies are tied together. Google pays Reddit about $60 million a year under a 2024 deal to use Reddit’s posts for AI training and search, and the two are negotiating a renewal; Huffman said Reddit is “only going to do a deal that makes sense for Reddit.” Reddit pays Google, too — a filing on Friday showed that in August it committed to spend $580 million on Google’s cloud through August 2029. And Google is the front door, the search engine that used to deliver logged-out visitors who now arrive less and less often.
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Reddit’s response is a door of its own. This quarter it starts testing a requirement to log in before reading, first in some international markets and then worldwide. Huffman said the shift “lets us better protect the Reddit corpus of data,” and that most scraping happens among logged-out users.
The money hasn’t left yet, though. Huffman said the vast majority of revenue comes from app users and logged-in users, who arrive directly, and both groups grew from the prior quarter. He called Google’s AI the leading hypothesis rather than a finding; Reddit can’t see Google’s rankings. And the shift is costing Google as well. Its search revenue growth slowed to 12 percent in the September quarter, and Alphabet lost about $500 billion in market value on Thursday.
For years the arrangement was simple: Reddit had the answers and Google sent people to read them. Now Google answers on its own page, and Reddit is deciding how much of itself to leave unlocked.
Now Google answers on its own page, and Reddit is deciding how much of itself to leave unlocked.
