Will FTC Inquiry Into Reddit AI Licensing Deals Postpone IPO?

Reddit stock is in high demand. The platform is making a chunk of its stock shares in its initial public offering (IPO) to users. 

The IPO is set to debut March 21, but several days ago the Federal Trade Commission (FTC) opened an inquiry into the company's artificial intelligence (AI) licensing deals like the one it inked with Google. It's difficult to say whether or not the inquiry will put the brakes on the company going public. 

In a regulatory filing posted Friday, Reddit said it received a hold letter from the FTC the day prior. The letter described how the FTC will conduct a non-public inquiry focused on its sale, licensing, or sharing of user-generated content with third parties to train AI models.

“The FTC staff was interested in meeting with us to learn more about our plans and that the FTC intended to request information and documents from us as its inquiry continues,” the letter states. “Regulatory engagements can be lengthy and unpredictable.”



The company warned that any regulatory process could cause it to incur substantial costs, and may result in reputational harm or fines, causing Reddit to discontinue or modify products, services, features, or functions. It also could cause Reddit to change policies or practices, divert management and other resources from its business.

The inquiry comes as government tried to keep up with the fast-paced development of AI technology and the impact it has on the U.S. economy, consumer privacy, and the spread of disinformation.

Reddit is giving users a change to buy into its IPO, along with some investment funds such as Fidelity.

Semiretired fiction writer Daniel Jeffers is one of those people who want to own Reddit stock. Next month he will reach its Reddit “Cake Day”—the anniversary of the date when someone created an account.

Among his favorite subreddits are AskHistorians (one of my favorites), AskOldPeople and AmIWrong. The 67-year-old plans to buy up to $1,000 of Reddit’s IPO shares in a show of support, according to the Wall Street Journal. These subreddits are a great place to research specific topics, and Redditors are more than happy to help.

Kevin Xu is another Reddit user who wants to buy the company’s stock. He made millions trading stocks, quit his job at Google and created an investing app called AfterHour, per the WSJ. Xu requested 690 shares, which Reddit aims to price at $31 to $34 each.

Amidst the push of an IPO, Reddit on Friday also launched Free-form ads in a layout that allows advertisers to share in-depth information with Reddit by combining multiple media types, including image, video and text using ready-made templates. It’s a native ad format designed to look and feel similar to the type of content redditors share with each other.

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