With Reddit looking to maximize its revenue potential, and capitalize on the value of its data, it’s now taking legal action against AI projects that look to siphon off its info without explicit permission.
As reported by The New York Times, Reddit has filed a new lawsuit in the U.S. District Court, which seeks to block four different companies from scraping Reddit data via Google search results, as opposed to using (and paying for) the Reddit API.
As reported by NYT:
“Three of those companies – SerpApi; a Lithuanian start-up, Oxylabs; and a Russian company, AWMProxy – sold data to AI companies like OpenAI and Meta, according to the lawsuit. The fourth company, Perplexity, is a San Francisco start-up that makes an AI search engine.”
Reddit’s seeking a permanent injunction against these companies, along with financial damages, while it also hopes that the case will help to establish more solid legal precedent for data protection.
Which, from a business perspective, makes a lot of sense.
Reddit increased its API charges in 2023, in order to ensure that it’s able to profit from the data its users generate, as more and more AI projects looked to Reddit for their data inputs.
Reddit’s human-curated topical message boards contain vast insight and knowledge, so much so that it’s now the most commonly referenced source for AI responses.
Within that, AI projects also see the opportunity to use Reddit chats as reference data to help fuel their tools, and Reddit’s implemented various measures to ensure that its info can’t be scraped, nor legally used, without explicit permission and payment.
Reddit alleges that these providers subverted its terms by scraping Reddit answers from Google instead, which is another loophole in its data protections, that Reddit’s now hoping to close off with this legal push.
And given the value of Reddit data, it’s worth the effort.
Reddit posted a 24% year-over-year increase in its “Other” revenue category in Q2, largely based on its data deals with AI projects, with the company generating $35 million for the quarter from this element.
Reddit has signed content licensing agreements with Google and OpenAI, among others, yet in order to maximize the potential of its data offerings, it needs to ensure that there’s value in exclusivity, in order to incentivize others to pay for such.
Which is why this legal push makes sense, and it could help Reddit, and other social media platforms, establish more solid legal footing to combat scraping in future.
Because AI projects need data, and social platforms are among the key sources on this front. And with billions at stake, you can bet that every platform will be assessing their options, in order to fend off unauthorised use.
Both LinkedIn and Meta have also launched legal action against scrapers, while Elon Musk’s X has also threatened legal recourse against anybody looking to steal its data as well.
It looks set to become a lucrative battleground for lawyers moving forward, as the growth of AI tools necessitates further cases on this front.
