- Reddit shares fell 9.18% to close at $170.10 on July 22 after the Wall Street Journal reported the company may not renew its Google AI content deal [1] - The deal, signed in February 2024 for approximately $60 million per year, gives Google access to Reddit's user-generated content for AI model training [2] - Reddit executives are concerned that Google's AI Overviews have reduced referral traffic to the platform, undermining the deal's strategic value [3] - Wells Fargo warned Reddit could lose $500 million in AI licensing revenue and face user headwinds if it walks away from the deal [4] - Reddit is scheduled to report Q2 earnings on July 30, adding urgency to the situation
[5] Reddit shares tumbled 9.18% on Tuesday, closing at $170.10, after the Wall Street Journal reported that the social media company is reconsidering whether to renew its landmark $60 million-a-year AI content licensing agreement with Google [1]. The deal, which allows Google to train AI models on Reddit's vast archive of user-generated forum posts, was signed in February 2024 — the same day Reddit filed for its IPO
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[2]Reddit executives are weighing whether to restrict Google's access to the platform's content entirely as renewal negotiations continue, according to the report [3]. The core grievance: Google's AI Overviews, which synthesize answers directly in search results, have reduced referral traffic to third-party websites including Reddit, eroding a key benefit the platform expected from the partnership.
The selloff comes just eight days before Reddit's scheduled Q2 earnings report on July 30, and raises broader questions about the sustainability of the AI data licensing market that Reddit helped pioneer [5]. Reddit disclosed in 2024 that its total AI licensing contracts — including deals with Google, OpenAI, and others — were worth $203 million
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[6]## The Deal at Stake Reddit and Google struck their content licensing agreement in February 2024, giving Google access to Reddit's Data API to train its AI models and display Reddit content across Google products [2]. In return, Reddit received approximately $60 million per year and access to Google's Vertex AI platform to improve its own internal search capabilities
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[2]The deal was considered a watershed moment for the AI data licensing market, validating the idea that platforms with large user-generated content repositories could monetize their data for AI training. Reddit went on to sign additional agreements with OpenAI and other AI companies, bringing its total disclosed licensing revenue to $203 million in 2024 [6].
Now, Reddit executives reportedly want usage-based fees in any renewed deal, a shift from the flat annual payment structure of the original contract [7]. No final decision has been made, and negotiations between the two companies remain ongoing
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[3]## Why Reddit Is Reconsidering The central issue is Google's AI Overviews feature, which provides AI-generated summaries directly in search results. Publishers across the web have complained that the feature answers user queries without requiring a click-through to the source website, reducing referral traffic that drives advertising and engagement [3].
Reddit is not alone in reassessing its relationship with Google over this issue. USA Today, Politico, The Economist, People, and Reuters are all weighing how — or whether — they will continue working with Google on AI content access [3].
Google has maintained that its AI search products continue to direct users to publishers' websites and that it provides tools allowing content owners to manage how their material is used [3].
Wall Street Reaction #
Analysts responded with concern but stopped short of downgrading the stock. RBC Capital Markets analyst Brad Erickson characterized a potential deal termination as 'a significant step backwards' for Reddit [4].
Wells Fargo issued a starker warning, estimating that Reddit stands to lose $500 million in AI licensing revenue if it walks away from the deal, while also facing headwinds to user engagement — though the firm noted that cutting off AI access could support healthier long-term engagement [4].
DA Davidson took a more measured tone, saying it would not 'jump the gun and make the assumption' about the final outcome of negotiations, while flagging risk to daily active user growth, particularly among logged-out users [4]. All three firms maintained their existing ratings on the stock
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[4]## What's Next Reddit's Q2 earnings call on July 30 will likely be the next major catalyst, with management expected to face pointed questions about the status of the Google deal and its broader AI licensing strategy [5].
The outcome of these negotiations carries implications well beyond Reddit. If one of the most prominent AI data licensing deals unravels, it signals that the economics of content-for-training agreements may be shifting as AI companies increasingly use that content to reduce, rather than drive, traffic to its sources.
For Google, losing access to Reddit's content — one of the most frequently cited sources in AI-generated search answers — would create a notable gap in the training data and real-time information pipeline that powers its AI products.
Companies mentioned #
Further sources #
[[1] Reddit Inc Stock (RDDT) Moved Down by 9.18% on Jul 22 ↗](https://www.tradingkey.com/news/market-movers/262047917-market-movers-rddt-20260722)
[[2] Google strikes $60M deal with Reddit for AI training data — Tom's Guide ↗](https://www.tomsguide.com/ai/google-strikes-dollar60m-deal-with-reddit-for-ai-training-data-what-you-need-to-know)
[[3] Reddit stock plunges on report of possible Google content restrictions — Yahoo … ↗](https://finance.yahoo.com/markets/stocks/articles/reddit-stock-plunges-report-possible-191345097.html)
[4] This Analyst Believes Reddit Not Renewing Google AI Content Deal Would Be A Ste… ↗
[5] RDDT Stock Drops 8% as Google AI Data Deal Uncertainty Overshadows Reddit's Q2 … ↗
[6] Reddit Is Winning the AI Game — Columbia Journalism Review ↗+1 more The stories that matter, in one email. Free — unsubscribe anytime.