In a major licensing deal for the artificial intelligence firm OpenAI, the organization says that it has inked a multifaceted deal with the web platform Reddit. OpenAI Reddit partnership is for usage of content from the social media platform for its artificial intelligence chatbot. This OpenAI deal with Reddit has sent the share price of the company up as much as 15% in after-hours trading.
OpenAI Reddit partnership announcement on Thursday is the latest in a number of deals between the Microsoft-backed start-up and media brands as the competition for high-quality and reliable data to underpin powerful new AI models intensifies.
OpenAI is also fighting copyright lawsuits from publishers who are reluctant to allow their content to be used by the ChatGPT-maker.
OpenAI’s deal with Reddit
The agreement gives OpenAI access to content on Reddit’s website and will allow the social media platform to embed more AI tools.
Financial terms were not disclosed, but a jump in Reddit’s stock would mean a bonanza for the co-founder and chief executive of OpenAI. As Sam Altman has invested tens of millions of dollars into the social media group.
Ahead of Reddit’s March IPO, Reddit struck deal with Alphabet, worth about $60 million per year.
OpenAI on the partnership
Altman, who has said he has no equity stake in OpenAI, held close to 10% of Reddit’s stock ahead of its IPO in March via various entities, according to public filings. The 39-year-old, a serial entrepreneur and investor, did not lead the negotiations with Reddit, according to OpenAI.
OpenAI will also become a Reddit advertising partner, the company said.
Deal a boon for Reddit
The deal with OpenAI will also be a boon to Reddit’s monetization efforts. This has until now mainly focused on building up its advertising-based business model. It has already struck deals with Google and Cision.
“We are thrilled to partner with Reddit to enhance ChatGPT with uniquely timely and relevant information, and to explore the possibilities to enrich the Reddit experience with AI-powered features,” said Brad Lightcap, OpenAI’s chief operating officer.
Including Reddit in ChatGPT “upholds our belief in a connected internet, helps people find more or what they’re looking for, and helps new audiences find community on Reddit”, said Steve Huffman, Reddit’s co-founder and chief executive.
Other deals by OpenAI
OpenAI has struck a series of deals with publishers this year. This included the Financial Times, U.S.-based Associated Press, Germany’s Axel Springer, France’s Le Monde and Spain’s Prisa Media. Those deals give it the access to material which can be used to develop and run generative AI technology. This in turn can create text, images and code from human prompts.
Social media platforms have been increasingly seeking out ways to monetize their valuable data as the AI boom has taken off.
Reddit’s revenue
Investors view selling its data to train AI models as a key source of revenue beyond Reddit’s advertising business.
Reddit’s earlier this month reported strong revenue growth and iamproving profitability in the first earnings since its market debut. This indicated that its Google deal and its push to grow its ads business were paying off.
Reddit’s stock
Reddit’s share rose 10.5% to a price of $62.31 after the bell. As of Wednesday’s close, the stock is up nearly 12% since its market debut in March.
