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Reddit is joining the artificial intelligence (AI) frenzy and hints at plans to use AI to power up its internal search engine and unlock new premium content offerings for users. However, the rollout takes place against the backdrop of the backlash over controversial API pricing changes and growing consumer skepticism about AI’s role in marketing.
During Reddit’s second-quarter earnings call on Tuesday, co-founder and CEO Steve Huffman outlined the company’s vision for the platform’s future. “Later this year, we will begin testing new search result pages powered by AI to summarize and recommend content, helping users dive deeper into products, shows, games and discover new communities on Reddit,” he stated.
The AI-powered feature is expected to personalize search results, making it easier for them to navigate content site-wide.
Huffman hasn’t fully revealed their immediate plans yet but has mentioned utilizing both first-party and third-party models. This is in light of their recent partnerships with OpenAI and Google, which allow both companies access to user data for training AI models and benefit Reddit by using their models for various functionalities.
Like every search engine on the web, it aims to integrate advertisements with search results, potentially boosting the company’s advertising revenue. This move comes a week after it acquired Memorable AI, a startup that uses generative AI to enhance marketers’ advertising.
In addition, Huffman has plans to increase Reddit’s revenue by exploring non-advertising avenues through paywalled subreddits. “I think the existing, altruistic, free version of Reddit will continue to exist, grow, and thrive just the way it has. But now we will unlock the door for new use cases, new types of subreddits that can be built that may have exclusive content or private areas, things of that nature,” he said.
The earnings call also discussed the platform’s remarkable growth, reporting a 57% increase in weekly active users, reaching 342.3 million. Its revenue of $281.2 million for the quarter also surpassed Wall Street expectations of $253.8 million.
Many changes seem to be taking place within the company’s structure, even now after going public. In April 2023, the company introduced new API policy changes and pricing structures, which faced fierce criticism.
The developers of popular third-party apps like Apollo projected that they would lose millions, making it financially unsustainable to continue their services. This led to a mass protest, during which over 8,000 subreddits went dark in solidarity.
The AI hype swept almost every tech company in the industry. However, a recent study published in the Journal of Hospitality Marketing & Management reveals that mentioning AI in product descriptions may deter customers from purchasing. The study found that emotional distrust increases when AI is mentioned.
This suggests broader consumer sentiment toward AI may pose challenges to Reddit’s plans. As noted by Mesut Cicek, the study’s author, marketers should focus on presenting AI to build emotional trust rather than relying on buzzwords.
Later this year, when Reddit will enable these features for the first time, the tech community and users alike are waiting to see how these changes will transform content discovery and community engagement, especially in light of the ongoing dissatisfaction with its API policies and the mixed consumer sentiment regarding AI.
