Reddit’s vast archive of human experience has become a critical resource for the AI industry, making it the second most-cited source in Google’s new AI Overviews, according to a recent study from analytics firm Semrush. This high-profile placement, behind only Q&A site Quora, validates the company’s aggressive strategy to monetize its data through major partnerships, including a $60 million deal with Google, and solidifies its content as a critical training ground for artificial intelligence.
This newfound status, however, is a double-edged sword. The very AI features that elevate Reddit’s content also threaten to cannibalize the user traffic that underpins its advertising revenue. By providing direct, summarized answers, AI Overviews often eliminate the need for users to click through to the original source.
This creates a fundamental paradox for the company: its data is more valuable than ever, but the way it’s being used could undermine the business model that has just recently, and for the first time, achieved profitability.
The situation captures a central tension of the emerging AI-driven web, where the value of being a primary source of information is in direct conflict with the risk of becoming a footnote in an AI-generated summary. For Reddit, navigating this challenge will be critical to sustaining its growth and proving the long-term viability of its business model in an ecosystem it is helping to build.
The Great Walled Garden: Reddit’s Data Monetization Play
In recent years, Reddit has aggressively pivoted from an open-access platform to a fortified data vendor. CEO Steve Huffman has been unequivocal about this strategy, stating at a Wall Street Journal Tech Live event, “AI models need human knowledge, and Reddit’s content is full of it.” This philosophy underpins the company’s major licensing deals with both Google and OpenAI, which grant the AI developers access to Reddit’s real-time conversations for training their models.
To protect these high-value assets, Reddit has taken decisive action. In July 2024, it updated its web protocols to give Google exclusive scraping rights while blocking crawlers from competitors like Microsoft’s Bing. This strategy has also become litigious.
In June 2025, Reddit filed a lawsuit against the AI startup Anthropic, alleging that the firm used its content to train the Claude AI model without permission. This legal fight is part of a much larger conflict over data rights, as seen in a recent lawsuit where eight major U.S. newspapers sued OpenAI and Microsoft for what their filing called “one of the most brazen and massive thefts of intellectual property in modern history”.
The Traffic vs. Value Paradox
While being a top-cited source offers validation, it doesn’t necessarily translate to more engaged users. The core issue is that AI-generated summaries can satisfy a user’s query without them ever visiting the source website. This trend is already having a measurable impact, with top news sites seeing an average 12% drop in Google Search traffic in the month after AI Overviews were fully rolled out in the U.S., according to a study cited by director of SEO and editorial e-commerce of Mail Online, Carly Steven.
However, the story is more complex than a simple decline in visitors. The same study that highlighted the traffic risk also found that the average visitor who arrives from an AI search is 4.4 times more valuable than one from traditional search, based on conversion rates. These users are often more informed and have a higher intent to purchase or sign up by the time they click a link.
This creates a critical question for Reddit’s business model: can the higher quality of a smaller number of visitors compensate for the potential loss of mass traffic that fuels its advertising revenue?
The ‘Logged-Out’ User Conundrum
Adding another layer of complexity is the nature of the audience that Google delivers. Analysts at Redburn observed that Reddit’s “accelerated user growth has been driven predominantly by logged-out users who arrive on the platform largely via Google Search.” The firm noted that these transient users are considered less valuable because they typically seek a quick answer and spend little time on the platform, making them difficult to monetize through on-site ads.
This creates a peculiar dynamic where the users who are arguably most responsible for the high value of Reddit’s data licensing deals are the least valuable to its core advertising business. As AI search continues to grow, Reddit must find a way to either convert these search-driven visitors into engaged community members or develop new revenue streams that are less dependent on traditional on-site ad impressions.
A Shifting Search Landscape
Reddit’s dilemma is a microcosm of a larger, escalating conflict between content creators and search engines. As Google integrates AI more deeply into its products, it is fundamentally altering the flow of information and traffic online. Publishers’ concerns were amplified by reports that Google was testing AI Overviews that link back to new Google searches rather than to external websites, effectively keeping users within its own ecosystem.
This has led to significant pushback from publishers worldwide. In Germany, a media consortium is now demanding €1.3 billion from Google, arguing that AI-generated summaries are causing referral traffic to collapse and that they deserve compensation for the use of their content.
Ultimately, Reddit’s journey reflects the broader upheaval in the digital content landscape. The platform has successfully positioned its user-generated content as a premium asset in the AI economy. Yet, in doing so, it has entered a precarious new era where its greatest strength—its data—is being used in ways that could threaten its very foundation.
