With Reddit looking to maximize its revenue potential and capitalize on the value of its data, the time has come take legal action against AI projects that want to siphon their information without explicit permission.
As reported by The New York TimesReddit has has filed a new lawsuit in US court, seeking to stop four different companies from collecting Reddit data through Google search results, rather than using (and paying for) the Reddit API.
As reported by NOW:
“Three of those companies — SerpApi; a Lithuanian startup, 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 startup that makes an AI search engine.”
Reddit is seeking a permanent ban against these companies, along with financial damages, while also hoping the case will help set a firmer legal precedent for data protection.
Which makes a lot of sense from a business perspective.
Reddit increased its API fees in 2023 to ensure it could capitalize on the data its users generate, as more and more AI projects looked to Reddit for their data input.
Reddit’s human-curated topical message boards contain a tremendous amount of insight and knowledge, so much so that it is now the most referenced resource for AI responses.
Within that, AI projects are also seeing the opportunity to use Reddit chats as reference data to feed their tools, and Reddit has implemented several measures to ensure the information can’t be scraped or legally used without explicit permission and payment.
Reddit claims that these providers have undermined the terms by scrapping Reddit replies from Google instead, which is yet another data protection loophole that Reddit now hopes to close with this legal push.
And considering the value of Reddit data, it’s worth it.
Reddit posted one An increase of 24% year-on-year in the ‘Other’ revenue category in the second quarterlargely based on its data deals with AI projects, where the company generates $35 million for the quarter of this element.
Reddit has signed content licensing deals with Google and OpenAI, among others, but to maximize the potential of its data offering it must ensure there is value in exclusivity, to incentivize others to pay for it.
That’s why this legal push makes sense, and it could help Reddit and other social media platforms build a more solid legal foundation to combat scraping in the future.
Because AI projects need data, and social platforms are among the most important resources on this front. And with billions at stake, you can bet that each platform will assess its options to combat unauthorized use.
Both LinkedIn and Meta have also taken legal action against scrapers, while Elon Musk’s X has done so as well threatened legal action against anyone who also wants to steal their data.
It looks set to become a lucrative battlefield for lawyers looking to develop further, as the growth of AI tools necessitates further business on this front.
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