As Reddit stock falls, CEO questions value of Google's

What happened

Like any company, Reddit reports quarterly earnings, and its CEO, Steve Huffman, addresses investors during those reports. It’s not always about just sharing numbers, though: This quarter, Huffman took the opportunity to voice concerns and criticisms about Google’s AI Overviews feature, which automatically summarizes search results on most user queries.

Part of the problem is that both publishers and Reddit have historically depended on regular Google search traffic, but in most cases, the current status quo treats being surfaced as one of the so-called blue links and being part of AI Overviews as a package deal. There have been several efforts to change that situation. txt in part to try to force Google to make changes.

Investors are concerned that Reddit can’t succeed without those Google referrals, and that concern can be extended to most other organizations in the business of producing content for the open web. Advance Publications, which owns Ars Technica parent Condé Nast, is the largest shareholder in Reddit.

Why it matters

First, there was a letter to investors, wherein Huffman spun his narrative about Reddit’s value proposition and general strategic direction amid the proliferation of AI tools.

And then, in comments around the earnings report, he added: To add context to these statements, Reddit has long had a relatively lucrative ($60 million) licensing deal with Google, but Reddit is considering ending that deal, according to a Wall Street Journal report from earlier this month. The report also said that several prominent publishers are considering similarly cutting ties with Google, including The Economist, Reuters, Politico, and USA Today.

In light of the Pew Research study, Google told Ars, “This study uses a flawed methodology and skewed queryset that is not representative of Search traffic. ” That contradicts what many publishers have been saying, though most publishers are of course wary of sharing too many proprietary numbers publicly.

What to watch

Google has also made changes to AI Overviews that it claims will lead to more prominent links out to other websites than before, but it still maintains that AI Overviews are here to stay and that they’re actually good for the user experience and the web in general.

The situation remains unresolved, and Reddit’s shares fell more than 20 percent after the earnings report, even though the company’s quarter trounced investors’ expectations on most of the basic financials. The reason? Search referrals were “choppy,” in Huffman’s words, and investors are thus concerned about the future of the site as AI tools continue to disrupt the traditional economics of the web.