Shares of Reddit are rising as it strikes a content deal with OpenAI

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OpenAI has struck a deal with Reddit to use content from the social media platform for its artificial intelligence chatbot, sending shares in the company up as much as 15 percent in after-hours trading.

Thursday’s announcement is the latest in a number of deals between the Microsoft-backed startup and media brands, as competition for high-quality and reliable data to support powerful new AI models increases. At the same time, OpenAI is fighting copyright lawsuits from publishers who don’t want to allow their content to be used by the ChatGPT creator.

The agreement gives OpenAI access to content on Reddit’s website and allows the social media platform to embed more AI tools.

Financial terms were not disclosed, but a jump in Reddit’s stock would mean a windfall for Sam Altman, the co-founder and CEO of OpenAI, who has invested tens of millions of dollars in the social media group.

Altman, who has said he has no equity stake in OpenAI, owned nearly 10 percent of Reddit’s stock prior to its March listing through 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.

The deal will also be a boon to Reddit’s monetization efforts, which so far have largely focused on building its ad-based business model. During its pre-IPO roadshow, Reddit told investors it was also hoping for a windfall from selling its data to third parties so they could train its AI. It has already signed deals with Google and Cision.

OpenAI has signed a series of deals with publishers this year, including the Financial Times, the US Associated Press, Germany’s Axel Springer, France’s Le Monde and Spain’s Prisa Media. These deals give the San Francisco-based startup access to materials that can in turn be used to develop and run generative AI technology that can create text, images and code based on human cues.

“We are excited to partner with Reddit to enhance ChatGPT with uniquely timely and relevant information, and to explore opportunities to enrich the Reddit experience with AI-powered features,” said Brad Lightcap, Chief Operating Officer of OpenAI .

Including Reddit in ChatGPT “affirms our belief in a connected Internet, helps people find more or what they’re looking for, and helps new audiences find a community on Reddit,” said Steve Huffman, co-founder and CEO of Reddit.

While some media brands have partnered with OpenAI, others have resisted. The New York Times and other publishers have instead sued OpenAI and Microsoft for collecting their articles. In December, the NYT filed a lawsuit seeking billions of dollars in damages from the two companies for ‘profits'[ing] of the massive copyright infringement, commercial exploitation and misappropriation of The Times’ intellectual property.”

OpenAI has claimed that the lawsuit is “baseless.”

Last month, eight regional US newspapers, including the New York Daily News and the Chicago Tribune, also sued the companies for copyright infringement.

Social media platforms have increasingly looked for ways to monetize their valuable data as the AI ​​boom has taken off.

Meta’s AI model Llama 3, which powers the virtual assistant feature, is open source, meaning developers can easily build free products with it. However, major cloud groups such as Apple and Google must pay to train their models on the system. Under Elon Musk,

At Reddit, the decision to charge third parties for data has upset historically unruly users, who were embroiled in a standoff with the company in June after moderators responsible for more than 8,000 forums blocked access to their content or limited.

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