After twenty years, Reddit is preparing to end the era when anyone could read its discussions without an account. CEO Steve Huffman unveiled a plan on Thursday under which most content will only be available to logged-in users. The company wants to deter those who scrape data from the platform on a massive scale, while openly blaming Google's AI-powered search for the decline in traffic.
People No Longer Come to Reddit from Google
The figures Huffman presented do not look good. During October, the number of visitors brought to Reddit by search engines fell by an average of more than one million per week. The company's CEO pointed out that demand from Google had not declined at all. According to him, the search engine crawls Reddit just as intensively as before, but its AI Mode does not generate traffic—for Reddit or anyone else.
The problem is not limited to a single social network. AI-powered search answers people's queries directly, causing publishers and social networks to lose visitors and threatening the growth of the user base on which their advertising business depends. Someone who gets an answer directly in the search engine no longer has a reason to click through.
This is evident for Reddit even in the United States, where it has its strongest base. The number of daily active unique users in the US fell by two percent to just under 51 million, the first decline since the company went public in 2024. Moreover, the outlook is even worse. Huffman warned that the total number of daily unique visitors, currently around 130 million, could fall by more than ten percent in the fourth quarter if the decline in search engine traffic continues.
Log In or Leave?
Reddit does not want to rush anything. In the fourth quarter, the company will test a logged-in-only version in selected markets outside the US to assess the impact of the change, and only then will it roll it out further. Management has good reason to rely on registered users. According to Huffman, they account for more than 80 percent of the platform's total revenue.
However, not everyone considers this move painless. Luke Stillman, managing director of research firm Madison and Wall, warns that mandatory login will put another obstacle in people's way, particularly for those who visit Reddit only occasionally.
The entire change is also driven by a battle over data. Discussions among millions of people are a valuable resource for companies developing artificial intelligence. The vast archive of user debates helps startups train language models and provides marketers with material for advertising. Reddit licenses its data to OpenAI and Google, while it has filed lawsuits against Anthropic, Perplexity AI, and three data-scraping companies, accusing them of illegally collecting content. Huffman said the platform would continue to license its text, but carefully and with safeguards to protect both users and the company itself.
Revenue Rises, Shares Fall
Financially, Reddit is doing well. It generated nearly $900 million in revenue in the third quarter, more than analysts had expected. Although revenue growth of 53 percent slowed compared with the previous quarter, it is still better than that of competitors such as Snap or Pinterest, which compete with Reddit for advertisers' money against the much larger Meta. CFO Drew Vollero announced that revenue over the past twelve months had exceeded $3 billion and that the company's next internal target was to surpass the $5 billion mark.
The revenue forecast for the current quarter of $1 billion to $1.03 billion is roughly in line with expectations. However, the company expects adjusted operating profit before depreciation and amortization to be between $480 million and $510 million, while analysts had projected more than $512 million. Ultimately, investors were most alarmed by Huffman's warning about declining visitor numbers, and Reddit shares plunged 18 percent in after-hours trading.
Sources: theverge.com, reuters.com and euronext.com
