Reddit has revealed that the Federal Trade Commission is investigating its AI licensing deals, as stated in the paperwork submitted to the Securities and Exchange Commission.

The company, currently going through its Initial Public Offering, has stated that the regulator has reached out to Reddit officials regarding their AI deals, expressing their intention to request information and documents.

The reason for the FTC’s investigation into Reddit’s licensing business is unclear, but it appears to be in the initial phases of the inquiry. In a filing, Reddit stated that they received a letter from the FTC on March 14, 2024.

The letter informed them about the FTC’s non-public inquiry, which is specifically looking into Reddit’s practices of selling, licensing, or sharing user-generated content with third parties for the purpose of training AI models. It is understandable that the FTC has shown interest in this area, considering the unique nature of these technologies and commercial arrangements. We firmly deny any involvement in unfair or deceptive trade practices.

Reddit’s licensing agreements for its user-generated content are an integral component of the company’s revenue growth strategy in preparation for its upcoming IPO. On the day the company filed for IPO, it was revealed that a significant partnership had been formed with Google.

This partnership involves the utilization of Reddit data to enhance and refine Google’s AI models. According to reports, the value of that arrangement was approximately $60 million. The company mentioned that it is currently in the initial phases of considering these types of deals.

As reported by Axios, several other companies have also received letters from the FTC. The regulator has previously expressed curiosity about the current wave of generative AI upstarts and their connections with large tech companies. Currently, the FTC is investigating Microsoft, Alphabet, and Amazon regarding their investments in prominent AI startups.