Reddit shares jump after-hours on OpenAI data-sharing deal

Reddit said the deal allows OpenAIs tools to “better understand and showcase Reddit content” and sees the AI firm back new features on the social platform.

Reddit (RDDT) rose 11% in after-hours trading following the social media firm striking a data-sharing deal with artificial intelligence chatbot ChatGPT creator OpenAI.

Reddit said on May 16 that it will provide OpenAI with access to its Data API providing real-time content from posts made on the platform which it said would “bring Reddit content to ChatGPT and new products.”

Source: Reddit

In exchange, OpenAI will give Reddit users and moderators a suite of new artificial intelligence-powered features, aimed at strengthening user engagement.

Reddit also named the AI firm as its latest advertising partner.

Reddit fell 5.45% on May 16 but the partnership announcement after the bell saw it raly 11.05% to $62.61 in after-hours trading, according to Google Finance.

Reddits 24-hour share price. Source: Google Finance

Reddit signed a similar agreement with Google in February, reportedly worth $60 million.

Reddit has long been focused on finding ways to strengthen community engagement and develop revenue streams outside of offering advertising space.

The deal comes amid OpenAI and other AI firms facing mounting legal action over their data-gathering methods to train their models, with lawsuits alleging the firms illegally stole copyrighted content and private information.

On May 16, the worlds largest music publisher Sony sent letters to over 700 firms including AI developers OpenAI, Microsoft and Google saying it has “reason to believe” they may have made “unauthorized uses” of its music to train their models, according to multiple reports.

It previously had a blockchain-based rewards service, Community Points, but the firm shut it down last October citing scalability concerns.

Reddit reported holding Bitcoin (BTC) and Ether (ETH) in its cash reserves in February and even allows users to pay for certain virtual items in Ether and Polygon (MATIC).