(Bloomberg) — Reddit Inc. is partnering with OpenAI to provide its content to its chatbot ChatGPT and other products, as well as help social media companies add new artificial intelligence features to their forums.
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Shares of Reddit, which held an initial public offering in March, rose as much as 15% in late trading following the announcement.
The agreement “will enable OpenAI's AI tools to better understand and showcase Reddit's content, especially regarding recent topics,” the companies said in a joint statement Thursday. The deal will allow OpenAI to display content from Reddit and train its AI systems based on its partners' data.
Reddit also plans to offer users new AI-based tools built on models created by OpenAI and advertise on partner sites. Financial terms of the deal were not disclosed.
Reddit content has long been a popular source of training data for creating AI models such as OpenAI. Reddit last week announced new policies governing its use of data as part of an effort to increase revenue through licensing deals with artificial intelligence developers and other companies.
“Our data is extremely valuable,” CEO Steve Huffman said at the Bloomberg Technology Summit earlier this month. “We're very interested in this.”
Finding new money-making opportunities was part of Reddit's pitch for the IPO. The company also signed a deal worth $60 million with Alphabet Inc.'s Google in January to help train large-scale language models, the technology behind generative AI.
Huffman previously declined to discuss specifics of the deal with Google, but typical terms include how long Reddit's overview will appear in Google searches and whether licensees will be able to use Reddit's branding in AI-generated results. He said that there is a possibility of stipulating whether or not it is necessary to display the information. The San Francisco-based social network has licensing agreements worth a total of $203 million over two to three years and is in negotiations to sign additional licensing agreements.
OpenAI is increasingly partnering with media companies to help train AI systems and display real-time content within chatbots. The ChatGPT maker also signed deals with Dotdash Meredith earlier this month and with the Financial Times in April.
Read more: OpenAI Inks deals with People magazine publisher Dotdash Meredith
Backed by Microsoft Corp., the startup has emerged as a powerhouse in AI development. OpenAI CEO Sam Altman has a long history with Reddit. He was one of the company's largest shareholders when it went public earlier this year, and briefly served as Reddit's interim CEO in 2014.
The companies said in a statement that the partnership was led by OpenAI Chief Operating Officer Brad Lightcap and approved by independent directors.
Reddit shares fell 5.5% to $56.38 in regular trading in New York on Thursday, but rose to $64.75 after the partnership was announced. Since the IPO, the stock price has increased 66%.
(Updates executive comment starting in fifth paragraph.)
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