Reddit puts logged in experience first as Google AI hits traffic

Reddit's CEO Steve Huffman announced on Thursday plans to require users to log in for most content on the platform. The move comes after Huffman blamed Google's AI search features for a decline in referral traffic to the social media site. Shares of Reddit dropped 18% in extended trading following the announcement, as Huffman predicted a potential drop of double digits in daily active unique visitors for the fourth quarter, from around 130 million.

Google's AI search was directly answering user queries, cutting off traffic to publishers and social media firms, which threatens the advertising business. Reddit's referral traffic to the platform decreased by over one million on average each week in October, leading to a 2% decline in daily active users in the US, marking the first decline since the company went public in 2024.

Huffman noted that requiring user log-ins creates an additional barrier to engagement, particularly for casual users. Reddit, which licenses its data to OpenAI and Google, has filed lawsuits against IPO-bound Anthropic, Perplexity AI, and three data scraping companies for illegally collecting its data. The company's holiday-quarter forecast indicates that its AI ad strategy is paying off.

Reddit's 53% revenue growth slowed sequentially in the third quarter but still outperformed rivals such as Snap and Pinterest. OpenAI has been testing ads in ChatGPT for some US-based users.