Like any company, Reddit reports quarterly earnings, and its CEO, Steve Huffman, addresses investors during those reports. It’s not always about just sharing numbers, though: This quarter, Huffman took the opportunity to voice concerns and criticisms about Google’s AI Overviews feature, which automatically summarizes search results on most user queries.
First, there was a letter to investors, wherein Huffman spun his narrative about Reddit’s value proposition and general strategic direction amid the proliferation of AI tools.
He wrote:
As the internet becomes flooded with synthetic content, people are craving real human perspective. We are the antidote to an automated web. AI compresses the internet into summaries. Reddit delivers the opposite: deep discussions, passionate debates, and lived experiences. People don’t want a summary of Reddit; they want Reddit.
The letter also said:
As AI makes information more abundant, the challenge is no longer finding content—it’s finding context, personal opinion, and first-hand accounts. Everything online feels flat, polished, generated, or sponsored, so consumers are overwhelmed and increasingly skeptical. We’ve never had more information, but we’ve never trusted it less.
And then, in comments around the earnings report, he added:
What we see is, 10 blue links has driven tremendous value and growth to the broader ecosystem… from where we sit, AI Overviews has yet to make a similar level of positive impact, and I think that’s consistent across the broader landscape, right? As businesses, publishers, retailers, we’re still looking for that win-win.
To add context to these statements, Reddit has long had a relatively lucrative ($60 million) licensing deal with Google, but Reddit is considering ending that deal, according to a Wall Street Journal report from earlier this month. The report also said that several prominent publishers are considering similarly cutting ties with Google, including The Economist, Reuters, Politico, and USA Today. (Reddit also has a deal with OpenAI.)
Last year, a study by Pew Research that looked at data from 900 US adults concluded that Google’s AI Overviews cut referrals to sites like those by almost half, compared to the “10 blue links” approach that Huffman referred to. It’s important to note, though, that Google has long diverged from just “10 blue links” in other ways even before AI Overviews entered the scene.
In light of the Pew Research study, Google told Ars, “This study uses a flawed methodology and skewed queryset that is not representative of Search traffic. We consistently direct billions of clicks to websites daily and have not observed significant drops in aggregate web traffic as is being suggested.”
A few days later, Google further countered in its own blog post, saying, “total organic click volume from Google Search to websites has been relatively stable year-over-year.” That contradicts what many publishers have been saying, though most publishers are of course wary of sharing too many proprietary numbers publicly.
Part of the problem is that both publishers and Reddit have historically depended on regular Google search traffic, but in most cases, the current status quo treats being surfaced as one of the so-called blue links and being part of AI Overviews as a package deal.
There have been several efforts to change that situation. Last year, we reported on Cloudflare’s attempt to update the default configuration for robots.txt in part to try to force Google to make changes. Google has also made changes to AI Overviews that it claims will lead to more prominent links out to other websites than before, but it still maintains that AI Overviews are here to stay and that they’re actually good for the user experience and the web in general.
The situation remains unresolved, and Reddit’s shares fell more than 20 percent after the earnings report, even though the company’s quarter trounced investors’ expectations on most of the basic financials. The reason? Search referrals were “choppy,” in Huffman’s words, and investors are thus concerned about the future of the site as AI tools continue to disrupt the traditional economics of the web.
Investors are concerned that Reddit can’t succeed without those Google referrals, and that concern can be extended to most other organizations in the business of producing content for the open web.
Advance Publications, which owns Ars Technica parent Condé Nast, is the largest shareholder in Reddit.
