Reddit Chief Executive Steve Huffman said Google’s AI Overviews are making search traffic less predictable, highlighting growing uncertainty over a channel that has long been one of the platform’s main sources of new users.
Speaking after Reddit reported second-quarter results that topped expectations, Huffman said changes to Google’s search experience continue to affect referral traffic. The company also issued a stronger-than-expected outlook, although shares fell 11% in extended trading.
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AI Search Changes Referral Traffic
For years, Reddit relied on Google Search to direct users to discussions and recommendations across the platform. As Google expands AI-generated summaries in search results, fewer users may need to click through to external websites.
“Search is volatile, and we see those changes, we’ve been through those many times,”
Huffman said.
Huffman said Google’s traditional search model created significant value for publishers and online platforms, while AI Overviews have yet to deliver similar benefits.
“If we look at the Google ecosystem, the 10 blue links have driven a tremendous amount of value for the whole ecosystem. AI Overviews has yet to make a similar level of positive impact, and that seems consistent across the broader landscape,”
he said.
Reddit Focuses On Direct User Growth
Huffman said Reddit is investing in product improvements, international expansion and user retention as it seeks to reduce its dependence on search referrals.
“We’re thinking about all of our options. Our goal is to maximize the long-term value for Reddit,”
he said.
He also said users visit Reddit for perspectives and discussions that AI-generated summaries cannot fully replicate.
“Some of the tension is that people want Reddit, they don’t necessarily want a summary of Reddit. They want the human perspective, the multiple perspectives, the lived experience that we provide,”
Huffman said.
Company Keeps AI Spending Low
Unlike larger technology companies investing billions of dollars in AI infrastructure, Reddit continues to operate with relatively low capital spending.
“We’re a low-spend company,” Huffman said, adding that capital expenditures totalled about $1.1 million during the quarter. “We’re trying to deliver the AI returns without the AI cost.”
Data Licensing Continues To Grow
Reddit continues to generate revenue from licensing its data to AI companies, including OpenAI and Google. Revenue from its “other” category, which includes licensing agreements, rose 24% year over year to $43 million.
Earlier this month, The Wall Street Journal reported that Reddit was considering limiting Google’s access to its data as publishers raised concerns over declining referral traffic. Huffman said the company’s position had not changed.
