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Google’s AI Overviews Push Reddit To Rethink Search Strategy

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.

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.

Bitcoin Surges 23% In A Week As Investor Optimism Returns

Bitcoin was on track for a weekly gain of around 23% on Friday as a series of positive macroeconomic and policy developments boosted investor sentiment.

The cryptocurrency was trading about 6% higher at roughly $77,000, up from around $62,800 at the start of the week. Crypto-related stocks also rallied, with Coinbase and Circle gaining more than 9%, while Strategy rose 7%.

Macro Factors Fuel Rally

Bitcoin’s latest surge began Wednesday after Treasury yields fell sharply following a major intervention by the U.S. Treasury in the bond market. Lower yields eased pressure on risk assets and helped trigger a broader move into cryptocurrencies.

The rally was further amplified by a major short squeeze. Around $2.7 billion in crypto short positions were liquidated, according to CoinGlass.

Max Stuedlein, head of Partnerships at Sygnum APAC, said the move reflected an alignment of macroeconomic and policy catalysts, including the Treasury’s decision to increase buybacks of longer-dated government debt.

Clarity Act Boosts Sentiment

Investor confidence improved further on Thursday as the White House and crypto industry leaders made a final push to advance the Clarity Act in the coming weeks.

The legislation is widely viewed as a potential catalyst for the crypto market, although its chances of passing remain relatively limited.

Despite the rally, bitcoin remains well below its 2026 high of $94,820 reached in January and its all-time high of $126,198, set last October.

Analysts See More Volatility Ahead

Lucy Gazmararian, founder and managing partner at Token Bay Capital, said the crypto market may be approaching the end of its bear cycle.

She expects bitcoin could experience one more decline of around 20% before the market turns, pointing to historical cycles and the recent liquidation of heavily leveraged short positions.

Gazmararian also described bitcoin as a long-term hedge against monetary debasement, while warning that its short-term price remains highly volatile and driven by market cycles.

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