Reddit Prioritizes Login Experience; Google AI Drives Traffic Growth

October 29 (Reuters) — Reddit (RDDT.N) CEO Steve Huffman outlined a plan on Thursday to require user logins for access to most of the platform’s content, a move aimed at curbing data scraping. This follows his earlier attribution of a decline in referral traffic to Google’s AI-powered search features.
Reddit’s shares fell 18% in after-hours trading after Huffman warned that if referral traffic continues to decline, the platform’s total daily active unique visitors for the fourth quarter could drop by a double-digit percentage from the current figure of approximately 130 million.

He stated that in October, Reddit’s search engine traffic dropped by an average of more than 1 million visits per week. In the U.S., daily active users fell by 2% to 50.7 million—the first such decline since Reddit went public in 2024.
“Google’s crawling of our site remains as robust as ever, so from their perspective, the demand hasn’t changed. The reality is that AI models do not drive traffic—and that holds true for us, just as it does for any other company,” Huffman added during an earnings call.
AI-powered search provides direct answers to user queries, cutting off traffic to publishers and social media platforms—a trend that threatens the user growth essential to their advertising businesses.

“Requiring users to log in creates yet another barrier to engagement, especially for casual users,” says Luke Stillman, managing director at the research firm Madison and Wall.
Reddit has licensed its data to OpenAI and Google, while also filing lawsuits against Anthropic, Perplexity AI, and three data-scraping firms—alleging that they have collected Reddit’s data unlawfully.
The company possesses a vast repository of user-generated discussions—a valuable asset that it leverages to provide data for AI startups to train their models, and to help marketers gain insights for advertising.
“We will continue to be intentional about licensing our corpus, but these commercial deals include safeguards to protect both our users and our business,” Huffman stated.

Reddit’s third-quarter revenue grew by 53%. While the quarter-over-quarter growth rate slowed, it still outperformed other companies—such as Snap (SNAP.N) and Pinterest (PINS.N)—as they compete with a larger rival, Meta (META.O), for advertising revenue in a highly competitive market.

CFO Drew Vollero stated that Reddit’s revenue for the trailing 12-month period ending in the third quarter surpassed $3 billion, with the company’s next “internal North Star” goal set at $5 billion in revenue.
In the fourth quarter, Reddit plans to test a login-only access model in select markets outside the United States to evaluate its impact before considering a broader rollout. This shift would mark the end of Reddit’s two-decade-long policy of allowing open browsing without the need for registration. Huffman noted that logged-in users account for more than 80% of the platform’s revenue-generating traffic.

The company’s third-quarter revenue reached $895 million, surpassing the average analyst estimate of $878.4 million compiled by the London Stock Exchange Group. Its revenue forecast for the current quarter is between $1 billion and $1.03 billion, which is largely in line with expectations.
Adjusted EBITDA for the quarter is projected to be between $480 million and $510 million, compared to the previous forecast of $512.2 million.