Google's AI Mode might be Reddit's biggest threat yet—Here's why
What's the story
Google's rollout of "AI Mode" in Search has sparked concerns at Reddit, with fears that the feature could significantly reduce traffic to the platform and ultimately reduce revenue.
The AI-driven feature delivers summarized answers directly in search results, often pulling insights from Reddit threads.
This means, Reddit's information can be accessed directly through Google's search results without visiting the site.
The feature threatens one of Reddit's primary sources of discovery and audience engagement.
User shift
Impact on Reddit's user base
The introduction of AI Mode is likely to affect Reddit's logged-out users, who are usually casual visitors without accounts.
These users have played a major role in Reddit's growth via Google Search.
Wells Fargo recently predicted a decline in Reddit traffic as "Google more aggressively implements AI features in search," triggering nearly 5% drop in Reddit's stock value.
Stock volatility
Reddit's previous stock fluctuations linked to Google's search changes
Notably, this isn't the first time Google's search feature changes have affected Reddit's stock value.
In February, shares dropped over 15% after Reddit CEO Steve Huffman noted "volatility" in traffic during an earnings call, following a tweak to Google's search algorithm.
Wells Fargo has indicated that recent user disruptions on Reddit could be "more permanent" due to changing search behavior in response to Google's AI advancements.
Business resilience
Reddit's business model and response to AI mode
Despite the potential impact of AI Mode, Reddit insists its logged-in users are the biggest drivers of its business.
COO Jen Wong said at a tech event in March that their product work is focused on developing these users who make "the bedrock of our impressions and inventory because of their very long engagement on Reddit."
She added while search behavior may change due to Google's AI advancements, it doesn't pose an existential threat to their business.
AI integration
Reddit's own AI tool and future outlook
Reddit has also built its own internal AI search tool, Reddit Answers, which delivers relevant information from site posts in response to searches.
Huffman was confident about Reddit's future on the internet because of the unique human interactions it offers.
He said, "Sometimes people will want the summarized, annotated, sterile answers from AI, and we're even building this ourselves in Reddit Answers."
"But other times, they want the subjective, authentic, messy, multiple viewpoints that Reddit provides."