Reddit stock AI Overviews concerns collided after the company’s latest earnings report, as CEO Steve Huffman questioned whether Google’s search summaries are sending enough value back to sites that supply the web’s raw material. Reddit’s shares fell more than 20 percent after the report, according to Yahoo Finance, even though the company beat investor expectations on many core financial measures.
Huffman used Reddit’s quarterly investor communications to argue that the company’s value comes from human discussion at a time when AI systems summarize, rewrite and remix online information. In Reddit’s shareholder letter, he said users want context, personal experience and opinion rather than compressed summaries of the web.
In comments around the earnings report, reported by Engadget, Huffman contrasted Google’s older search results model with AI Overviews. He said the familiar set of search links had created value for the web ecosystem, while AI Overviews had not yet shown a comparable benefit for companies such as publishers, retailers and Reddit. He said those businesses were still looking for a “win-win.”
Why did Reddit stock fall after earnings?
Investors focused on Reddit’s dependence on Google search traffic. Huffman described search referrals as “choppy,” and that was enough to raise concerns about whether Reddit can keep growing if Google answers more user queries directly on the results page.
AI Overviews are Google’s generated summaries that appear above or within search results for many queries. They are built to answer a search without requiring the user to click through immediately, a design that publishers fear can turn their work into unpaid feedstock. For readers who want the machinery rather than the marketing, Kernel has an explainer on how LLMs answer prompts.
The argument is not abstract for Reddit. The Wall Street Journal reported earlier this month that Reddit is considering ending a Google licensing deal worth $60 million. The Journal also reported that The Economist, Reuters, Politico and USA Today are among publishers considering similar breaks with Google. Reddit also has a licensing agreement with OpenAI.
A Pew Research study based on data from 900 U.S. adults found last year that Google’s AI Overviews cut referrals to websites by nearly half compared with a results page built around traditional links. Google disputed that finding, telling Ars Technica that the study used a flawed method and an unrepresentative set of queries. Google said it sends billions of clicks to websites daily and had not seen the aggregate traffic declines being suggested.
Google later said in a blog post that total organic click volume from Google Search to websites had been relatively stable year over year. That claim runs against what many publishers have said publicly, though most have avoided releasing detailed traffic data that would let outsiders check the math.
Can sites opt out of AI summaries without leaving Google search?
For most publishers and platforms, appearing in normal Google search results and being used in AI Overviews are treated as linked parts of the same search system. That creates the ugly bargain: accept Google’s crawling and summarization terms, or risk losing placement in the search results that still drive meaningful traffic.
Cloudflare has tried to push back by changing default robots.txt behavior in ways meant to pressure Google on AI scraping and summaries. Google has also changed AI Overviews to include what it says are more prominent outbound links. The company maintains that AI Overviews are staying and says they improve search for users and the web.
Reddit’s problem is the open web’s problem with a ticker symbol attached. If Google keeps more answers on its own pages, companies built around forums, reporting and user-generated knowledge have to prove they can replace the traffic Google used to send them, or persuade Google to share more of the upside.
This story draws on original reporting from Ars Technica.
