Reddit, the popular social media platform, is on the verge of its highly anticipated initial public offering (IPO). This IPO is set to be the largest for any social media company since Pinterest. However, as Reddit’s S-1 filing reveals, the company fails to fully address the complications that arose from changes to its developer platform and API pricing.
In late 2020, Reddit’s decision to increase API fees led to widespread protests, site stability issues, and a decline in traffic. Community members and moderators were outraged that the company was essentially putting popular third-party apps out of business.
This move to increase API fees was part of Reddit’s larger plan to control its corpus of user-generated content, which is used to train AI models. The company touts this aspect of its business in its IPO prospectus, stating that it has already made $230 million from licensing its data to other companies. Even tech giant Google is said to have contributed $60 million to this effort.
However, the end result was a significant backlash from Reddit’s community. Popular subreddits, such as r/aww, r/video, and r/bestof, went dark in protest and moderators penned open letters explaining how these changes would negatively impact their communities. These third-party apps were praised for offering superior mod tools and user-friendly interfaces, which the official Reddit app lacked.
Despite the pushback, Reddit CEO Steve Huffman stood by the company’s decisions, even going as far as to criticize the developer of one of the affected apps, Apollo. As a result, the moderators extended their blackout and even used Reddit’s online event, r/place, to continue their protests, writing “fuck spez” all over the digital canvas.
In the end, Reddit emerged unscathed, with the protests dying down and traffic returning to normal. However, its IPO prospectus only mentions its developer platform as a way to enhance its own site, not addressing how it alienated a group of developers or caused chaos on the platform.
Unfortunately, this is not the only mark left on Reddit as it enters the IPO market. The company’s money-hungry moves, disregard for user feedback, and recent revelation of selling user data to train AI systems have all contributed to a lingering impact on the company during a time when the internet itself is undergoing a reboot of sorts.
The web has become cluttered with SEO-optimized pages and intrusive ads, leading users to seek alternative means of obtaining information, such as through AI chatbots. However, there is also a change taking place across the social web as users turn to decentralized social networking platforms.
After Twitter made similar moves to lock out third-party developers, a significant number of its users flocked to decentralized alternatives like Mastodon and Bluesky. These platforms give users more control and autonomy, free from the whims of a single corporate entity. In fact, Mastodon and other apps within the “Fediverse” have reached a combined 17.2 million users, showing the demand for decentralized options.
Furthermore, smaller efforts are underway to offer decentralized alternatives to Reddit. Projects like Lemmy, Kbin, Raddi.net, Aether, Lime Reader, and others are gaining traction. Just as Twitter users broke away to join decentralized platforms, Reddit users could also make the switch.
Interestingly, Reddit’s IPO prospectus only mentions the possibility of influential Redditors or certain demographics turning to alternative products or services. It fails to acknowledge the broader movement towards decentralizing social media, a force so strong that even social networking giant Meta has joined in by integrating with ActivityPub, the decentralized social networking protocol used by Mastodon and other apps.
With this in mind, it’s not far-fetched to consider the potential impact on Reddit from community unrest or the loss of moderators to decentralized platforms. In the end, Reddit’s management decisions could ultimately drive users away, as they seek more control over their communities and data.
