Google's AI Mode May Threaten Reddit's Casual User Traffic

Google’s introduction of AI Mode could have significant implications for Reddit, a platform that has thrived in part due to its strong presence in Google search results. The new search tool, announced at the Google I/O conference last week, aims to provide a more conversational user experience, offering direct answers to queries without necessitating clicks to external sites. This shift could reduce traffic to Reddit, particularly affecting its vast audience of logged-out users. Reddit’s recent growth has been substantial, buoyed by Google's favorable treatment of its links in search results. Many users turn to Reddit for human insights and genuine discussions, especially in an era where AI and automated content dominate much of the internet. Sundar Pichai, Google’s CEO, described AI Mode as a "total overhaul" of the search tool, emphasizing its ability to synthesize and present information in a more user-friendly manner. The impact of Google’s change became evident on Monday when Reddit's stock dropped by about 5% following a Wells Fargo report predicting a decline in Reddit traffic due to the implementation of AI Mode. This is not the first time such a drop has occurred; in February, Reddit shares fell over 15% after CEO Steve Huffman reported traffic "volatility" in the fourth quarter, attributed to a tweak in Google’s search algorithm. According to the report, recent user disruptions on Reddit may be "more permanent" as Google continues to refine its AI search features, altering user behavior. Reddit, however, maintains a different perspective. Jen Wong, the company’s Chief Operating Officer, highlighted at the Morgan Stanley Technology, Media, & Telecom Conference in March that logged-in users, who engage directly with the site, form the core of Reddit’s business. These users contribute to the platform’s robust community interactions and generate a majority of the site’s impressions and inventory. As Wong noted, "A lot of our product work allows us to develop and consistently grow those logged-in users, which are the bedrock of our impressions and inventory because of their very long engagement on Reddit." To address the potential threat, Reddit is developing its own internal AI search tool called Reddit Answers. This feature is designed to summarize and provide information from posts on the site, ensuring users can still find what they seek without leaving Reddit. Huffman expressed confidence in Reddit’s resilience, acknowledging the evolving landscape of AI-driven search but asserting that Reddit offers something unique: subjective, authentic, and diverse viewpoints. During an earnings call earlier this month, Huffman emphasized, "There's no doubt LLMs [Large Language Models] will evolve search on the internet. We can all see that. It's awesome. 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." He further explained, "So in the same way that Reddit for the last decade has been an alternative to social media — social media being performative and manicured, and Reddit being the opposite — Reddit communities and conversations will be an alternative to AI search answers." This sentiment underscores Reddit’s value proposition: the human element that users often crave in their online interactions. Industry insiders and analysts have mixed views on the impact of Google's AI Mode. While some, like Wells Fargo, predict a decline in Reddit’s user base, others believe that Reddit's strong community foundation and its focus on authentic human conversations will help it weather the storm. Reddit’s development of AI tools, alongside its commitment to maintaining its unique human-centric approach, positions it well to adapt to the changing digital landscape. In conclusion, while Google’s AI Mode represents a challenge to Reddit’s traffic, the platform’s core strength—its engaged community of logged-in users—remains a significant asset. Reddit’s proactive steps to integrate AI while preserving its distinct identity suggest that it can continue to thrive, offering a valuable alternative to both traditional social media and AI-driven search results. Industry experts note that the shift towards AI in search engines is inevitable and will likely redefine how users seek information online. However, the unique human interactions and diverse perspectives offered by Reddit set it apart and could ensure its relevance in the future. Reddit’s ongoing product development, including Reddit Answers, demonstrates its commitment to innovation and user engagement. Despite the stock market’s initial reaction, the company’s robust business model and loyal user base suggest a resilient path forward.