Reddit’s long-awaited IPO might be the biggest social media IPO since Pinterest. In its S-1 filing, Reddit fails to fully address the complications that arose from changes to its developer platform and API pricing late last year, which led to site-wide protests, communities going dark, site stability issues, and traffic declines as moderators and Reddit users protested how the company was putting popular third-party apps out of business with higher API fees. As a result of such demonstrations, Reddit may face competition from the burgeoning decentralization movement.
Reddit’s API price adjustments were part of a larger strategy to lock down its user-generated material, which trains AI models. Reddit’s IPO prospectus notes that it’s generated $203 million leasing its data to other firms, indicating its growth potential. According to Reuters, Google contributed at least $60 million to Reddit’s AI license arrangement.
Reddit’s community reacted strongly to the money-hungry move, despite its benefits. After learning that Reddit’s pricing changes might have an impact on Apollo, Narwhal, and other reputable third-party Reddit applications, community members and moderators staged a large protest. Last June, r/aww, r/video, r/Futurology, r/LifeHacks, r/bestof, and hundreds of other subreddits went dark to encourage Reddit management to change their ways.
Moderators also wrote open letters explaining how these app closures and changes would affect their community management, noting that the apps offered “superior mod tools, customization, streamlined interfaces, and other quality-of-life improvements” that the official Reddit app did not.
The moderators extended their blackout when Reddit CEO Steve Huffman defended Reddit and even mocked Apollo’s creator.
After Reddit rebooted its online event, r/place, which offers a massive digital canvas for collaborative painting, Redditors continued their protests by writing “fuck spez”—a reference to Huffman’s Reddit username—all over the canvas, including in one area that resembled a black hole.
Reddit triumphed. Apps closed, demonstrations ended, and Reddit traffic was restored.
Reddit’s IPO prospectus suggests using its developer platform to create bots and features “that shape their communities” to improve its service.
“We believe our developer platform has the potential to become a driver for community-powered innovation and deepen relationships between users and communities; empower users to continuously create, improve, and grow; and ultimately strengthen our community of communities at scale.” Reddit’s S-1 states
Naturally, it doesn’t discuss how it alienated developers or caused site turmoil.
Reddit’s actions to disrupt developers’ businesses, alienate users, and now sell user data to train AI systems have left an imprint on the firm at a time when the internet is rebooting.
The web is cluttered with SEO-optimized pages and junk ads, so users are turning to AI chatbots like Reddit’s S-1 and Google hacks to return pages from its own site by appending “reddit” to search queries.
However, another social web transition might affect Reddit and other centrally administered services.
Many Twitter users switched to Mastodon and Bluesky when Twitter (now X) altered its API prices to keep off third-party apps, including Reddit. Within weeks of starting, the latter had 5 million members and introduced federation, allowing anybody to build a server. Mastodon and the “fediverse” of applications have 17.2 million users.
The consumer need for networks not controlled by a single corporate organization or, once Twitter was sold to Elon Musk, an unstable billionaire, drove this rise.
Several smaller decentralized Reddit alternatives are underway.
Lemmy, Kbin, Raddi.net, Aether, Lime Reader, and others are gathering pace despite their early stages. Reddit users might join decentralized alternatives, as Twitter users did once they became viable.
However, Reddit’s S-1 risk factors only mention that “influential Redditors” or “certain demographics” may decide that “an alternative product or service better meets their needs.” Redditors might use “other products, services, or activities as an alternative to ours.”
Of course, that’s like saying, “We might have a competitor someday!” It ignores the decentralization of social media, which is so strong that Meta, a social networking giant, built Threads to integrate with ActivityPub, the protocol used by Mastodon, Pixelfed, PeerTube, and other “federated” apps.
Reddit must dread decentralized social networks if Meta joins the movement.
Reddit also downplays the possibility of community discontent due to its management choices, stating “disruptions to the normal operation of our communities, including as a result of actions or inactions by our volunteer moderators.”
Reddit administrators led the protests by closing their communities and marking them NSFW, which blocks advertisements. Reddit then removed the protesters. Seeing their requests disregarded and overturned might lead them to decentralized social media, where they can manage their communities and user data.
