TLDR
Reddit says its search referrals fell by more than one million a week on average in October, and chief executive Steve Huffman blamed Google's AI Overviews and AI Mode: 'The reality is the AI Mode does not drive traffic.' Reddit's third-quarter revenue still rose 53% to US$895 million. Google is now selling ads in AI Mode in Australia.
KEY TAKEAWAYS
The traffic
Reddit says Google's AI search features are cutting the traffic it gets from search. Search referrals fell by an average of more than one million a week in October, which Reddit attributed to changes in search engines' AI features, and chief executive Steve Huffman said the decline accelerated towards the end of the September quarter.[2]
"On the change from Google, our hypothesis is twofold. The biggest one is the AI Overviews or AI Mode," Huffman told analysts. "So what started as a feature is now the full search experience. And at the minimum, it pushes everyone down the search page. And then on top of that, the experiences themselves are not traffic drivers."[2]
"The reality is the AI Mode does not drive traffic, not for us and not to anybody as far as I know," he said. "It used to be a traffic driver. Now it's not." He also suggested Reddit's machine-translated content may be ranking lower outside the US.[2]
The results
Reddit's business grew anyway. Revenue rose 53% to US$895 million in the September quarter, ad revenue rose 54% to US$847 million and net income was US$283 million. Daily active users rose 12% to 130.3 million, but US users fell 2% to 50.7 million while international users rose 24% to 79.6 million. Reddit expects fourth-quarter revenue of US$1.0 billion to US$1.03 billion.[1]
Huffman said demand for Reddit itself had not changed. "The word Reddit is still among the most searched words on Google," he said, and Google was crawling Reddit "as hard as ever". He argued the shift fits Reddit's plan to become a direct destination: "Google is teaching people that if you want to come to Reddit, you need to come to Reddit."[2] Reddit and Google have had a data-licensing deal since February 2024.[2]
What it means here
Google has brought ads in AI Mode to Australia as its search growth slows, and an earlier study found AI Mode cuts publisher clicks. Huffman's comments are the bluntest yet from a big platform about what that does to the sites Google used to send people to.
SOURCES & CITATIONS
FREQUENTLY ASKED QUESTIONS
Why is Reddit's search traffic falling?
How did Reddit's results look?
Is AI Mode in Australia?
James Dore is founder and editor of Prompt the Market and Strategy Director at Bushnote, a Sydney strategy, SEO and AI search agency. He has a background in strategy, media and financial services, and led consumer product marketing at MONEYME. He writes on AI search, answer engines, technology policy and media economics.
