Redditor API Protest Continues to Batter Reddit Execs and IPO Hopes

Key takeaways

• Reddit is still battling with its community over planned changes to its API pricing
• Thousands of subreddits are still dark in protest over CEO Steve Huffman’s decision
• The ongoing saga puts Reddit’s IPO in jeopardy, having already had its valuation slashed

Remember last week’s storm where Reddit moderators closed subreddits to protest the Reddit CEO’s decision to charge for the website’s API? Well, that’s not only still raging, but the battle has become a war as hackers get involved with holding Reddit to ransom. Yes, really.

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What’s the latest with Reddit?

Reddit has a history of having to work with its users rather than against them, but things spiraled out of control last week. In a nutshell, Reddit wants to charge a lot of money for its API because AI companies are using the data for free. The move follows Twitter’s lead, as they recently made similar changes. But Redditors aren’t having any of it, saying the harm to popular third-party apps is unfeasible.

In protest, thousands of popular subreddits decided to go dark for 48 hours, with some taking it a notch up and staying dark indefinitely. 3,625 subreddits were still locked or read-only by the start of this week.

Things have taken an unexpected turn as ransomware group BlackCat has said it was responsible for the February phishing attacks on the website and that it stole 80GB worth of sensitive data. It’s now demanding $4.5 million from the company — and for it to reverse its planned API price changes.

Is Reddit’s IPO in jeopardy?

This is all a major headache for Reddit CEO Steve Huffman, especially as the ‘front page of the internet’ is meant to be floating on the stock market later this year. Reddit isn’t profitable right now and has already suffered a lower valuation from Fidelity, which slashed it by 41%. Introducing API charges was a neat solution, especially as generative AI continues to innovate.

But Reddit’s users have shown what they think of that plan. It’s a reminder that Reddit has a passionate and outspoken 57 million users who could potentially come up against investors and shut down subreddits without any financial consequences.

Obviously, investors don’t want that — so it’s possible the long-awaited IPO, which was first filed in 2021, needs to be delayed further until Reddit can sort out its future.

The bottom line

It’s possible that Reddit needs to completely rethink its strategy to ensure it can turn a profit, balance investor and user demands and handle the growing AI and free data threat. Not such a big task, right? Either way, Huffman faces a challenging path ahead.

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