OpenAI has struck a deal with Reddit to use content from the social media platform for its artificial intelligence chatbot, sending shares in the company up as much as 15 per cent in after-hours trading.

Thursday’s announcement (Friday NZT) is the latest in a number of deals between the Microsoft-backed start-up and media brands as the competition for high-quality and reliable data to underpin powerful new AI models intensifies. At the same time, OpenAI is fighting copyright lawsuits from publishers who are reluctant to allow their content to be used by the ChatGPT-maker.

The agreement gives OpenAI access to content on Reddit’s website and will allow the social media platform to embed more AI tools.

Financial terms were not disclosed, but a jump in Reddit’s stock would mean a windfall for Sam Altman, the co-founder and chief executive of OpenAI, who has invested tens of millions of dollars into the social media group.

Altman, who has said he has no equity stake in OpenAI, held close to 10 per cent of Reddit’s stock ahead of its public listing in March via various entities, according to public filings. The 39-year-old, a serial entrepreneur and investor, did not lead the negotiations with Reddit, according to OpenAI.

The deal will also be a boon to Reddit’s monetisation efforts, which have until now mainly focused on building up its advertising-based business model. On its roadshow ahead of its listing, Reddit told investors it also hoped to see a windfall from selling its data to third parties so that they could train their AI. It has already struck deals with Google and Cision.

OpenAI has struck a series of deals with publishers this year, including the Financial Times, US-based Associated Press, Germany’s Axel Springer, France’s Le Monde and Spain’s Prisa Media. Those deals give the San Francisco-based start-up access to material which can in turn be used to develop and run generative AI technology that can create text, images and code from human prompts.

“We are thrilled to partner with Reddit to enhance ChatGPT with uniquely timely and relevant information, and to explore the possibilities to enrich the Reddit experience with AI-powered features,” said Brad Lightcap, OpenAI’s chief operating officer.

Including Reddit in ChatGPT “upholds our belief in a connected internet, helps people find more or what they’re looking for, and helps new audiences find community on Reddit”, said Steve Huffman, Reddit’s co-founder and chief executive.

While some media brands have partnered with OpenAI, others have resisted. The New York Times and other publishers have instead sued OpenAI and Microsoft for harvesting their articles. In December, the NYT filed a lawsuit seeking billions of dollars in damages from the two companies for “profit[ing] from the massive copyright infringement, commercial exploitation and misappropriation of the Times’s intellectual property”.

OpenAI has claimed the suit is “without merit.”

Last month, eight regional US newspapers including the New York Daily News and Chicago Tribune also sued the companies for copyright infringement.

Social media platforms have been increasingly seeking out ways to monetise their valuable data as the AI boom has taken off.

Meta’s AI model Llama 3, which powers its virtual assistant feature, is open source, meaning developers can readily build products using it for free. However, big cloud groups such as Apple and Google will be charged for training their models on the system. Under Elon Musk, X introduced a pricey paywall for access to its data in his bid to boost the financial health of the platform, although that prompted a backlash from smaller developers who were priced out.

At Reddit, the decision to charge third parties for data has upset its historically unruly users, who in June were involved in a standoff with the company after moderators in charge of more than 8000 forums blocked or restricted access to their content.

Written by: George Hammond and Hannah Murphy in San Francisco

© Financial Times