Reddit’s long-awaited IPO is coming, it promises to be the biggest social media IPO since Pinterest. But in the company S-1 filing, Reddit is failing to fully address complications arising from changes to its developer platform and API pricing, which late last year led to site-wide protests, dark communities, site stability issues, and declining traffic as moderators and Reddit users complained about how the company was shutting down popular third-party apps with its inflated API fees. Nor does it address the potential fallout from those protests — that Reddit itself could one day face competition from the growing social media decentralization movement.
Reddit’s API pricing changes were part of the company’s broader plan to lock down all user-generated content that has been used to train artificial intelligence models. On that front, Reddit’s IPO newsletter touts the promise of this growing business, noting that it has already earned $203 million so far from licensing its data to other companies. (Google is said to have contributed at least $60 million to that effort, according to Reuters report (about Reddit’s AI licensing deal with the tech giant.)
As beneficial as it was to Reddit’s bottom line, the money-hungry move led to significant backlash within the Reddit community. After learning that their favorite third-party Reddit apps—like Apollo, Narwhal, and more—would soon fall victim to Reddit’s fee changes, community members and moderators organized widespread protests. Popular subreddits (Reddit’s name for its online communities) including r/aww, r/video, r/Futurology, r/LifeHacks, r/bestof and dozens more were killed last June to pressure Reddit management to reconsider its actions.
Moderators too they wrote open letters trying to explain how these app closures and changes would have a negative impact on how they manage their communities, noting that the apps offered access to “superior mod tools, customization, improved interfaces, and other quality-of-life improvements” that the official Reddit app didn’t he did it.
When Reddit CEO Steve Huffman doubled down on Reddit’s position by taking a look at the developer of one of its most popular apps, Apollo, the moderators decided to extend their blackout.
Later, when Reddit relaunched its online event, r/place, which offers a huge, digital canvas on its site that people can paint together, Redditors used the event to continue their protests, writing ” fuck spez” — a reference to Huffman’s Reddit username — all over the canvas, including an area that began to look like a giant black hole.
Reddit finally won the battle. The protests died down, the apps died, and Reddit traffic returned.
In its IPO prospectus, Reddit cites its developer platform as a means of improving its own site — creating bots and building features “that shape their communities,” it says.
“We believe our developer platform has the potential to become a driver for community-based innovation and deepen relationships between users and communities. to empower users to continuously create, improve, and grow; and ultimately to strengthen the community of our communities at scale,” Reddit’s S-1 reads.
Of course, he doesn’t talk about how he alienated a bunch of developers or how in doing so he threw his site into chaos for a period of time.
The reality is that Reddit’s moves to disrupt developer businesses, anger users, and now, sell Redditor user data to train artificial intelligence systems, have left a lasting mark on the company at a time when the Internet itself is undergoing a reboot of sorts.
The web, filled with SEO-optimized pages and spammy ads, has seen its users turn to alternative means of getting information, such as AI chatbots—as Reddit’s S-1 hints—various Google hacks to return pages from his own website. adding the keyword “reddit” to search queries, for example.
But there’s another change taking place in the social web as well, which could eventually affect Reddit and other centrally managed platforms.
After Twitter (now called X) changed its API fees to lock out third-party developers like Reddit, some of its users fled to newer, decentralized social platforms like Mastodon and Bluesky. The latter has reached 5 million users, weeks after opening its doors to the public, and has now started federation (meaning anyone can run their own server). Meanwhile, Mastodon and the wider network of apps connected to the “fediverse” as the decentralized social web is called, has a total of 17.2 million users.
The impetus for this growth has to do with consumer demand for networks that are no longer under the control of a single corporate entity and its various whims — or, after the sale of Twitter to Elon Musk, those of an erratic billionaire.
Smaller efforts to offer decentralized alternatives to Reddit are also underway.
Although it is still early days, projects such as Lemmy, Kbin, Raddi.net, Ether, Lime Reader, and others are gaining steam. Just as some Twitter users left to join decentralized alternatives when viable alternatives became available, Reddit users could do the same.
Reddit does not acknowledge this in the risk factors in its S-1, however, beyond claiming that it is possible that “influential Redditors” or “certain demographics” could conclude that “an alternative product or service better meets their needs.” And that Redditors could choose to engage in “other products, services or activities as an alternative to ours.”
Of course, it’s like saying, “Sure, we could have a competitor someday!“ It doesn’t delve into the broader movement around social media decentralization — a force so powerful that even social networking giant Meta chose to build its latest app, Threads, to integrate with ActivityPub, the decentralized social networking protocol used by Mastodon, Pixelfed. PeerTube and other “federated” apps.
If Meta fears the power of decentralized social networks enough to join the movement, surely Reddit isn’t immune?
Additionally, Reddit downplays the possibility of community unrest as a result of its management decisions, saying there could be “disruptions to the normal functioning of our communities, including as a result of actions or inactions by our volunteer moderators.”
Reddit moderators led the movement to shut down their communities in protest and marked their communities NSFW, which prohibits advertising, forcing Reddit to subsequently remove protesting moderators. Seeing their requests ignored and bypassed could eventually lead them to find new homes in decentralized social media, where they would retain control of their communities and user data.
