Reddit stock drops 9% as Google AI licensing renewal stalls

The friction between Reddit and Google signals a foundational shift in the 'data for traffic' exchange that has long underpinned the open web. If premium content hubs like Reddit successfully pivot to usage-based licensing or withhold data to protect referral flows, the cost of training and operating real-time AI models will skyrocket. For the streaming and digital media ecosystem, this highlights a growing trend of publishers demanding direct compensation for 'zero-click' surfaces. Watch Reddit's July 30 earnings call for management’s stance on whether protecting engagement outweighs losing a high-margin, nine-figure revenue stream.

The tension between Reddit and Google follows a broader industrial decline in search-driven discovery. Per Search Engine Land (April 2026), organic traffic to major U.S. publishers fell 38% year-over-year as AI-generated summaries expanded. This erosion is particularly acute for informational queries, where organic click-through rates crashed by 61% for queries triggering Google’s AI Overviews. Market analysts at Gartner have projected that organic search volume could drop by as much as 25% by the end of 2026 as users transition to agentic research tools like Perplexity and ChatGPT. Reddit’s aggressive stance on its Data API is part of an ongoing monetization pivot. In 2023, the company implemented a controversial pricing structure that charged $12,000 per 50 million API calls, effectively shuttering most third-party applications. By early 2026, Reddit and OpenAI solidified their own partnership, with OpenAI reportedly paying roughly $70 million annually for real-time access. Unlike the Google deal, the OpenAI arrangement allows Reddit content to be surfaced within ChatGPT while exploring new discovery-based advertising integrations. Simultaneously, other AI search entrants are testing revenue-sharing alternatives to mitigate publisher backlash. Per Financial Times (March 2026), Perplexity AI launched a publisher program with a $42.5 million payout pool, offering partners an 80/20 revenue split when their content is cited in answers. This move suggests that while flat-fee training deals are under fire, new models based on citation-driven revenue sharing may become the standard as publishers like Politico and CNN—who saw traffic drops of 23% and 25% respectively in 2026—seek to recoup losses from AI-driven cannibalization.