April 17, 2024
Reddit downplays risks of developer backlash, decentralized social media in its IPO filing


Reddit’s long-awaited IPO is nearing, promising to be the largest social media IPO since Pinterest. But in the company’s S-1 filing, Reddit fails to fully address the complications that arose from changes to its developer platform and API pricing, which late last year led to site-wide protests, communities going dark, site stability issues, and traffic declines as moderators and Reddit users alike protested how the company was putting popular third-party apps out of business with its increased API fees. Nor does it address the potential fallout from those protests — that Reddit itself could one day face competition from the growing movement to decentralize social media.

Reddit’s API pricing changes were a part of the company’s broader plan to lock down its corpus of user-generated content, which has been used to train AI models. On that front, Reddit’s IPO prospectus touts the promise of this growing business, noting that it’s already made $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 a Reuters report about Reddit’s AI licensing deal with the tech giant.)

However beneficial to Reddit’s bottom line, the money-hungry move led to significant backlash among Reddit’s community. After they learned that their favorite third-party Reddit apps — like Apollo, Narwhal, and others — were soon to become victims of Reddit’s fee changes, community members and moderators organized wide-scale protests. Popular subreddits (Reddit’s name for its online communities) including r/aww, r/video, r/Futurology, r/LifeHacks, r/bestof, and dozens of others went dark last June to put pressure on Reddit management to reconsider their actions.

Moderators also penned open letters trying to explain how these app closures and changes would have an adverse impact on how they manage their communities, noting the apps offered access to “superior mod tools, customization, streamlined interfaces, and other quality-of-life improvements” that the official Reddit app did not.

When Reddit CEO Steve Huffman doubled down on Reddit’s position, even taking a dig at the developer of one of the more popular apps, Apollo, the moderators decided to extend their blackout.

Later, when Reddit rebooted its online event, r/place, which offers a massive, digital canvas on its site that people can collaboratively paint, Redditors used the event to continue their protests, writing “fuck spez” — a reference to Huffman’s Reddit username — all over the canvas, including in one area that began to resemble a massive black hole.

Reddit ultimately won the battle. The protests died down, apps went out of business, and Reddit’s traffic returned.

In its IPO prospectus, Reddit mentions its developer platform as a means of enhancing its own site — by building bots and creating features “that shape their communities,” it reads.

“We believe our developer platform has the potential to become a driver for community-powered innovation and deepen relationships between users and communities; empower users to continuously create, improve, and grow; and ultimately strengthen our community of communities at scale,” Reddit’s S-1 states.

It doesn’t, of course, talk about how it alienated a set of developers or how doing so sent its site into chaos for a time.

The reality is that Reddit’s moves to disrupt developers’ business, anger users, and now, sell Redditor user data to train AI systems, have left a lingering mark on the company at a time when the internet itself is undergoing a reboot of sorts.

The web, having become cluttered with SEO-optimized pages and junk ads, has seen its users turning to alternative means of getting information, like AI chatbots — as Reddit’s S-1 alludes to — various Google hacks to return pages from its own site, by appending the keyword “reddit” to search queries, for instance.

But there’s another change taking place across the social web, too, that could eventually impact Reddit and other centrally managed platforms.

After Twitter (now called X) changed its API fees to lock out third-party developers, similar to Reddit, a number of its users fled to newer, decentralized social networking platforms, like Mastodon and Bluesky. The latter has reached 5 million users, weeks after opening its doors to the public, and has now launched 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 combined 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.

Though it’s still early days, projects like Lemmy, Kbin, Raddi.net, Aether, Lime Reader, and others are gaining steam. Just as some Twitter users broke away to join decentralized alternatives, once they became viable alternatives, Reddit users could also do the same.

Reddit doesn’t acknowledge this in its risk factors in its S-1, however, beyond claiming that it’s 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 with “other products, services, or activities as an alternative to ours.”

Of course, that’s like saying,Sure, we could have a competitor someday! It doesn’t dig into the broader movement around decentralizing social media — a force so strong that even social networking giant Meta has opted 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 is not immune?

In addition, Reddit downplays the potential for community unrest, as a result of its management decisions, saying things like there could be “disruptions to the normal operation of our communities, including as a result of actions or inactions by our volunteer moderators.”

Reddit’s moderators led the movement to shut down their communities in protest and marked their communities NSFW, which disallows ads, forcing Reddit to then remove moderators who were protesting. Seeing their demands ignored and overridden could eventually drive them to find new homes on decentralized social media, where they would maintain control over their communities and user data.



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