Reddit shares leaped in after-hours trading on Friday after announcing a partnership with OpenAI. This agreement will let OpenAI to train its artificial intelligence models using Reddit’s huge database of content.

The agreement, as a result, gives OpenAI the right to access Reddit’s Data API, which in turn will help them integrate Reddit content into their AI tools in real-time. In response, Reddit is going to use OpenAI’s technology to provide AI-powered features for its users and moderators.

OpenAI Gains Access to Reddit’s Data API

The collaboration will make OpenAI more powerful by including Reddit’s structured and distinctive content in its models. OpenAI will use this data to enhance the performance of its well-known ChatGPT and other AI products, thus keeping them up-to-date with the latest human conversations on a variety of topics.

This cooperation is a result of the same agreement that was made between Reddit and Google, where Google’s AI models can now access Reddit content through the platform’s API.

Steve Huffman, the CEO of Reddit, was delighted about this partnership and said that

“Reddit has become one of the largest open archives on the internet for real human conversations, which are always up-to-date. Including it in ChatGPT proves our belief in a connected internet and helps people to find more information they need as well as new communities on Reddit.”

AI Features and Advertising Partnership

Apart from the training data, Reddit will also use OpenAI’s state-of-the-art models to develop new AI-powered features for its users and moderators. This will probably enhance the user experience on the platform by providing better tools and functionalities based on artificial intelligence.

Besides, OpenAI will also become Reddit’s advertising partner and thus integrate its AI technology into Reddit’s advertising solutions.

The deal was led by OpenAI’s COO, Brad Lightcap, and it was approved by OpenAI’s board. Lightcap said,

“We are glad to be Reddit’s partner to add a new feature to ChatGPT that is easily accessible and related at every moment, and we will also try with Reddit’s AI-powered features.”

Market Reaction and Historical Context

Reddit’s stock prices sky-rocketed, adding 11% in after-hours trading right after the announcement. The upswing in the price of AMC is happening at a time when other meme stocks, like GameStop, have also been rallying in earlier days. Reddit, which went public in March, has seen its share price reach new heights, trading near its record high of $65.11.

Collaboration with OpenAI, consequently, is one element of Reddit’s overall plan to improve and develop its platform. This decision comes after user dissatisfaction with the changes to Reddit’s API pricing, which caused protests and subreddit blackouts.

Although facing these difficulties, the company continues with its strategic partnerships, which are aimed at raising user involvement and broadening its technological potential.

OpenAI’s Expanding Reach

During the week, OpenAI launched a new AI model, GPT-4o that is faster and more efficient than its previous versions. This new model has increased the capabilities for text, video and audio communications and OpenAI plans to add a feature of video chat for ChatGPT users.

This enlargement of the services, moreover, is a proof that the company wants to make its AI products better and be used by more people.

OpenAI CEO Sam Altman, a major shareholder in Reddit with a stake valued at approximately $750 million, has played a significant role in fostering the relationship between the two companies. The partnership aligns with OpenAI’s vision of integrating AI more deeply into everyday digital interactions, providing users with more relevant and timely information.

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Kelvin is a distinguished writer specializing in crypto and finance, backed by a Bachelor’s in Actuarial Science. Recognized for incisive analysis and insightful content, he has an adept command of English and excels at thorough research and timely delivery.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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