When Reddit unveiled its new AI advertising suite at Cannes Lions this week, the timing couldn’t have been more ironic. The company, still riding the momentum of a successful IPO and a strong Q1 earnings report, announced tools that may finally make Reddit’s vast archive of user-generated content commercially viable at scale. Yet, as brands and agencies line up to test them, the legal walls around that very content began to close in.
Reddit has had a busy June. On the Croisette, it announced the launch of “Reddit Community Intelligence”: an AI-powered toolkit that includes “Reddit Insights” for social listening and “Conversation Summary Add-ons” that layer positive Redditor commentary directly beneath ads. These features are part of a push to turn Reddit’s 20-year archive of conversation into actionable intelligence for marketers. Jen Wong, Reddit’s COO, said at Cannes, “In a world increasingly flattened by AI, the value of human content on our platform only grows.” It certainly seems to be working. According to Reddit, A\advertisers like Lucid Motors have apparently seen click-through rates jump by 19% when using the Conversation Summary format.
Reddit’s stock surged 19% this week, reflecting investor enthusiasm. The launch was also timed alongside favorable analyst commentary. B. Riley pointed to Meta’s $14.3 billion investment in Scale AI as a signal that Reddit’s own “corpus” of content is increasingly valuable to AI companies and ad buyers alike.
But, there’s a growing pile of litigation. Just weeks after suing Anthropic for scraping its data without a license, Reddit now finds itself on the other side of the courtroom. A class-action lawsuit filed on June 18 alleges that Reddit misled investors by downplaying the negative impact of Google’s AI Overviews feature on its traffic. The claim: Reddit knew Google’s zero-click summaries were significantly cutting into site visits, particularly from users who were getting their answers directly on Google without ever clicking through. The suit also suggests that Reddit’s sunny assessments of long-term growth prospects lacked a “reasonable basis.”
For more, see: Reddit Is Sitting on a UGC Goldmine and Big AI Wants In.
These are not isolated events.
AI is accelerating an existential crisis for traditional advertising. It might soon allow brands to bypass agencies entirely: something Reddit’s new tools make more plausible. The company is offering brands not just access to user sentiment, but also pre-packaged social proof and optimization drawn directly from community conversations. If Reddit’s bet works, ad agencies risk being replaced by AI-powered dashboards.
The industry is already reshaping itself. WPP, Omnicom, and IPG are merging or investing billions into AI. Meanwhile, companies like Adobe are trying to stay relevant by pivoting to meta-optimization tools for AI-driven discovery.
Read more: Has Adobe Found a Winner with LLM Optimizer?
Adobe’s new suite aims to help brands understand how their content performs inside language models like ChatGPT and Gemini: another signal that the axis of search, discovery, and advertising is now AI.
Back on Reddit: on one hand, the company is monetizing the content that AI companies covet. On the other, it faces backlash from users and investors over how that content is used, and who profits from it. Reddit signed a $60 million licensing deal with Google and another with OpenAI, reportedly earning more than $200 million. That’s a smart move from a revenue standpoint, but the legal landscape is shifting quickly. The class-action lawsuit argues that Reddit’s optimism about its relationship with Google may have concealed how much its traffic was actually eroding.
And erosion is no small issue. Organic search traffic across publishers has dropped: Business Insider is down 55% year-over-year. Reddit’s own DAU growth has slowed over the past three quarters. While it reported 108 million daily active unique users in Q1 2025 (up 31% year-on-year) that growth is decelerating. And more than half of Reddit users remain logged out, reducing the company’s ability to monetize them directly.
This gets to the paradox of Reddit’s strategy: The more valuable its archive becomes to AI, the more it risks becoming obsolete by AI. Reddit may earn licensing revenue now, but as Google’s AI Overviews continue to reduce user clicks, the long-term viability of Reddit as a destination, rather than a source, remains unclear.
Reddit is not alone. Every online content platform is confronting the “zero-click future” ushered in by generative search. To survive, publishers must build direct relationships with audiences, through subscriptions, events, or differentiated products. Reddit’s answer is to become an infrastructure layer for brands.
The trouble is, if users feel exploited, if they believe their content is being sold without meaningful consent, Reddit could lose the authenticity that makes its communities valuable in the first place. Already, some are raising concerns, even as Reddit’s user agreement gives the platform broad rights over user content. The tension between data ownership and data utility will only deepen as platforms license content and AI models consume it.
At Cannes, the mood was celebratory but cautious. Behind closed doors, the ad industry is anxious. AI is a “Great Reordering”, and platforms like Reddit are racing to prove they can capture value before they lose control of it.
