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Reddit Says Google AI Mode Cut a Million Visits a Week · DX Today | No-Hype Podcast & News About AI & DX

• 0:00
  SPEAKER_00: Welcome to the DX Today Podcast, your daily deep dive into the AI ecosystem.
• 0:04
  SPEAKER_00: I'm Chris, and joining me as always is Laura.
• 0:07
  SPEAKER_01: Hey Chris, happy Halloween to everyone listening.
• 0:09
  SPEAKER_01: And I have to say, today's story is genuinely a little spooky because it is about a huge website watching its traffic quietly disappear.
• 0:17
  SPEAKER_00: Right, so let's set the scene.
• 0:19
  SPEAKER_00: Reddit reported its quarterly earnings this week, and the headline was not really the money at all.
• 0:24
  SPEAKER_00: It was the chief executive pointing a finger directly at Google.
• 0:27
  SPEAKER_01: Exactly.
• 0:28
  SPEAKER_01: Steve Huffman, the chief executive of Reddit, told investors that referrals from Google search fell by more than 1 million visits per week on average during October, and he blamed Google's AI features.
• 0:43
  SPEAKER_00: So give me the scale here because I want listeners to understand whether this is a scratch or a real wound.
• 0:48
  SPEAKER_01: Good instinct.
• 0:49
  SPEAKER_01: Reddit had about 130.3 million daily active unique visitors in the third quarter.
• 0:55
  SPEAKER_01: Roughly 76.8 million of those were logged out, and about 53.5 million were logged in.
• 1:01
  SPEAKER_00: So the majority of people who show up on Reddit every day are not even signed in.
• 1:05
  SPEAKER_00: I am guessing a lot of those logged out folks arrive by typing a question into Google.
• 1:10
  SPEAKER_01: That is precisely the pipeline.
• 1:12
  SPEAKER_01: You search for the best budget hiking boots, Google shows a Reddit thread, you click, you read, you leave.
• 1:18
  SPEAKER_01: That logged out visitor is the one most exposed when Google stops sending clicks.
• 1:22
  SPEAKER_00: And the company actually put a number on how bad it could get, right?
• 1:26
  SPEAKER_00: They did not just complain, they warned investors about the next quarter in fairly specific terms.
• 1:31
  SPEAKER_01: They did.
• 1:31
  SPEAKER_01: Reddit said that if the trend continues, daily unique visitors in the fourth quarter could fall by a low double-digit percentage from that 130 million level.
• 1:40
  SPEAKER_01: That is a striking thing for a growing company to say out loud.
• 1:44
  SPEAKER_00: Okay, now let me hear the actual quote, because I understand Huffman was unusually blunt about Google, and that kind of directness from a chief executive is pretty rare on an earnings call.
• 1:53
  SPEAKER_01: He was very blunt.
• 1:54
  SPEAKER_01: He said, quote, AI mode does not drive traffic.
• 1:58
  SPEAKER_01: Not for us and not to anybody as far as I know.
• 2:00
  SPEAKER_01: And quote, he named AI overviews and AI mode as the biggest factor behind the decline.
• 2:06
  SPEAKER_00: Let me play devil's advocate for a second, because I think that is my job today.
• 2:10
  SPEAKER_00: Is it possible Reddit is just using Google as a convenient villain to explain a weak traffic quarter?
• 2:16
  SPEAKER_01: It is a fair challenge.
• 2:17
  SPEAKER_01: And to his credit, Huffman called these hypotheses not proven facts.
• 2:21
  SPEAKER_01: Reddit did not give any measurement that separates the causes, so we should hold the claim with a little caution.
• 2:27
  SPEAKER_00: You said causes, plural.
• 2:29
  SPEAKER_00: So what is the other suspect in this mystery?
• 2:31
  SPEAKER_00: Besides Google's AI answers, simply giving people what they wanted without a click-through to Reddit.
• 2:36
  SPEAKER_01: The second factor he named is that Google appears to be ranking Reddit's machine translated content lower.
• 2:42
  SPEAKER_01: That mainly hurts markets outside the United States, where Reddit had been showing automatically translated threads to local searchers.
• 2:49
  SPEAKER_00: That actually makes sense from Google's side.
• 2:51
  SPEAKER_00: If I search in Spanish and land on a clumsy machine translation of an English thread, I probably have a worse experience than reading a native page.
• 3:00
  SPEAKER_01: Right, and that is why the honest answer is that both forces are probably at work at once.
• 3:05
  SPEAKER_01: One is a quality judgment about translations, and the other is a structural shift in how search itself works.
• 3:11
  SPEAKER_00: Interesting.
• 3:12
  SPEAKER_00: So part of this could be a ranking change rather than AI eating the click.
• 3:17
  SPEAKER_00: What does Google say about all of this?
• 3:19
  SPEAKER_00: Because surely they have a very different version of the story.
• 3:22
  SPEAKER_01: Google says it sends billions of clicks every week through its AI features, and that Reddit does not get any special ranking preference.
• 3:30
  SPEAKER_01: And Huffman himself noted that Google still crawls Reddit, quote, as hard as ever.
• 3:34
  SPEAKER_00: That detail's kind of the heart of it for me.
• 3:37
  SPEAKER_00: Google is still reading everything Reddit has, as hard as ever, but sending back fewer visitors.
• 3:42
  SPEAKER_00: That sounds like the deal changed without anyone signing anything new.
• 3:45
  SPEAKER_01: That is exactly how many publishers feel.
• 3:48
  SPEAKER_01: The old bargain of the web was simple.
• 3:50
  SPEAKER_01: Let the search engine index you, and in return it sends you traffic.
• 3:54
  SPEAKER_01: AI answers break that bargain because the answer itself keeps the user on Google.
• 3:59
  SPEAKER_00: Now here's the twist I find fascinating.
• 4:01
  SPEAKER_00: Google is not exactly celebrating either because the same week Alphabet admitted that these AI searches make less money than the old style of search ads.
• 4:09
  SPEAKER_01: Yes, and this is the part that makes the story bigger than Reddit.
• 4:13
  SPEAKER_01: Alphabet said search revenue grew 12% to about$63 billion, but a year earlier that growth rate was 14.5%.
• 4:22
  SPEAKER_01: So growth is clearly slowing down.
• 4:25
  SPEAKER_00: So growth slowed, and they actually said out loud that AI mode was the reason?
• 4:29
  SPEAKER_00: I would have expected a company that size to blame something vague like the economy or currency swings instead.
• 4:35
  SPEAKER_01: Their chief business officer Philip Schindler pointed to, quote, lower monetization we were seeing in AI mode, end quote.
• 4:42
  SPEAKER_01: Alphabet shares fell almost 10% on Wednesday after that comment.
• 4:46
  SPEAKER_01: Investors really heard it.
• 4:48
  SPEAKER_00: And this is happening while Google is spending staggering amounts on the infrastructure behind these AI answers.
• 4:54
  SPEAKER_00: Give me a sense of how much money is going into the machines right now.
• 4:57
  SPEAKER_01: Alphabet spent about$51.4 billion on capital investment in the third quarter alone, and it still expects between$195 and$205 billion for the full year with significantly more next year.
• 5:11
  SPEAKER_00: So we have this strange situation where AI search is hurting the websites that supply the answers.
• 5:16
  SPEAKER_00: And it is also hurting the company providing the answers.
• 5:19
  SPEAKER_00: Who is actually winning in this arrangement right now?
• 5:22
  SPEAKER_01: In the short term, arguably the user who gets a quick answer for free.
• 5:26
  SPEAKER_01: Schindler argued that most AI mode queries are incremental, meaning new searches people would not have made before, and Google has now started showing ads inside AI mode worldwide.
• 5:36
  SPEAKER_00: That is the optimistic case then.
• 5:38
  SPEAKER_00: More questions overall.
• 5:40
  SPEAKER_00: Ads eventually catch up, everybody grows.
• 5:43
  SPEAKER_00: But I suspect Reddit is not willing to just sit around and wait for that to happen.
• 5:47
  SPEAKER_01: Not at all, and this is the biggest strategic news.
• 5:50
  SPEAKER_01: Huffman published a post called About That Login Screen saying Reddit will move to a primarily logged-in experience.
• 5:57
  SPEAKER_01: The first full test start this quarter in select markets outside the United States.
• 6:06
  SPEAKER_00: It seems like a company would try marketing its way out of a traffic dip before taking such a drastic step.
• 6:12
  SPEAKER_01: They did.
• 6:13
  SPEAKER_01: Reddit raised marketing to international users to offset the lost search reach and shifted domestic web marketing toward app install campaigns.
• 6:21
  SPEAKER_01: They also noted that only about 13% of eligible mobile web users even see the prompt to switch to the app.
• 6:28
  SPEAKER_00: Wait, so the answer to losing visitors from Google is to put up a wall that makes visitors sign in?
• 6:34
  SPEAKER_00: That feels backwards on the surface.
• 6:36
  SPEAKER_00: Walk me through the logic because I am skeptical.
• 6:38
  SPEAKER_01: It sounds backwards until you look at the money.
• 6:40
  SPEAKER_01: The chief operating officer, Zen Wong, said more than 80% of Reddit's monetization comes from logged-in users inside the app.
• 6:48
  SPEAKER_01: The drive-by visitor from Google is worth much less.
• 6:51
  SPEAKER_00: So the casual Google visitor reads one thread, sees maybe one ad, and disappears.
• 6:55
  SPEAKER_00: The logged in app user scrolls for half an hour and sees dozens of targeted ads, losing the first hertz less than I assumed.
• 7:01
  SPEAKER_01: Right, and Huffman said it directly.
• 7:14
  SPEAKER_00: Okay, but there is another reason for a login wall.
• 7:17
  SPEAKER_00: And I suspect it is about AI as well.
• 7:19
  SPEAKER_00: If everything sits behind a login, the AI companies have a much harder time scraping it for free.
• 7:25
  SPEAKER_01: You nailed it.
• 7:26
  SPEAKER_01: Huffman said a logged in only Reddit will, quote, for sure make scraping harder, though not impossible.
• 7:32
  SPEAKER_01: And Reddit also plans to close access to its public data interface in March of 2027.
• 7:37
  SPEAKER_00: That connects to the licensing side of the business.
• 7:40
  SPEAKER_00: Reddit famously sells its data to AI companies.
• 7:43
  SPEAKER_00: How does that fit?
• 7:45
  SPEAKER_00: Because a wall makes the data scarcer and maybe a lot more valuable at the same time.
• 7:50
  SPEAKER_01: Exactly that logic.
• 7:51
  SPEAKER_01: Reddit's deal with Google was reported at about$60 million a year.
• 7:55
  SPEAKER_01: Huffman said licensing talks are active, but he was candid that they could end without a deal.
• 8:00
  SPEAKER_01: Scarcity strengthens his negotiating hand either way.
• 8:03
  SPEAKER_00: So let me summarize the strategy as I understand it.
• 8:06
  SPEAKER_00: Google keeps the answers on its own page, so Reddit stops giving the answers away and forces anyone who wants them, human or machine, through the front door.
• 8:15
  SPEAKER_01: That is a crisp way to put it, and it is not a crazy business.
• 8:19
  SPEAKER_01: Reddit guided fourth quarter revenue to between 1 billion and 1.03 billion dollars, which is 38 to 42% growth.
• 8:27
  SPEAKER_00: Hold on, revenue is growing around 40% and the stock still collapsed?
• 8:31
  SPEAKER_00: That seems like a disconnect.
• 8:32
  SPEAKER_00: What did investors actually react to if the core business numbers look that healthy?
• 8:37
  SPEAKER_01: They reacted to the future.
• 8:39
  SPEAKER_01: The stock closed at about$129 on Thursday, then dropped around 18% after hours, and several reports say the total decline ran past 25%.
• 8:50
  SPEAKER_01: Investors are pricing in years of reduced reach, and they are worried that the user base, which drives every future ad dollar, could actually shrink for the first time in a long while.
• 8:59
  SPEAKER_00: I want to zoom out now because I think every listener who runs a website, a blog, an online store, or a local business should be paying close attention to the story, not just Reddit shareholders.
• 9:09
  SPEAKER_01: Completely agree.
• 9:10
  SPEAKER_01: If a site as beloved by Google as Reddit can lose more than a million weekly referrals, then any business that depends on search traffic carries the same structural risk.
• 9:19
  SPEAKER_01: That is the real lesson for the rest of the web.
• 9:22
  SPEAKER_01: Whether you are a national newspaper, a recipe blogger, or a plumber who gets most of his calls from people searching nearby.
• 9:28
  SPEAKER_00: So what do you actually do about it?
• 9:30
  SPEAKER_00: If I am a small company owner listening right now and my leads come from Google, what is the practical move this week rather than in some distant future?
• 9:38
  SPEAKER_01: First, measure it honestly.
• 9:40
  SPEAKER_01: Look at your search referrals week by week since AI answers expanded.
• 9:44
  SPEAKER_01: Second, build direct relationships like email lists, apps, and communities that you own and that no algorithm can take away overnight.
• 9:52
  SPEAKER_00: And I would add a third point, which is to think about whether AI systems are citing you at all.
• 9:57
  SPEAKER_00: Being the source in AI answer quotes might become the new version of ranking on page one.
• 10:02
  SPEAKER_01: Yes, and that shift is already creating a whole new discipline around being visible inside AI answers.
• 10:08
  SPEAKER_01: But be careful, because even being cited does not guarantee the click.
• 10:13
  SPEAKER_01: Reddit is cited constantly and the visits still fell.
• 10:16
  SPEAKER_00: That is a sobering point.
• 10:18
  SPEAKER_00: Let me push back one more time on the doom here, though.
• 10:21
  SPEAKER_00: Couldn't AI search eventually send higher quality visitors, people who already know exactly what they want before they arrive.
• 10:29
  SPEAKER_01: That is Google's argument, and it might be partly true.
• 10:32
  SPEAKER_01: Fewer visits, but more intent per visit.
• 10:35
  SPEAKER_01: The trouble is that businesses pay bills with volume two, and nobody has shown yet that the quality gain fully offsets the lost quantity.
• 10:42
  SPEAKER_00: And I suppose there is an irony in all this.
• 10:45
  SPEAKER_00: The AI answers are built partly on Reddit conversations.
• 10:48
  SPEAKER_00: And now those conversations may vanish behind a login, which could make future AI answers worse over time.
• 10:53
  SPEAKER_01: That is the feedback loop that keeps me up at night.
• 10:56
  SPEAKER_01: If the open web closes its doors to protect itself, the models that depend on fresh human discussion lose their best source of real experience.
• 11:04
  SPEAKER_01: Everyone ends up poor.
• 11:05
  SPEAKER_00: So the takeaway for today is that the bargain of the open web is being rewritten in real time.
• 11:10
  SPEAKER_00: And Reddit just became the first giant to openly say it is walking away from the old terms.
• 11:15
  SPEAKER_01: Well said.
• 11:16
  SPEAKER_01: Watch the fourth quarter numbers, watch those login tests overseas, and watch whether other big publishers follow Reddit behind a wall.
• 11:23
  SPEAKER_01: If they do, the internet we search every day could look very different by next year.
• 11:27
  SPEAKER_00: That's all for today's episode of the DX Today Podcast.
• 11:30
  SPEAKER_00: Thanks for listening, and we'll see you next time.