Reddit’s days as an open corner of the internet are ending. The company announced in its third-quarter earnings on Thursday that it is transitioning to a primarily “logged-in experience” — a seismic shift driven by drying-up search traffic and the AI-powered web eating its referrals.
Reddit logo (Credits: TechCrunch)
Why Reddit Is Shifting to a Logged-In Experience
Reddit built an empire on Google — millions of users appended “Reddit” to their search queries to find real human answers. But AI-powered search changed everything. AI summaries now answer questions without requiring website visits, and Google’s traditional “ten blue links” have lost their pull. Reddit said search traffic referrals dropped by more than 1 million per week on average in October, and warned that if the trend continues, daily active users could decline a low-double-digit percentage by next quarter — potentially dragging its 130.3 million global daily actives down to around 115-117 million.
The U.S. is already shrinking: U.S. daily active users fell from 53.2 million in Q2 to 50.7 million in Q3, down 2% year-over-year. The logged-in pivot is designed to protect Reddit’s data from AI scraping so it can keep selling lucrative licensing deals to model providers — and because logged-in users are worth more to advertisers, giving richer signals for ad targeting and a more personalized feed.
The Numbers Behind the Decision
Despite the traffic pain, Reddit is monetizing better than ever. Revenue jumped 53% year-over-year to $895 million, beating Wall Street’s roughly $875 million estimate, while net income rose 74% to $283 million. Advertising revenue grew 54% to $847 million, and non-ad revenue — including AI data licensing — climbed 35% to $48 million. Even with fewer U.S. users, U.S. average revenue per daily active user soared 53% to $13.82, and global ARPU rose 36% to $6.87.
CEO Steve Huffman acknowledged the magnitude of the change: “I don’t know about you, but as someone whose life has been defined by the open internet, it’s a big change for me. But I’ve come to the conclusion that this is the right decision for our platform and the right decision for our business.” The company is also rolling out a new algorithmic “For You” feed mixing community posts with interest-based recommendations. For the open web, this may be the canary in the coal mine.
Also Read: 3 Hidden Ways You’ve Consented to AI Data Scraping From Meta, LinkedIn, and X | Granola Adds Free Unlimited Dictation to Take On Wispr
Source: TechCrunch AI — read the full story there.
