Reddit CEO Signals Google Deal May Be Dead — As Stock Craters 20%

Reddit's stock plunged more than 20% following its latest earnings report, despite the company beating most financial expectations. The culprit: investors spooked by what CEO Steve Huffman described as 'choppy' referral traffic from Google, a sign that AI Overviews are eroding the search-driven visitor pipeline that content platforms depend on.

Huffman used the earnings moment to publicly challenge the value of Google's AI Overviews, arguing that the old '10 blue links' model drove real ecosystem growth whereas AI-generated summaries have yet to produce a comparable win for publishers, retailers, or any other content business. His criticism carries commercial weight: Reddit holds a $60 million licensing deal with Google, and a Wall Street Journal report indicated Reddit is actively considering walking away from it. Several major publishers — Reuters, The Economist, Politico, and USA Today — are reportedly weighing similar moves.

Huffman's investor letter framed Reddit as a structural antidote to the AI content flood, arguing that as the web fills with synthetic, generated material, users are hungry for unfiltered human perspective, lived experience, and genuine debate — things Reddit claims to uniquely supply. The pitch is that summaries can't replace the community itself.

The traffic problem has data behind it. A Pew Research study of 900 U.S. adults found that AI Overviews cut referrals to third-party websites by nearly half compared to traditional search. Google pushed back hard, calling the methodology flawed and the query set unrepresentative, and separately published data claiming total organic click volume from Search has remained stable year-over-year — a direct contradiction of what publishers are experiencing.

The broader standoff remains unresolved. Efforts to renegotiate the terms — including Cloudflare's push to update robots.txt defaults — haven't fundamentally shifted Google's position. Google maintains AI Overviews improve the user experience and are good for the web. Meanwhile, publishers and platforms are increasingly questioning whether being included in those summaries is a feature or a liability.