Despite widespread protests, Reddit’s CEO says the company “doesn’t negotiate” on third-party app costs

WASHINGTON (AP) — If you jumped on Reddit to browse your favorite forums this week, you may have encountered “private” or “restricted” messages. That’s because thousands of subreddits chose to go dark in an ongoing protest over the company’s plan to start charging certain third-party developers to access the site’s data.

But Reddit CEO Steve Huffman told The Associated Press that he is not resigning.

“Protest and dissent are important,” Huffman said. “The problem with this is that it̵[ads1]7;s not going to change anything because we made a business decision that we’re not negotiating.”

Organizers of the protest say Reddit’s new policy threatens to end important ways of historically customizing the platform by using an API, or application programming interface, that allows computer programs to communicate with each other. Third-party developers rely on API data to create their apps, which provide access to features not available in the official Reddit app, particularly for content moderation and accessibility aids.

But Reddit says it’s too expensive to support these third-party developers and that the new policy is necessary to become a self-sustaining business.

Reddit has more than 100,000 active subreddits, and nearly 9,000 of them went dark this week. While some reverted to their public settings after 48 hours, others say they plan to stay private until Reddit meets their demands, which include reducing third-party developer fees — set to take effect July 1 — so popular apps aren’t shut down . .

As of Friday, more than 4,000 subreddits were still participating in the blackout — including communities with tens of millions of subscribers like r/music and r/videos — according to a tracker and live Twitch stream of the boycott.

Reddit notes that the vast majority of subreddit communities are still active. And while Huffman maintains that he respects users’ rights to protest, he also says that the subreddits currently participating in the blackout “are not going to remain offline indefinitely” — even if that means finding new moderators.

The company’s response to the blackout has fueled further outrage among protest organizers, who accuse Reddit of trying to remove moderators — or “mods” — of subreddits protesting this week. Subreddit “mods” are volunteers who often use tools outside the official app to keep the forums free of spam and hateful content, for example, and many of them are angry about Reddit’s new fees.

“A lot of what’s going on here is … (Reddit) burning goodwill with the users. And it’s so much more expensive than trying to cooperate,” said Omar, a moderator for a subreddit who participated in this week’s blackout asking to not be identified by full name due to security issues that have arisen while moderating their subreddit.

Reddit denies removing moderators for protest, claiming they are simply enforcing their code of conduct.

“If mods leave a community, we find new mods. If mods keep a large community private with people who want to engage, we find new mods who want to renew it,” the company said in an email. “The rules that allow us to do this are not new and were not designed to limit protests.”

Most people who visit Reddit probably don’t think about APIs, but access to these third-party resources is essential for moderators to do their jobs, experts note.

“Reddit is built on volunteer moderation work, including the creation and maintenance of many tools,” Sarah Gilbert, a postdoctoral fellow at Cornell University and research director of the Citizens and Technology Lab, said in a statement. “Without Reddit’s volunteer moderators, the site would likely see less useful content, and more spam, misinformation and hate.”

Reddit has pushed back on some of these concerns, saying that 93% of moderator actions are currently done through the desktop and native Reddit apps.

Huffman and Reddit management also note that the new fees will only apply to qualified third-party apps that require high usage limits. According to Thursday calculations published by the company, 98% of apps will continue to have free access to the Data API as long as they don’t make money and stay below Reddit’s data usage threshold.

The company has also promised that moderator tools and bots will continue to have free access to the Data API and has struck deals with some non-commercial, accessibility-focused apps to exempt them from new fees.

Still, some moderators say they depend on popular apps to shut down because of the new charges. Apollo and Reddit is fun, for example, has already announced plans to close at the end of June. Apollo developer Christian Selig estimated the fees at around $20 million a year.

Huffman has pushed back on that estimate and Reddit argues that the upcoming fees for high-usage third-party apps — which stand at a rate of 24 cents per 1,000 API calls — are reasonable.

With more than 500 million active monthly users globally, Reddit is one of the internet’s top sites. It’s hard to predict how much money Reddit will save — and make — after implementing the new fees. But Huffman says the “pure infrastructure costs” of supporting these apps cost Reddit about $10 million each year.

“We can’t subsidize other people’s business,” Huffman said. “We didn’t ban third-party apps — we said, ‘You have to cover your costs.'”

Reddit’s API changes coincide with the San Francisco-based company’s reported plans to go public later this year. While Huffman couldn’t directly address the rumored initial public offering, he emphasized the need for Reddit to become self-sustaining.

“I believe that every business has an obligation to be profitable in the end — for our employees’ shareholders, for our investors’ shareholders and, one day as a public company, hopefully our user shareholders as well,” said Huffman, who co-founded the site in 2005.

Reddit initially sought an IPO in 2021, but halted its plans amid a plunge in tech stocks. With eyes on the possibility of a renewed IPO for the second half of 2023, financial experts speculate that the company is trying to show increased revenue and profitability to investors.

“My guess is that they feel a lot of pressure ahead of the IPO to show that they can generate revenue from other sources,” Luke Stein, a finance professor at Babson College, told The Associated Press, noting that API monetization could creating another avenue for revenue streams, instead of relying on advertising and new users as Reddit has done in the past.

Experts also pointed to the significance of Reddit showing a way to charge AI companies that have historically used Reddit data at no cost to develop large and for-profit AI models.

Nevertheless, the listing is uncertain and the API changes may also have consequences.

“If they can actually make the changes stick, (they can) increase revenue,” said James Angel, an associate professor at Georgetown University’s McDonough School of Business. “On the other hand, if they alienate their best users, it could lead to problems down the road, especially if those users decide to move to other platforms.”