Reddit shifts to logged-in model as AI scraping and search changes pressure growth

Traders Union
All News
Business & Wealth
Companies
Reddit shifts to logged-in model

Highlights

Reddit will test a logged-in user model internationally this quarter to improve ad targeting, engagement, and limit unauthorized AI and search scraping.
Reddit warns daily active users could drop by a low-double-digit percentage in Q4 amid weaker search referral traffic, despite Q3 ad revenue growing 54% year over year to 94.7% of total.
Non-advertising revenue, including data licensing, rose 35% year over year to $48 million in Q3 as Reddit restricts third-party data access and pursues lawsuits against Anthropic and Perplexity.

Rollout plan and business rationale

As first reported by Axios, Reddit says the change is designed to improve user experience, strengthen ad targeting and limit unauthorized scraping of its data as AI companies and search platforms reshape traffic flows.

Chief executive Steve Huffman says logged-in users spend more time on Reddit and give the company a better understanding of their interests, which helps it serve more relevant advertising. Chief operating officer Jen Wong says the move does not mark a strategic break, but reflects Reddit's longer-term goal of being a direct destination rather than relying heavily on search-driven visits.

Reddit says it will begin testing the fuller logged-in experience outside the U.S. this quarter before expanding changes gradually. Users who sign in can receive tailored feeds, content and community recommendations, while those arriving from search engines or shared links will still be able to view linked content, and the homepage remains accessible to logged-out visitors.

Advertising upside and platform impact

The shift comes as Reddit reports weaker search referral traffic and warns in its shareholder letter that daily users could fall by a low-double-digit percentage in the fourth quarter if those trends continue. The company says search referral traffic was down meaningfully in the third quarter, even as it beat Wall Street expectations on revenue and earnings growth.

Reddit is tying more of its model to logged-in engagement, which Wong says is about five times higher than engagement from logged-out users. Performance advertising, which accounts for more than 60% of ad revenue, is the fastest-growing part of the business, and advertising generated 94.7% of total revenue as the ads unit grew 54% year over year in the third quarter.

The company also says the change helps it protect content that has become more valuable in the AI era. Reddit continues to license its data to third parties, with non-advertising revenue, including data licensing, reaching $48 million in the third quarter, up 35% from a year earlier, while the company remains more selective about outside access after lawsuits against Anthropic and Perplexity in 2025 over unauthorized scraping.

In our previous coverage of how AI is raising the cost of standing still for businesses, we explained that widening adoption is lifting competitive expectations and making “average” performance less sustainable. The piece highlighted that companies need to rethink investment priorities, workforce skills, and decision-making to stay relevant, as AI-driven productivity and automation increasingly separate leaders from laggards.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.