Reddit is moving to a logged-in only experience, CEO Steve Huffman told shareholders on Thursday, October 29. Tests begin this quarter “in select markets outside the U.S.,” and the results will shape a version for every country.
That would end the anonymous reading that made Reddit a default stop for Google searchers. People look there for product recommendations and travel advice, two uses Google itself cited in 2024. Reddit has given no date for the United States.
The scale is large. In the third quarter, 27.3 million of Reddit’s 50.7 million daily U.S. visitors were not logged in, according to the company’s earnings release. By our count, that is 54% of its American audience on an average day.
What Huffman told shareholders
The plan appears in Huffman’s letter to shareholders, filed with the SEC on Thursday. “It’s a big one for us, and it’s a big one for me,” he wrote.
He gave several reasons. Signed-in users see more relevant content, he argued. The change is also “better for our business because we will have more signals for ads targeting.”
It “allows us to protect access to Reddit’s extremely valuable corpus of data.” And it “helps us better adapt to emerging regulations around the world.”
Huffman also cast the move as overdue. “Pretty much all of the major ad-based platforms have gone through this transition,” he wrote.
He framed it as a personal reversal in an interview with CNBC. “Reddit is the last platform to provide basically unfettered logged-out access, and that’s largely because of me, I’ve been holding that line,” said Huffman, a co-founder. He called the change “a sign of the times.”
Investors focused on the forecast. Third-quarter revenue rose 53% to $895 million, beating estimates. But Reddit guided fourth-quarter sales to $1 billion to $1.03 billion, below Wall Street’s $1.05 billion. The shares fell more than 15% after the release, CNBC reported.
Google’s AI answers are draining Reddit’s search traffic
The letter is blunt about the cause. Search referral traffic “was down meaningfully in Q3, with the decline accelerating later in the quarter,” Huffman wrote. Logged-out and web visitors took the biggest hit.
The slide has continued. In October, search traffic fell by more than 1 million referrals a week on average. If that pace holds, Reddit warned, total daily visitors could fall by a low-double-digit percentage in the fourth quarter.
The company’s own tables show where the loss sits. Logged-out daily U.S. visitors fell to 27.3 million in the third quarter, from 30.1 million in the second quarter. That is a 9% drop in three months.
Logged-in U.S. users held at 23.4 million, up 1% from a year earlier.
Huffman blamed Google’s shift to AI-written answers. Referrals fell because of the “shift to AI mode and AI overviews,” he told CNBC. He called it “a fundamental shift in how the Google product works, from being a traffic driver to whatever’s going on now.”
He went further on the earnings call. “The reality is, the AI mode does not drive traffic, not for us and not to anybody, as far as I know,” he said, Engadget reported.
The logged-out crowd was always worth less to Reddit. App users and logged-in users bring in “over 80% of the monetization on Reddit,” the letter says. A login wall risks the visitors Reddit earns the least from, and gives it more data on everyone who stays.
The Google deal that complicates the picture
Reddit and Google are also business partners. In February 2024, Google announced access to Reddit’s Data API. That lets Google “display, train on, and otherwise use” Reddit content. Engadget says the deal is reportedly worth about $60 million a year.
That license is now in play. Huffman told CNBC that Reddit remains “in negotiations” with Google. He said it is “only going to do a deal that makes sense for Reddit.”
Data licensing sits in Reddit’s “other revenue” line, which grew 35% to $48 million in the quarter. Its two biggest licensing partners are OpenAI and Google, CNBC reported. Those two rivals also do business with each other: Google now sells OpenAI’s models through its cloud.
The “corpus of data” line points at the same tension. A site that can only be read while signed in is harder to scrape for free. That strengthens Reddit’s hand in any license talks, at a time when tech giants are pouring money into the models that feed on such text, as our AI bubble explainer laid out. Reddit says it now holds more than 27 billion posts and comments.
Will Reddit links in Google search still open?
For now, yes. Huffman said Reddit has not settled where the login wall will sit. “We need to find the right boundary,” he said on the call, according to Engadget.
“Whether they’re coming from a shared link or maybe from search … there’ll be some version of Reddit accessible for those moments before we do that hard prompt,” he added. That suggests a reader clicking a Reddit result may still see the thread, at least briefly, before a sign-in request.
Reddit is still deciding which parts of the site logged-out users will see, CNBC reported. It plans to work out the details during testing.
Reddit has already closed smaller doors. In July, a Reddit employee announced that logged-out visitors to old.reddit.com, the site’s older design, would need to sign in over the following month. The company cited automated scraping, IBTimes reported.
The letter also shows a push toward the app. Only about 13% of eligible mobile web users now see the prompt to switch, it says, “so this has room to scale.”
What signing in gives Reddit
Reddit does not ask users to reveal who they are, and the company leans on that. People can take part “without needing to reveal your real world identity,” the letter says.
But a signed-in session ties what you read to one account. Reddit says plainly that it wants that data for ads. For readers, the trade is a pseudonymous account in exchange for a record of the threads and communities they open.
Huffman pointed to one concession. Reddit is working on “an improved incognito mode in the app,” the letter says, partly to curb people who delete and reinstall it.
He did not explicitly mention age verification laws when citing “emerging regulations,” Engadget noted. But a login requirement would presumably help Reddit comply with them.
The first tests start before the end of December, outside the U.S. Reddit says their results will shape the version it rolls out everywhere, including for the 27 million Americans who read it on an average day without an account.
