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Reddit (RDDT) Sues AI Startup Anthropic for ‘Unfair Competition’

Reddit (RDDT) Sues AI Startup Anthropic for ‘Unfair Competition’

Reddit (RDDT), the social media company behind the WallStreetBets message platform, is suing artificial intelligence (AI) startup company Anthropic for what it claims amounts to “unfair competition.”

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Specifically, the lawsuit says that Anthropic breached a contract between the two companies and engaged in “unlawful and unfair business acts” by using Reddit’s social media platform and data without its permission.

The lawsuit, filed in San Francisco, claims that Anthropic has been training its various AI models on the personal data of Reddit users without obtaining consent. Reddit further claims that it has been harmed by the unauthorized commercial use of its content.

Late Bloomer?

Reddit refers to Anthropic in the lawsuit as a “late-blooming” AI company, and goes on to state: “Despite what its marketing material says, Anthropic does not care about Reddit’s rules or users: it believes it is entitled to take whatever content it wants and use that content however it desires, with impunity.”

Anthropic has not commented publicly on the lawsuit or Reddit’s claims. However, Reddit’s public message boards have long been at the center of the debate over content used by AI companies such as Anthropic. Reddit’s 20-year-old site is filled with user information and content on hundreds of thousands of topics, and it has been a main source of training for large AI models run by multiple companies.

In May of this year, Reddit announced a partnership with privately held OpenAI, an Anthropic rival, that will allow the company to train its AI models on Reddit content. Reddit has a similar agreement in place with Google parent company Alphabet (GOOGL). RDDT stock has fallen 27% this year.

Is RDDT Stock a Buy?

The stock of Reddit has a consensus Moderate Buy rating among 23 Wall Street analysts. That rating is based on 13 Buy, nine Hold, and one Sell recommendations assigned in the last three months. The average RDDT price target of $148.19 implies 24.84% upside from current levels.

Read more analyst ratings on RDDT stock

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