Reddit’s biggest ever share price fall has highlighted the risks of websites’ dependence on Google. AI-generated responses are altering search traffic even for the largest platforms. Reddit’s shares lost more than 29% of their value in a single day after the company reported a sharp drop in traffic from Google. The platform’s management attributes this to the spread of AI Overviews and AI Mode — artificial intelligence tools that answer users’ questions without the need to visit third-party websites.
The Impact of AI Overviews on Search Traffic
An analysis by UkrMedia suggests that Reddit’s problems may be part of wider changes to the internet that are already affecting news outlets, information resources and businesses reliant on search traffic. At the close of trading on the New York Stock Exchange, shares of Reddit fell by 29.22% following results or algorithmic updates. For news organisations, the development of their own content distribution channels – direct links, email newsletters, social media and a loyal readership – is of particular importance.
Reddit, with over 130 million daily users, has already faced the risks of being dependent on Google. For smaller websites, where organic search accounts for the bulk of their traffic, similar changes could have an even greater impact.
Broader Industry Trends and Capital Spending
Reddit shares fell by 29% amid concerns over traffic from Google, raising broader questions about how AI Overviews are affecting website traffic and the future of SEO. At the same time, major technology companies are continuing massive investments in artificial intelligence infrastructure.
According to reports covering industry spending, four of the tech industry’s biggest companies set a new spending record in the recent quarter as they raced to build artificial intelligence. Over a two-week reporting window, Amazon, Microsoft, Google, and Meta said they were on track to spend more than $720 billion this year on data centers and other capital expenses — roughly triple what they spent just two years ago — with further increases expected next year as firms engage in an existential play for market share in the AI landscape.
