The eagerly anticipated Reddit IPO is almost here, and it looks to be the biggest social media IPO since Pinterest. However, Reddit does not adequately address the issues that resulted from changes to its developer platform and API pricing in the company's S-1 filing. These issues led to site-wide protests late last year, communities going dark, site stability problems, and traffic declines as both Reddit users and moderators expressed disapproval of the company for driving away popular third-party apps with its increased API fees. It also fails to mention the possible consequences of those demonstrations, namely that Reddit may eventually have to contend with competition from the expanding decentralization movement in social media.


The company's larger effort to lock down its corpus of user-generated content, which has been used to train AI models, included Reddit's adjustments to API pricing. Regarding that, Reddit's initial public offering (IPO) prospectus highlights the potential of this expanding enterprise, mentioning that it has earned $203 million thus far through data licensing to other businesses. (A Reuters story regarding Reddit's AI licensing agreement with the internet giant claims that Google gave at least $60 million to that endeavor.)


Even though the money-hungry decision helped Reddit's financial line, the community on Reddit strongly objected to it. Upon discovering that popular third-party Reddit apps such as Apollo, Narwhal, and others were about to face price adjustments on Reddit, users and moderators orchestrated extensive demonstrations. In an effort to put pressure on Reddit management to reevaluate their actions, numerous well-known subreddits—the term Reddit uses for its online communities—went silent in June of last year. These included r/aww, r/video, r/Futurology, r/LifeHacks, and dozens more.


In an effort to clarify how these app closures and modifications would negatively affect how they run their communities, moderators also wrote open letters. They pointed out that the apps provided access to "better mod tools, customization, streamlined interfaces, and other quality-of-life improvements" that the official Reddit app did not.

The moderators chose to prolong their blackout when Reddit CEO Steve Huffman strengthened Reddit's stance and even made fun of Apollo, the creator of one of the site's more well-known apps.

Redditors used the opportunity to continue their protests when Reddit later revived its online event, r/place, which allows users to collaboratively paint a large digital canvas on the platform. They wrote "fuck spez," a reference to Huffman's Reddit username, all over the canvas, including in one area that started to resemble a massive black hole.

Reddit only makes reference to its developer platform in its IPO prospectus as a way to improve its own website through the development of bots and features "that shape their communities."

"We think our developer platform can become a catalyst for community-driven innovation and enhance connections between users and communities; enable users to consistently produce, enhance, and expand; and ultimately fortify our community of communities at large-scale," the Reddit S-1 reads.

Naturally, it doesn't discuss how it drove some developers away or how doing so temporarily brought its website to a standstill.


As the internet is going through a sort of reboot, the truth is that Reddit's actions to upset users, damage developers' businesses, and now sell Redditor user data to train AI systems have left a lasting impression on the firm.

The internet has become overrun with SEO-optimized pages and spam advertisements, so people are turning to other sources of information. For example, Reddit's S-1 mentions AI chatbots, and Google has been known to use various hacks to return pages from its own website by appending the term "reddit" to search queries.
 

However, there is another development occurring on the social web that may someday affect Reddit and other sites run centrally.

Many users of Twitter (now called X) left for more recent, decentralized social networking sites like Mastodon and Bluesky when the company modified its API prices to exclude outside developers, much like Reddit. Weeks after going live, the latter had amassed 5 million members and introduced federation, which allows anyone to manage their own server. Meanwhile, there are 17.2 million users across Mastodon and the larger app network that is a part of the decentralized social web, or "fediverse."
 

Consumer need for networks freed from the whims of a single corporate entity, or, with Twitter's sale to Elon Musk, the capricious billionaire, is the driving force behind this rise.

There are additional smaller initiatives underway to provide decentralized alternatives to Reddit.

Projects like Lemmy, Kbin, Raddi.net, Aether, Lime Reader, and others are gaining traction even if it's still early. Reddit users could break away to join decentralized alternatives, just as some Twitter users did when such alternatives started to make sense.
 

However, Reddit only states that it's conceivable for "certain demographics" or "influential Redditors" to determine that "an alternative product or service better meets their needs" in its S-1 risk factors. Additionally, Redditor engagement with “other products, services, or activities as an alternative to ours” was available.

That would be the equivalent of acknowledging that we might face competition in the future. The decentralized social media movement is so powerful that even the largest social networking company, Meta, chose to build Threads to interface with ActivityPub, the decentralized social networking protocol used by Mastodon, Pixelfed, PeerTube, and other "federated" apps. However, the article skips over this movement's broader implications.
 

Reddit can't be immune, can it, if Meta fears the power of decentralized social networks enough to join the movement?

Furthermore, Reddit minimizes the possibility of community discontent stemming from its managerial choices, stating just that there might be “disruptions to the regular functioning of our communities, including due to actions or inactions by our volunteer moderators.”

The drive to close Reddit groups in protest was spearheaded by the site's moderators, who also designated their communities as NSFW, which forbids advertisements. Reddit was subsequently forced to fire the protesting moderators. They might eventually look for new homes on decentralized social media, where they might keep control over their communities and user data, if they see their demands disregarded and overruled.