In preparation for Reddit IPO, the US FTC has launched an investigation.
The investigation centers on the company’s recent AI license agreement with Google, which the company is confident won’t affect its prospects for an IPO.
Many Wall Street and financial industry veterans are anticipating the Reddit IPO as a significant public market event. Notably, the industry is buzzing over the US Federal Trade Commission’s (FTC) most recent investigation into the company’s AI licensing policy.
FTC Investigation and Reddit IPO
Federal regulators often look at businesses considering going public. The most recent Reddit IPO prospectus included a fresh notice regarding the FTC investigation, but the firm completely downplayed any threat.
The FTC staff investigation focuses on Reddit’s intention to license its user-generated content to companies that develop AI and want to use it for data training. In the significant case disclosed, the business signed a $60 million deal with Google that will grant the internet behemoth access to the user-generated content that is featured.
The company stated that the letter clarified that the FTC officials wanted to meet with us to discuss our plans in more detail and that they expected to ask for papers and information from us as their investigation went on.
Reddit’s comment highlighted that the FTC’s interest in the acquisition wasn’t surprising due to the innovative nature of these technologies and commercial arrangements.
Over the past year, as artificial intelligence has advanced, privacy concerns have arisen, prompting legislators worldwide to call for strict control of the technology. Reddit stated it has not broken any US consumer protection laws, so even with those lingering doubts, it is not concerned about the IPO’s chances of success.
Possible Forerunners in the Crypto Ecosystem
Inquiries have occurred in the US on various occasions, many of which have significantly hurt the prospects for qualified cryptocurrency businesses wishing to go public. The long-running legal dispute between blockchain payments company Ripple Labs and the US Securities and Exchange Commission (SEC) has kept the company from considering an initial public offering (IPO) for the past few years.
Regulatory scrutiny for initial public offerings (IPOs) and investigations blur when Coinbase Global Inc. is approved for listing on the Nasdaq in 2021. The markets authority is still pursuing legal action against Coinbase despite having cleared it for listing because it believes Coinbase facilitates the trade of unregistered securities.
According to a previous Coinweber story, the Reddit IPO has experienced a considerable delay. The company may achieve a market capitalization of $6.4 billion if it succeeds.
