Reddit shares suffered a brutal sell-off plummeting between 25% and 30%—after CEO Steve Huffman squarely blamed Google’s AI-powered search features for a severe erosion of organic referral traffic.
Despite posting strong third-quarter financial results, Reddit revealed in a shareholder letter that Google search referrals have been dropping by more than 1 million visits per week through October.
The traffic squeeze has forced Reddit to temper its fourth-quarter revenue outlook below Wall Street expectations and test login walls in select international markets.
Huffman pointed directly to Google’s AI Overviews and AI search modes, stating that the technology answers user queries directly on the results page rather than sending visitors downstream.
“AI Mode does not drive traffic. Not for us, and not to anybody as far as I know. That’s just a fundamental shift in how Google works,” Huffman told analysts and media.
The strategy aims to protect platform content from AI scrapers and pivot heavily toward direct, logged-in user engagement.
However, the shock wave serves as a stark warning across the broader digital landscape: the very AI systems indexing the open web are increasingly starving the human-driven platforms that feed them.
