Reddit, the popular social media platform, disclosed on Tuesday that it is evaluating a letter from Nokia Technologies alleging patent infringement. This revelation comes just ahead of Reddit’s highly anticipated initial public offering (IPO) scheduled for later this week.
The disclosure follows an inquiry by the Federal Trade Commission (FTC) focused on Reddit’s practices regarding the sale, licensing, and sharing of user-generated content with third parties for training artificial intelligence models. In its statement, Reddit acknowledged the potential for more intellectual property claims against the company as it faces increasing competition and gains greater prominence.
Nokia Technologies, the telecom and cloud network firm, has raised concerns about alleged infringements on some of its patents by Reddit. However, Nokia did not immediately respond to requests for comment regarding the matter.
This isn’t the first time Reddit has found itself entangled in patent infringement issues. Despite this, the social media giant is pushing ahead with its IPO plans, aiming for a valuation of up to $6.5 billion. According to reports by Reuters, the IPO has garnered significant interest, being between four and five times oversubscribed, which increases the likelihood of achieving the target valuation.
The IPO is scheduled to debut on the New York Stock Exchange on March 21st. Reddit’s vast array of online forums, known as “subreddits,” have gained notoriety, particularly through events like the “meme-stock” saga of 2021, where retail investors rallied on the platform’s “wallstreetbets” forum to trade shares of heavily shorted companies like GameStop.
In a bid to capitalize on its popularity among retail investors, Reddit has reserved 8% of the total shares for eligible users and moderators on its platform, certain board members, and friends and family members of its employees and directors.
