Reddit posted one of its strongest quarters on record, and its stock cratered anyway. The company’s Q2 2026 earnings, released July 30, showed revenue climbing 61 percent year-on-year to $804.9 million, comfortably beating analyst expectations. Shares still fell more than 20 percent, as CEO Steve Huffman used the earnings call to take direct aim at Google’s AI Overviews feature.
Huffman told investors that search referral traffic had turned “choppy,” and argued that Google’s AI-generated summaries haven’t delivered anything close to the value the traditional search results format once did.
“If we look at the Google ecosystem, the 10 blue links have driven a tremendous amount of value for the whole ecosystem,” he said. “AI Overviews has yet to make a similar level of positive impact, and that seems consistent across the broader landscape.”
Reddit’s Pitch: ‘The Antidote to an Automated Web’
Beyond the earnings call itself, Huffman used a letter to investors to frame Reddit’s core value proposition against the rise of AI-generated content. He wrote that as the internet fills up with synthetic content, people are increasingly craving real human perspective, describing Reddit as built around deeper discussion and authentic experience rather than machine-summarized answers.
Despite the stock drop, Reddit’s underlying business looks healthy. The company guided Q3 revenue between $860 million and $870 million, and its “other revenue” category, which includes data licensing deals, rose 24 percent year-on-year to $43 million.
The Google Relationship Under Strain
That licensing revenue is now part of the tension. Reddit has maintained a data licensing partnership with Google worth an estimated $60 million annually since 2024, allowing Google to train AI models on Reddit’s content, alongside a separate arrangement with OpenAI.
According to earlier reporting from The Wall Street Journal, Reddit has been weighing whether to cut off Google’s access to its data as the two companies negotiate a potential renewal of that 2024 agreement. Huffman didn’t rule out changes to the relationship, telling investors, “We’re thinking about all of our options. Our goal is to maximize the long-term value for Reddit.”
Rather than relying on Google to send users its way, Reddit says it’s leaning into product changes and user retention efforts aimed at converting search-driven visits into direct traffic, which the company considers more valuable long-term.
A Problem Extending Well Beyond Reddit
Reddit isn’t the only platform watching its search traffic erode. Industry data cited by multiple outlets shows steep declines across major publishers between June 2025 and June 2026.
Organic Google traffic to USA Today’s national site fell by nearly half, Politico’s traffic dropped 23 percent, CNN saw a decline of around 25 percent, and Business Insider’s traffic fell more than 85 percent. USA Today Co. CEO Mike Reed has publicly said it’s time to “take a stand” against the trend.
A Pew Research study, based on data from 900 American adults, found that Google’s AI Overviews cut referral traffic to external websites by nearly half compared to traditional search results.
The same research found that when an AI Overview appears on a search results page, the click-through rate to external sites drops to just 8 percent, and only 1 percent of searches result in a click on a link within the AI summary itself.
Google Pushes Back
Google disputes the Pew findings, telling Ars Technica the study relied on a flawed methodology and a skewed set of search queries. In a separate blog post, the company said organic click volume to websites has stayed relatively stable year-over-year, and pointed to recent changes to AI Overviews designed to surface more prominent outbound links.
Google says its AI-powered search features send billions of visits to websites every week and has begun paying more than 200 publishers for access tied to its AI features.
Cloudflare CEO Matthew Prince has weighed in on the broader shift too, warning that AI-generated summaries could be damaging the underlying business model of the open web. He’s noted that bots now account for roughly 56 percent of all internet traffic, a figure that captures how much of the web’s activity increasingly happens outside direct human browsing.
With Reddit and Google still negotiating the renewal of their data licensing deal, and publishers from USA Today to Politico openly reconsidering their relationship with Google’s crawlers. The coming months look set to test whether Google adjusts its AI Overviews format enough to ease the pressure.
Whether more platforms follow through on threats to restrict access to their content. For now, Reddit’s own answer is to keep hedging its bets: cashing Google’s licensing checks while publicly building the case that AI summaries alone can’t replace what search referral traffic used to provide.
Curated news reports, in-depth analysis, and special features by India’s Opinion editorial team.
