Reddit May Need To Ramp Up Spending On Content Moderation, Analysts Say

An anonymous reader quotes a report from Reuters: Reddit will need to spend heavily on content moderation as it may face greater scrutiny as a public company, analysts said, threatening its longstanding policy of relying on an army of volunteers to maintain order on its platform. The newly listed company warned in its initial public offering (IPO) paperwork that its unique approach to content moderation can sometimes subject it to disruptions like in 2023, when several moderators protested against its decision to charge third-party app developers for access to its data.

Depending on volunteers is not sustainable, given the regulatory scrutiny that the company will now face, said Julian Klymochko, CEO of alternative investment solutions firm Accelerate Financial Technologies. 'It's like relying on unpaid labor when the company has nearly a billion dollars in revenue,' he added. Reddit reported revenue of $804 million in 2023, according to an earlier filing. Reddit will need to make substantial investments in trust and safety, which could lead to a 'dramatic' rise in expenses, Klymochko said. Josh White, former economist at the Securities and Exchange Commission and assistant professor of finance at Vanderbilt University, also said that banking on free volunteers is Reddit's biggest risk. The company would need to ramp up spending on anti-misinformation efforts especially as the U.S. prepares for the presidential election later this year, White said. 'We believe our approach is the most sustainable and scalable moderation model that exists online today. We are continually investing in and iterating on new tools and policies to improve our internal capabilities,' the Reddit spokesperson said.

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