Reddit sues AI startup Anthropic for breach of contract, 'unfair competition'

Reddit has initiated legal proceedings against AI startup Anthropic, accusing the company of breaching contract terms and engaging in 'unlawful and unfair business practices' by allegedly utilizing the platform's data without permission. The lawsuit, lodged in San Francisco on Wednesday, contends that Anthropic has been training its AI models using personal data from Reddit users without consent, causing harm to Reddit through the unauthorized commercial exploitation of its content. On the day of the announcement, Reddit's shares saw a rise of over 6%. In its complaint, Reddit described Anthropic as a 'late-blooming' AI enterprise that claims to be a champion of ethical AI practices but asserts that the reality is quite the opposite. The filing states, 'Despite its marketing rhetoric, Anthropic disregards Reddit's regulations and users, believing it has the right to exploit any content it desires without consequence.' An Anthropic representative responded via email, expressing disagreement with the allegations and affirming the company's commitment to a vigorous defense. The litigation arises amidst heightened scrutiny of AI's reliance on user-generated content, particularly following the explosive growth of generative AI tools like OpenAI's ChatGPT since late 2022. Reddit, a platform rich with user-contributed knowledge across myriad subjects, has been integral to the training of many large AI models, including Anthropic's Claude. In May, Reddit established a partnership with OpenAI that permits the latter to utilize Reddit content for AI training, alongside a similar agreement with Google. Reddit emphasized in its lawsuit that major players in the AI industry recognize and adhere to its guidelines, naming OpenAI and Google as companies that comply with Reddit's licensing conditions to safeguard user privacy. OpenAI's CEO, Sam Altman, notably has a history as a board member and major investor in Reddit, with his stake now valued at over $1 billion. In March, Anthropic achieved a valuation of $61.5 billion during a funding round led by Lightspeed Venture Partners, with contributions from Salesforce Ventures and Cisco Investments. Reddit, which went public in 2024 with a market capitalization nearing $22 billion, insists that it has established clear rules regarding the use of its data, as outlined in its user agreement. The lawsuit states, 'While Reddit has always championed an open community for all seeking connection, it has never permitted its platform to be exploited by commercial entities aiming to build multi-billion-dollar businesses without offering anything in return to Reddit or its users.' The company is seeking damages and aims to ensure Anthropic adheres to its contractual and legal responsibilities, requesting a jury trial.