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Reddit cuts five percent of workers while API pricing shift sours developers

Two third-party Reddit apps have thrown in the towel over increased expenses

Social media community Reddit plans to lay off about 90 employees, amounting to about five percent of its 2,000-person staff.

A company spokesperson confirmed the cuts in an email to The Register, stating that the whole company's restructuring is part of changes to Reddit's data, API and mod tools projects. Word of the job cuts came in the form of an email sent to employees by CEO Steve Huffman that was obtained by The Wall Street Journal.

The company's contracting real estate footprint – forced because Reddit is subleasing from payment biz Block, which won't renew its lease – came before the layoffs.

In March, The San Francisco Chronicle reported that Reddit was preparing to downsize its office space, leaving its 78,000-square-foot office at 1455 Market Street for a 47,000 square feet office at 303 Second Street, in San Francisco's nearby South of Market neighborhood.

Follow the money, particularly with APIs

Reddit filed to go public in late 2021 but has not yet done so. It may yet list, however, in the second half of 2023.

In April, finance firm Fidelity, lead investor in the company's August 2021 funding round, revised the value of its $28.2 million stake to $16.6 million, a 41 percent decline in its multi-year loss-making investment.

Meanwhile Reddit's announcement of a new API usage policy, said to have followed from the desire to seek payment from makers of AI models that train on Reddit posts, has been causing trouble.

The company characterized its revised API terms of service as an effort to "build a more sustainable, healthy ecosystem around data on Reddit."

But the decision looks as if it will lead to fewer third-party apps working with Reddit. Under the new terms, app developers will need to pay plenty to ingest data from Reddit through its API. As a result many major forums on the site will be staging a 48-hour blackout next week, beginning on June 12.

Reddit, stung by blowback from its community, recently published an update to reassure developers that free API access will continue to be available if usage is legal and noncommercial. Nevertheless, the price Reddit is asking appears to be considerable in some cases.

On Thursday, the developers of both Apollo, an iOS client for interacting with Reddit, and Sync for Reddit, an Android client, said they will shutter their apps down at the end of June.

Developer Christian Selig published a lengthy post on Reddit to explain the situation. At a price of $0.24 per 1,000 API calls, he projects the cost of Reddit's API would be almost $2 million per month or over $20 million annually.

Selig said the cost "was not far off Twitter's outstandingly high API prices."

Twitter, which has a long history of changing the rules under which developers interact with its platform, said it was eliminating free use of its API in February, then backtracked a bit in May after firms like Microsoft declined the considerable fees.

Selig's post – which includes some interesting allegations about a conversation with Huffman – notes that Reddit disagrees with comparisons that liken its API policy change to Twitter's. He argues, however, that the comparison is apt.

"I think regardless of whatever their intent/meaning behind the comparison to Twitter was, the result is the same: the pricing will kill third-party apps, just as Twitter did," he said. ®

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