Reddit just had the worst day of its public life, and CEO Steve Huffman has a suspect in mind: Google's AI search.

Shares of Reddit fell nearly 30% on Friday — the steepest single-day drop since the company's 2024 IPO — after a third quarter that should have been a victory lap. Revenue jumped 53% to $895 million, beating Wall Street's expectations, with adjusted earnings of $1.40 a share against a $1.33 consensus. Advertising revenue rose 54% to $847 million. None of it held the stock, according to Silicon Report.

What mattered was the warning. Google's AI Overviews and AI Mode are starving Reddit of the search referrals it lives on. Huffman told investors that referrals from Google fell by more than a million visits per week on average in October — with the decline accelerating late in the quarter. If the trend continues, he said, Reddit's daily active uniques could fall by a low-double-digit percentage in the fourth quarter from the current base of 130.3 million. The user numbers already missed: 130.3 million worldwide versus roughly 134 million expected, with U.S. users down 2% to 50.7 million.

Huffman's line on the earnings call will travel: "The AI mode does not drive traffic, not for us and not to anybody as far as I know," as The Verge's Jay Peters reported. Previous Google algorithm changes would "kind of come and go," he told CNBC — this one is "a fundamental shift in how the Google product works, from being a traffic driver to whatever's going on now."

Reddit's answer is to pull up the drawbridge. The company will test mandatory account logins in select non-U.S. markets this quarter — a change to two decades of open, logged-out browsing. Huffman called Reddit the last major site to offer unfettered logged-out access. The move protects content from AI crawlers and sharpens ad targeting; it also quietly admits the open-web era that built Reddit is ending.

The irony is thick. Google and OpenAI each pay Reddit an estimated $60–70 million a year to train on its archives, and Google's crawlers visit the site as often as ever. Google gets the answers; Reddit gets an AI summary standing between it and its readers. Meanwhile Alphabet itself just suffered its worst day on record on Thursday, even as Google searches grew at their fastest rate in five years. The web's circulatory system has become a sink.

— via Silicon Report