Reddit announces 5% workforce reduction

Reduces roles, charges for API access, employees and users unhappy

Social media platform Reddit has joined the list of tech companies announcing layoffs.

According to a report from The Wall Street Journal, the San Francisco-based company will be implementing workforce reductions affecting approximately 5% of its employees. Consequently, around 90 individuals will lose their jobs.

Reddit is a widely-used digital platform that connects people from around the world, allowing them to engage in discussions, share news, and connect over shared interests, among other activities.

Currently, Reddit has a workforce of approximately 2,000 employees.

In addition to the job cuts, Reddit has revealed its intention to reduce the pace of hiring for the remainder of the year, resulting in the elimination of around 200 open positions.

"We've had a solid first half of the year, and this restructuring will position us to carry that momentum into the second half and beyond," Reddit CEO Steve Huffman said in an email to employees announcing the redundancies.

Huffman added that he, alongside the team, had thoroughly "reviewed and adjusted the company's plan through the end of 2024."

Additionally, the CEO emphasised that the company's priority is to achieve breakeven status in the coming year.

API access charges

Last month, Reddit unveiled its intentions to introduce charges for third-party developers seeking access to its API.

This decision seems to have been prompted by the utilisation of Reddit's text data by AI companies.

Previously, Reddit offered free access to its API, which allowed developers to build and enhance applications aimed at improving the Reddit experience. However, in a move similar to Twitter's, Reddit announced its decision to implement charges for app developers seeking access to its API.

The decision has sparked discontent among various communities across the platform. Many argue that this change will render the operation of apps that connect to Reddit financially unsustainable.

A Reddit administrator mentioned in their post that for a well-managed third-party app, the estimated cost of the new API access would be around 75 cents per user per month.

Christian Selig, a developer for popular Reddit app Apollo, said, "Apollo would have to pay Reddit $20 million per year to keep running as-is."

Selig's highlighted a stark difference in pricing between Reddit and Imgur for API usage.

According to Selig, Reddit is charging $12,000 for 50 million requests, whereas Imgur, a popular image hosting platform, charges significantly less, at $166 for the same number of requests.

In response to Reddit's API fee announcement, numerous subreddits are planning to participate in a blackout as a form of protest. The action involves temporarily making the subreddits inaccessible or restricting their content to demonstrate dissatisfaction.

Reddit, on the other hand, maintains that it is seeking fair compensation for API access.

Reddit spokesperson Tim Rathschmidt told Bloomberg that Reddit incurs significant hosting expenses, amounting to millions of dollars.

"Reddit needs to be fairly paid to continue supporting high-usage third-party apps. Our pricing is based on usage levels that we measure to be comparable to our own costs," Rathschmidt said.

Reddit filed for an initial public offering (IPO) towards the close of 2021. However, no final decision has been reached so far due to the uncertain economic conditions.

During the pandemic, there was a surge in public stock sales as many companies sought to go public. However, since then, the market has cooled down, resulting in a slowdown in the IPO process for Reddit.