Reddit Inc.’s role in the recent stock trading frenzy has brought millions of new users to the social media platform, says its chief executive, as well as scrutiny of the power of large online communities.
One of the peculiarities that define Reddit is that it relies largely on users, rather than algorithms or armies of technology officials, to police the speech. These community moderators did not intervene when users on a forum called WallStreetBets urged people to buy shares of heavily sold shares, such as GameStop Corp.
GME 19.20%
US regulators are investigating whether the ensuing market turmoil has resulted in violations of securities law.
In an interview, Reddit CEO Steve Huffman said that the WallStreetBets episode demonstrated the durability of the company’s model as it matures and grows. The 37-year-old Reddit co-founder recently changed his Reddit profile image to the Wall StreetBets cartoonish mascot of a Wall Street trader with so-called diamond hands, in a show of support for the group.
“This whole event is showing the power of large communities of ordinary people,” said Mr. Huffman. “Not only are large institutional and professional investors able to participate in the stock market.”
The action on Reddit helped the company get new advertisers – its main source of revenue – and bring back those that no longer existed, including those who recently stopped spending in the market turmoil, Huffman said. The most unprofitable Reddit user numbers put the daily average at 52 million in October. “We are still testing ourselves for advertisers,” he said. The company paid for a five-second commercial that aired on Sunday at Super Bowl LV.
San Francisco-based Reddit is known for its message boards on a variety of topics, as well as its “ask me anything” digital prefectures with celebrities, politicians and subject matter experts. The company was founded in 2005 and sold to Condé Nast a year later. The parent company of the magazine’s publisher, Advance Publications Inc., spun off Reddit in 2011 and remains a shareholder, along with venture capital firm Andreessen Horowitz, Chinese internet conglomerate Tencent Holdings Ltd.
and others.
Social media companies have long struggled to find the best way to moderate and organize their content, and now face the prospect of lawmakers changing the way they do business. One possibility is a revision of Section 230 of the Communications Decency Act, which since 1996 has protected social media companies from civil liability potentially resulting from the content users post on platforms. A Congressional hearing on the recent market fluctuations was scheduled for February 18; Huffman said on Friday that he had not yet been invited to participate.
Reddit allows users to evaluate all content on the platform and has tens of thousands of unpaid users to police the speech. On the other hand, larger social media platforms rely mainly on algorithms and paid help to do this kind of work.
Facebook,
the largest social network in the world, reported having about 1.85 billion daily users in the December quarter, while Twitter reported more recently that it had an average of 187 million daily users in the three months ending in September. Both also feature technology designed to help quickly identify offenders – just like Reddit, albeit to a much lesser extent.
Facebook Inc. and Twitter Inc. have shown growing interest in having their users help to moderate the content that appears on their platforms. Facebook, which has struggled to contain calls for violence within the platform’s communities, is pressuring voluntary group administrators to devote more efforts to review members’ posts. Twitter is testing a program called Birdwatch that encourages users to identify information in tweets that they believe to be misleading and to write notes that provide informational context.
The recent GameStop run and other actions involve investors in opposing fields: traditional Wall Street companies and small investors who are up against the system. WSJ asked the same series of questions to each of them about the role of WallStreetBets in the commercial frenzy. Photo illustration: Carlos Waters
“Community moderation can work, but only when there is good collaboration and communication between moderators and platforms,” said Joseph Seering, a Stanford University scholar who researches voluntary moderation.
Reddit’s relationship with its volunteer moderators was not always harmonious. Hundreds of communities closed in 2015 to protest the sudden dismissal of a popular Reddit employee. The company’s CEO at the time, Ellen Pao, apologized for the way Reddit handled the matter and resigned shortly thereafter; Mr. Huffman took over.
In June, Reddit banned “The_Donald,” a community dedicated to former President Donald Trump, saying that moderators often ignored content that violated the platform’s rules.
“It was a political community dedicated to a president, so there is a lot of weight in that,” said Huffman. “We gave them a lot of opportunities to be good citizens of Reddit, and they were never able to do that.”
The number of WallStreetBets members alone has more than quadrupled, to 8.7 million subscribers this year. Huffman said the group, which lists 25 moderators on its forum, chose to make the forum temporarily private last month because they were overwhelmed and faced technical challenges.
Reddit CEO Steve Huffman
Photograph:
Zach Gibson / Getty Images
While Reddit’s unpaid moderators are expected to ensure that members of their communities follow company rules, they are free to create additional rules, which for some do not include profanity or banter. The most common rule that Reddit communities have adopted, Huffman emphasized, is to be civilized.
“When it is written by your colleagues in the context of a community, it is really powerful,” he said. “Think of it as the difference between your parents saying, be nice, and your friends saying, be nice. The latter has a lot of weight. “
For the past four years, Dylan Kuehl has moderated a Reddit community called “buildapc”, for people looking for help building their own computers. It has more than 3.6 million subscribers. “Reddit does not provide us with any active input,” he said. “They don’t have anyone around who says, ‘Hey, you should ban that person or cancel a post.’ It totally depends on us. “
Mr. Kuehl, a 31-year-old Ontario software engineer, described the relationship between Reddit and its moderators as “symbiotic, almost codependent”. He said: “They trust us to keep their platform clean … so they can keep the lights on, so that we can continue to have our free platform to have our community.”
Mr. Huffman said that Reddit launched an initiative in 2019 for its volunteer moderators to get help quickly from more experienced volunteer moderators in times of crisis. He said that Reddit has more work to do in this area, but considers the company’s approach to be essential to its success and future, which could include additional fundraising and a public listing of its actions. Reddit was valued at $ 3 billion after its last financing round in February 2019, according to PitchBook, and has raised more than $ 550 million since its inception.
“I always think about what Reddit looks like as a public company,” said Huffman. “We still have to grow, but we are looking forward to it.”
Write to Sarah E. Needleman at [email protected]
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