Reddit Lost 1 Million Weekly Referrals as AI Eats the Internet

Reddit's search traffic fell by more than 1 million referrals per week on average through October, and its stock dropped 29% in a single session — the sharpest one-day fall in the company's history. The cause, according to its own CEO: Google's AI is no longer sending people to websites.

"What started as a feature is now the full search experience," Steve Huffman, Reddit's co-founder and CEO, said on the company's earnings call last week. "And, at a minimum, it pushes everyone down the search page. And then, on top of that, the experiences themselves are not traffic drivers."

Huffman added: "People still want Reddit. It's just Google is not sending them to Reddit the way they used to." Reddit also said it would require users to log in, an attempt to block AI bots from scraping the site.

Chatbots such as ChatGPT and Claude now field questions that once went to search engines. Google's AI summaries sit at the top of results pages and intercept traffic before users click through to the sites the AI mines for answers.

"That is forcing content companies and media companies to entirely rethink their business models, their relationships with search engines and AI tools," said Nate Elliott, an analyst at eMarketer. "It's an existential change for these businesses."

How far has the damage spread?

Apple felt the pressure this week. On Monday it flagged slower December-quarter growth in its services segment, citing challenges in "third-party licensing" — the arrangement under which Google pays Apple billions to remain the default search engine on Apple devices. UBS analyst David Vogt wrote in a research note that AI tools appeared to "cannibalize Google search activity."

Google itself is not immune. Alphabet shares sank 10% last week after the company disclosed that search-advertising revenue growth slowed to 12% in the third quarter, down from 19% in the first quarter. Google expects further pressure in the fourth quarter.

Fiverr, the freelance-work platform, saw third-quarter revenue fall 15.8% year over year. Its shareholder letter cited "AI-related disruption to traditional SEO efforts" hitting "both low-value and high-end work on the platform."

"The internet as we've known it for the past 20-plus years is going away and it's going to completely change," Fiverr CEO Micha Kaufman said last week. "It's dying."

LegalZoom, despite reporting a fifth straight quarter of double-digit subscription growth in August, noted "lower customer acquisition through our traditional search channels." And People magazine's CEO, Neil Vogel, told a September conference that Google once delivered more than 70% of its audience but now accounts for just 20% of its web audience. The publisher — which also puts out InStyle and Food & Wine — said last week it would lay off about 6% of its staff.

The takeaway: the traffic decline is broad, measurable and already hitting revenue and headcount.

What do AI answers do to clicks and quality?

The numbers are stark. Only about half of all searches led to a click outside the search engine even before AI summaries, Elliott said. AI overviews now push that click-through rate down to as little as one-third, depending on estimates.

A study published this year by the New Jersey Institute of Technology and other universities found Google returned AI Overviews for 51.5% of queries as of late last year. Traditional results favored popular, government and educational sites; AI answers favored content owned by Google and niche sites. Sites that blocked Google's AI crawler rarely appeared in the summaries.

Yi Chen, a business data science professor at NJIT and one of the study's researchers, warned that starving high-quality publishers leaves models with worse material. "It's going to be garbage in, garbage out," she said.

Who gets hurt next?

The risk is moving beyond media. Campbell's warned in its September annual report that AI shopping agents were changing how consumers discover its products, and conceded it might not get its marketing right. 1-800-Flowers, whose brands include Harry & David and the Popcorn Factory, warned in its own annual report that AI-driven search could cut traffic to its websites — and that the tools' frequent factual errors compound the problem.

"These tools may display inaccurate or incomplete information about our products, prices, availability, delivery terms or promotions, and we may have limited ability to correct or influence that content," the company said.

Tinglong Dai, a business professor at Johns Hopkins University, noted that AI summaries narrow choices to a handful of options, usually from older, established brands. Some research already shows chatbots recommending Walmart over other retailers. "I think it's going to hurt small businesses, new businesses, in a way that we haven't seen before," he said.

There is one caveat: eMarketer estimates only slightly more than half of U.S. internet users prompt an AI tool at least once a month, and Elliott said users layer AI on top of search rather than replacing it. The internet may not be dying so much as shrinking — but for publishers and small retailers, the distinction may not matter.