Misinformation triggers Reddit stock chaos in AI partnership confusion

In a significant development that underscores the complex interplay between financial markets, artificial intelligence, and media accuracy, Reuters retracted a story about an expanded Google-Reddit AI data partnership on March 17, 2025. The retraction came after Reddit shares experienced dramatic price fluctuations in response to the initial report, which was later determined to be based on outdated information.

The incident has drawn attention to multiple concerns within the tech industry: the substantial market influence wielded by major technology companies, the reliability of information used in AI systems, and the vulnerabilities in financial markets when responding to technology partnership announcements.

Reuters, one of the world's leading news agencies, initially published a report stating that Google would be expanding its existing data partnership with Reddit. The announcement triggered an immediate positive reaction in Reddit's stock price, with shares of the social media platform soaring within minutes of the story's publication.

However, subsequent investigation revealed that the Reuters report had been based on information from a blog post published approximately one year earlier, rather than on a new announcement. Upon this discovery, Reuters issued a retraction, and Reddit's share price quickly reversed course, eliminating the gains that had accumulated following the initial report.

According to social media posts by Nate Hake, a travel blogger who commented on the situation, "Today Reuters ran a story saying Google would expand its Reddit AI data partnership. $RDDT shares instantly soared. BUT turns out the story was based on a year-old blog post! Reuters retracts story. Reddit shares PLUNGE back down."

The Reuters retraction highlights the sensitivity of financial markets to news regarding AI partnerships, particularly those involving major technology platforms like Google and popular content sources like Reddit. The incident occurred just 24 hours before Reuters had to issue its formal correction, demonstrating how quickly misinformation can affect market valuations in the current technological landscape.

Financial analysts have noted that the rapid price movement in Reddit shares exemplifies how announcements related to AI partnerships can significantly impact market valuations, sometimes disproportionately to their actual business implications. This volatility raises questions about market efficiency when processing news about technological collaborations and AI developments.

The timing of this incident is particularly notable as it occurs amid growing scrutiny of large technology companies' influence over internet economics and information flow. Google, with its dominant position in search and emerging role in AI, has been at the center of discussions regarding tech platform power concentration.

Reddit, which completed its initial public offering in March 2023, has actively sought partnerships with AI companies to monetize its vast repository of user-generated content. These collaborations allow AI companies to utilize Reddit's diverse discussions and community interactions to train and improve their AI models, while providing Reddit with new revenue streams.

The original partnership between Google and Reddit, announced in February 2023, involved a multi-year agreement reported to be worth approximately $60 million annually. Under that arrangement, Google secured access to Reddit's data API to train its AI models and display Reddit content in search results and other Google products.

Technical details of the partnership reveal the complex infrastructure required for such data-sharing arrangements. The integration involves Reddit's Application Programming Interface (API), which provides structured access to the platform's content database. Google's AI systems, including its Gemini models, can use this data to better understand conversational patterns, question-answer formats, and diverse perspectives on countless topics.

Data engineers familiar with such partnerships note that these arrangements typically include specific parameters regarding data access frequency, content filtering mechanisms, and update intervals. The systems must process enormous volumes of text data while maintaining privacy standards and filtering problematic content.

The broader context of this incident involves ongoing discussions about how AI systems source their training data, the compensation models for content creators whose work helps train these systems, and the potential for AI to reshape online information ecosystems.

Critics have expressed concerns about the consequences of AI-driven information retrieval potentially replacing traditional web browsing. As Hake noted in a follow-up comment, "When 'Google does the Googling for you' via its AI, who will be responsible when the info is wrong?" This question highlights emerging concerns about accountability in AI-mediated information access.

The incident also raises questions about the verification processes employed by news organizations when reporting on technology partnerships, especially given the significant financial implications such reports can have. Reuters, which has traditionally maintained high standards for fact-checking, faced criticism for not verifying the recency of the information before publication.

Industry analysts point out that as AI becomes more integrated into business operations and investment decisions, the verification of information becomes increasingly critical. The speed at which markets react to news has accelerated with algorithmic trading, making accurate reporting more important than ever.

The false report and subsequent market reaction also demonstrate how AI-related announcements can trigger automated trading algorithms programmed to respond to specific keywords or company relationships. These algorithms, which execute trades in milliseconds, can amplify market movements before human traders have an opportunity to verify information.

Regulatory bodies, including the Securities and Exchange Commission, have previously expressed interest in how AI-related news affects market stability. This incident may prompt further examination of disclosure requirements around AI partnerships and the potential need for additional safeguards against market manipulation or misinformation.

For content creators and smaller publishers, the incident highlights concerns about Google's outsized influence on the internet economy. The dramatic market response to even the rumor of an expanded partnership underscores how valuable major platform relationships have become in the AI era.

Technical experts note that while partnerships between content platforms and AI companies present opportunities for innovation, they also create potential single points of failure in the information ecosystem. When a small number of companies control both the distribution and AI processing of information, errors can propagate rapidly through the system.

The incident comes at a time when legislators around the world are debating appropriate regulatory frameworks for AI systems and the companies that develop them. Questions about transparency, accuracy, and market influence are likely to feature prominently in these discussions.

As AI systems become more integrated into financial markets, news gathering, and information distribution, incidents like the Reuters retraction serve as important case studies in the complex interactions between technology, media, and markets.

Timeline of Events:

• February 2024: Original Google-Reddit partnership announced, reportedly worth around $60 million annually
• March 17, 2025, morning: Reuters publishes story about expanded Google-Reddit AI partnership based on year-old information
• March 17, 2025, following publication: Reddit ($RDDT) shares experience significant price increase
• March 17, 2025, later the same day: Reuters discovers error and retracts story
• March 17, 2025, following retraction: Reddit shares reverse gains and decline
• March 17, 2025, 11:49 PM: Social media commentary by Nate Hake highlighting the incident
• March 18, 2025: Ongoing analysis of the incident's implications for markets, media, and AI information systems