A $1 billion deal would bring Google’s AdSense program to Reddit
A $2 billion deal between Google and Reddit is a deal worth keeping.
The news service’s search engine and its advertising revenue have both surged in the past year and the two companies are set to share an investment of nearly $1.5 billion, according to people familiar with the matter.
Google will acquire advertising business from Reddit for about $750 million in cash and stock, according a person familiar with terms of the deal, who asked not to be identified because the deal is private.
Reddit will pay Google $1 per share for its stake in the company and then another $250 million to make the deal official, the people said.
The deal comes on the heels of the Google-Reddit deal announced in December that resulted in a $1-per-share deal that gave the company more than $1 million in annual revenue.
The two companies have had their share of rocky times over the past few years.
Google’s YouTube, which has grown to nearly 200 million monthly visitors, is under pressure from advertisers and the rise of online video streaming services like Netflix.
Reddit, meanwhile, is in the midst of an advertising overhaul that has led to some complaints about the company’s lack of transparency and the way advertisers are paying for ads.
The new deal is the largest Google deal to date, eclipsing the $1bn Google-PayPal deal that was announced in February.
Reddit is also expanding its role as an online platform for businesses.
The company last year bought a $2.7 billion stake in mobile ad platform Foursquare, the first time a major tech company has bought a major social media platform.
Earlier this month, the company also said it would buy a $6.5 million stake in a startup that makes its own advertising software.
Google has said it is working to bolster its search engine in an effort to compete with Facebook and Amazon.
Reddit’s recent earnings, however, have been lackluster.
It reported quarterly revenue of $5 million in the third quarter and net income of $1,600 million in Q3, down 17 percent from a year earlier.
That’s compared with $13.2 million for Facebook and $14.6 million for Amazon.
Last year, Reddit was hit hard by a massive cyberattack that shut down some parts of the site.
The attack, which included a botnet that was able to steal data from millions of accounts, also forced the company to cut ad revenue.
Reddit also announced that it would launch an advertising-free version of its website and other features to make up for the loss of revenue, but that the service remains far behind Facebook and Twitter.
The search giant also announced a partnership with Instagram, which will allow users to post photos and videos to the service in a way similar to Facebook’s Photo Stream, which was launched in 2016.
The Instagram acquisition, which is expected to close in the first quarter, will add more than 30 million people to the site’s photo gallery, according the people familiar.
Instagram CEO Kevin Systrom said in a statement that the new deal was “an important milestone” for the company.
He added that it will enable Instagram to offer advertisers a new way to reach their audiences on the platform.
Google said in January that it planned to spend about $300 million on advertising on Reddit this year.