Reddit, the social media platform, will lay off roughly 5% of its workforce and slow down its hiring process, according to new reports, as it joins the ranks of tech companies forced to cut costs heading into the slowing economy.
According to the Wall Street Journal, the layoffs are one part of a larger restructuring designed the bring about greater financial stability by increasing operational efficiency.
Steve Huffman, the company’s CEO said, “Reddit is making these moves to address priorities, including funding projects and achieving our goal of breaking even next year.”
The company plans to lay off approximately 90 workers. Reddit presently employs about 2,000 workers, meaning the layoffs represent about one twentieth of the company’s workforce. The company will also eliminate about 200 open job offerings as it slows hiring.
Huffman said, “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.” The company will also reduce hiring for the rest of the year to about 100 employees, decreasing the expected hires from a previous estimate of 300 employees.
Reddit has been enduring some upheaval since it announced plans to charge external companies for access to its API, (application programming interface). The move appeared to be in response to AI companies utilizing reddit text data, however communities across the platform have erupted in protest. Hundreds of subreddits are planning to boycott the platform in protest of the pricing, noting that the charge will make running apps which connect to the platform economically unsustainable. One Reddit administrator pointed out that for a competently run third-party app, the charge would work out to about 75 cents per user per month.
Reddit was founded in 2005 by Huffman, Alexis Ohanian and Aaron Swartz. the company moved to San Francisco in 2006, after the startup was purchased by Conde Nast and its parent firm Advance Publications. The social media site was spun out by the publisher in 2011. A year later, still operating with only 20 employees, the company managed to secure an “Ask Me Anything” with then-President Barak Obama, and was receiving three billion page views per month.
In 2021 the company secured hundreds of millions of dollars in funding, which drove its fundraising total past $1 billion, and then filed for an IPO at the end of 2021. Since then the IPO process stalled, leaving the company in private hands. When the firm last raised money it was valued at $10 billion.
The platform now joins the overwhelming cost-cutting trend in the tech sector. Microsoft, Facebook (now known as Meta), Google, and Amazon have all recently downsized their workforces. Although the companies have given a variety of reasons for the reductions, the change in economic outlook due to a mixture of inflation and the rate hikes the Federal Reserve is using to combat it are seen as the primary culprits.
