Federal court clears Reddit to advance anti-circumvention claims against Perplexity AI and SerpApi, even as the platform navigates Google search traffic fluctuations following robust Q2 2026 earnings.

  • A federal judge permitted Reddit's Digital Millennium Copyright Act (DMCA) anti-circumvention claims to proceed against AI search startup Perplexity and scraping firm SerpApi. 
  • Reddit posted strong Q2 2026 financial results, generating $805 million in revenue and earnings of $1.25, while expanding daily active users to 130.3 million. 
  • Despite strong financials, Reddit stock experienced after-hours pressure after management warned of "choppy" Google search referral traffic influenced by Google's evolving AI search features.

Reddit Inc. (RDDT) has secured a major procedural victory in its legal battle against unauthorized artificial intelligence data harvesting, after a federal judge denied motions to dismiss key claims alleging that AI platform Perplexity AI and web-scraping vendor SerpApi illegally bypassed technical safeguards to scrape community content.

The ruling allows Reddit to advance its claims under Section 1201 of the Digital Millennium Copyright Act (DMCA), which prohibits the circumvention of technological measures designed to control access to copyrighted works.

According to court filings, Reddit alleges that Perplexity AI and SerpApi systematically evaded the platform’s security protocols. Reddit states that the companies extracted proprietary content without authorization or licensing agreements, using the scraped data to power generative AI answer engines and commercial search tools.

The court rejected defense arguments seeking an early dismissal, determining that Reddit’s complaint adequately alleged that the defendants intentionally bypassed access control measures. The decision marks a significant precedent in digital publishing and intellectual property law, signaling that AI developers may face liability under anti-circumvention rules when circumventing technical barriers to train models or serve real-time web results.

The lawsuit is part of a broader industry push by Reddit to enforce data rights, monetize its database of human discussions through official API licensing contracts, and curb uncompensated automated scraping by third-party AI developers.

Reddit stock dropped 22% on Friday, its biggest single-day drop on record. 

RDDT Q2 2026 Earnings And User Growth Metrics 

Reddit reported earnings per share of $1.25 on revenue of $805 million in Q2, while Wall Street expected an EPS of $0.97 on revenue of $731 million, according to Fiscal.ai data.

The company forecast revenue of $860 million to $870 million in the third quarter (Q3), beating the consensus estimate of $830 million.

Reddit experienced a minor sequential decline of approximately 0.6% in U.S. daily active users (DAUs) during Q2 2026. Executives attributed this brief dip to choppy and volatile search-engine traffic referrals, even as overall global engagement and year-over-year revenue continued to grow strongly. 

“As AI makes information more abundant, the challenge is no longer finding content; it's finding context, personal opinion, and first-hand accounts. Everything online feels flat, polished, generated, or sponsored, so consumers are overwhelmed and increasingly skeptical,” Reddit CEO Steve Huffman said. 

RDDT Stock: Retail View 

Retail sentiment around Reddit trended in the ‘extremely bullish’ territory at the time of writing, with message volumes at ‘extremely high’ levels.

RDDT stock is down 38% year-to-date. The Vanguard Morningstar Total Stock Market ETF (VTI) is up 9%, while the Vanguard Morningstar Mid-Cap ETF (VO) is up 10% for the same duration.

The Vanguard Morningstar Growth ETF (VUG) is up 3.4% during this period.

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