Background: Reddit is the internet's ultimate rabbit-hole - it’s the place where people post, comment and debate literally everything. There are nearly 3.5 million subreddits, covering broad topics like finance and fitness to very specific topics like #breadstapledtotrees where people post photos of bread stapled to trees. Or what about #thomasthedankengine where people remix and share the Thomas the Tank Engine Song.

‍What happened: Now, Reddit has announced its fourth quarter results where it had just under 102 million daily active users - but analysts were expecting nearly 104 million. And the reason for this fall? Changes in Google’s algorithm. Reddit relies heavily on search traffic from Google - so when Google tweaks the rules, Reddit feels it hard.

‍What else: It’s not all bad news— because even with their slower user growth, Reddit saw its quarterly revenue 71%. But, this is a little reminder for Reddit & co that reliance on one platform can come back to bite you.

What's the key learning?

💡Platform dependency risk is when a business relies too heavily on a single external platform. It could be Google, Meta, Amazon or other platforms that drive traffic or sales.

💡The risk is that a single change by a platform can drastically impact a company’s performance. Get this: on some days, up to 50% of Reddit’s daily visitors came from Google - so a small algorithm change or even just a policy update can change the fortunes of a company.

💡We’ve seen this before with the media bargaining code in Australia. When Meta/Facebook implemented a ban on news pages, web traffic to Australian news sites fell by 13% from within the country. Ultimately, the solution is to spread your risk across multiple traffic sources.