Alphabet's Google has strengthened its collaboration with Reddit amidst concerns about the social media platform's dependence on Google Search for user growth.

James Cordwell, an analyst at Redburn Atlantic, began covering Reddit's stock by giving it a "sell" rating. He expressed concerns that Reddit's daily active user (DAU) growth, a crucial measure for web-based traffic, is at risk due to potential algorithm alterations by Google.

The impact of Google's algorithm changes on Reddit has been noticeable, with a decrease of 600,000 U.S.-based DAUs arriving via Google search recorded in the fourth quarter, according to Cordwell.

As a result, Reddit's shares dropped by 5.6% during Monday's afternoon trading session.

The extended partnership means that Reddit now has access to Google's Vertex AI, a machine learning model and AI application development platform from Google Cloud, to enhance its search capabilities.

Google, headquartered in Mountain View, California, confirmed it will enhance the integration of Reddit content across its services, aiming to improve user accessibility to valuable information.

Moreover, Google will utilize Reddit's API to access real-time, structured content, which will enhance the accuracy and relevance of the information displayed.

Cordwell noted that Reddit's growth in organic users, those who use the platform regularly rather than for singular queries, has remained relatively stable over the past six months, implying that the platform's appeal has not drastically changed.

(Adapted from reporting by Rishi Kant in Bengaluru; Editing by Maju Samuel)