Last March, the social link-sharing website Reddit hired former Facebook engineer Yishan Wong to be its CEO. To mark the occasion, Wong participated in one of Reddit’s popular “Ask Me Anything” Q&A threads. When asked about the future of the Website, Wong likened Reddit to a city-state, adding, “Notably, the city-as-legal-entity does not own the people and communities. It may exercise jurisdictional power for purposes of maintaining civil order (e.g. police, fire, anti-spam), and there is a concept of eminent domain, but morally speaking the city exists to facilitate and steward the messy human goals of the people who live there.”

That certainly sounds wonderful. But while Wong didn’t go to into much more detail about what constitutes “jurisdictional power,” a leaked memo that Wong posted recently on a private section of Reddit may reveal some clues as to how a governing body led by him would operate.

The memo was in response to last week’s dustup between Reddit and Gawker. Before diving into the content of the memo, here’s the TL;DR version of what happened:

Early last week, Reddit caught wind that Gawker writer Adrian Chen was planning an expose/outing of one of Reddit’s most controversial users, a peddler of gore and underage pictures who goes by Violentacrez. The “subreddits” (sections within Reddit) that he’s been linked have disturbing names like “Rapebait” and “Chokeabitch.” The article revealed the identity of Violentacrez to be one Michael Brutsch, a programmer at a Texas financial services company who was swiftly fired as a result of the expose. In retaliation for violating the privacy and anonymity of one of its most prolific posters, Reddit moderators went so far as to censor Gawker links from  more than 70 subreddits.

In the memo, Wong emphasizes that Reddit will not ban distasteful subreddits, adding, “We serve the community, we serve the ideals of free speech, and we hope to ultimately be a universal platform for human discourse.” Even if that “discourse” involves posting scantily-clad pictures of females under the age of 16.

Wong also wisely recognizes that the decision to ban Gawker links was a bad one, but not because it violates Reddit’s devotion to the free exchange of ideas. Instead, Wong criticizes the move for being bad publicity and ultimately ineffective:

Let’s be honest, this ban on links from the gawker network is not making reddit look so good. While the ban was originally being discussed by mods, we were discussing it internally too. We even briefly considered the consequences of a site-level ban on the entire gawker network, and realized three things about it:

1. It would ultimately be ineffective at stopping off-site doxxing. People who want to go after someone off-site would still do it. They have plenty of other megaphones besides reddit.

2. It would definitely raise the profile of the issue with the general public, and result in headlines like “gawker exposes creepster; reddit engages in personal vendetta to defend pedophile.” This would hardly help us explain the problem of irresponsible release of personal information to the general public.

3. Practically speaking, it wouldn’t really deter or hurt gawker anyways. This is in contrast to domain banning spammers, where it is not just punitive, it literally stops the spam.

What this suggests is that, if not for the public outcry, and if Wong actually thought it would work, Reddit may have blocked the entire Gawker network indefinitely. That doesn’t exactly sound like a free exchange of ideas. It also suggests what others have noted, which is that Reddit values anonymity over free speech (unless it sparks a huge public outcry, of course). While anonymity can certainly help foster free speech, the two concepts are not the same.

There’s nothing wrong with valuing anonymity. Reddit is merely a business giving customers what they want. After all, industry analyst Jeremiah Owyang told Technology Review that anonymity is one of the big reasons Reddit has been able to compete with Facebook as a link-sharing tool. But thinking of Reddit as a business runs counter to Wong’s original argument that Reddit is a city-state as opposed to just another one of those “money-making machines” he refers to in his AMA.

So now that we’ve established that (surprise, surprise) Reddit is a business, not a pure microcosm of free thought on the Web, it bears asking: Will Reddit’s devotion to the anonymity of its users threaten to derail its quest for mainstream acceptance and expansion? Quite possibly.

Beyond the unsavoriness that goes with defending peddlers of atrociously offensive content, there’s the argument that basing your business around protecting anonymity may not be such a good idea in 2012. As John Scalzi points out in his excellent blog post, “If at this point in Internet history you think you’re really anonymous/pseudonymous on the Internet, or that you have a right to anonymity/pseudonymity on the Internet, you’re kind of stupid.”

With that in mind, Reddit may need to either rethink its business model or actually live up to the promise of a utopian city-state with a truly free exchange of ideas.