March 13 (Reuters) - Digg is laying off staff citing "brutal reality" in the current digital environment and a surge in artificial intelligence-driven bot activity, more than a year after the once-popular content aggregator announced its comeback.

CEO Justin Mezzell said in a blog post on Friday that the company is downsizing its team to a small core group after failing to find product-market fit against established social media platforms.

The company grappled with an "unprecedented" influx of sophisticated AI agents and automated accounts that undermined the platform's voting and engagement systems.

"When you can't trust that the votes, the comments, and the engagement you're seeing are real, you've lost the foundation a community platform is built on," Mezzell said in a statement.

Digg founder Kevin Rose had teamed up with former rival Alexis Ohanian to buy the company as they had bet on an AI-powered revival of the platform that once drew around 40 million monthly visitors.

Mezzell said Rose will return to Digg full-time starting in April and will lead the effort to rebuild the platform. "We're not giving up. Digg isn't going away," he added.

The company did not immediately respond to a Reuters request for comment about the number of impacted employees.

Launched in 2004 by a then 27-year-old Rose, Digg was once called the "homepage of the internet" and was a rival to Reddit RDDT.N, a firm co-founded by Ohanian.

The platform was sold to New York-based tech incubator Betaworks in 2012. Microsoft's MSFT.O LinkedIn had scooped up its most valuable assets, including patents.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)

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