Chegg Sues Google Over AI-Generated Search Summaries, Alleging Traffic and Revenue Loss

Google's AI summaries are changing search. Now it's facing a lawsuit

For more than two decades, users have turned to search engines like Google, typed in a query, and received a familiar list of 10 blue links -- the gateway to the wider web. Ranking high on that list, through search engine optimization (SEO), has become a $200 billion business. But in the past two years, search has changed. Companies are now synthesizing and summarizing results into AI-generated answers that eliminate the need to click through to websites. While this may be convenient for users (setting aside concerns over hallucinations and accuracy) it's bad for businesses that rely on search traffic. One such business, educational tech firm Chegg, has sued Google in federal district court, alleging that AI-generated summaries of its content have siphoned traffic from its site and harmed its revenue. Chegg reported a 24% year-on-year revenue decline in Q4 2024, which it partly attributes to Google's AI-driven search changes. In the lawsuit, the company alleges that Google is "reaping the financial benefits of Chegg's content without having to spend a dime." A Google spokesperson responded that the company will defend itself in court, emphasizing that Google sends "billions of clicks" to websites daily and arguing that AI overviews have diversified -- not reduced -- traffic distribution.

Google Hit With Lawsuit Over Its Loathsome AI Overviews

Google is being sued by Chegg -- yes, the barely-hanging-on company that has furnished many a college student with homework answers and cheap textbooks -- over its infamously shoddy AI Overviews, Reuters reports. In a lawsuit filed Monday, Chegg accused the tech giant of abusing its monopoly of the search engine market to pressure websites like itself into letting its content be scraped by Google's AI tools for free. The advent of AI Overviews, the company says, has turned Google from a "search engine" into an "answer engine." And the upshot, per the lawsuit, is that by summarizing its material in the AI-powered search summaries, Google is diverting traffic away from Chegg's website and hurting its bottom line. The foundering California-based tech company laid off hundreds of employees last year, suffering a 24 percent decline in year-over-year net revenue, according to a recent company statement, with its stock barely trading above one dollar. "Our lawsuit is about more than Chegg -- it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," Chegg CEO Nathan Schultz said in the statement. Chegg's complaints echo the concerns voiced -- by itself and others -- at the cusp of the AI boom with the explosion of ChatGPT. Back then, the question was whether chatbots like OpenAI's would displace search engines as the go-to way of looking up information, fundamentally changing the internet ecosystem as we know it, and hurting Google's lucrative search business, from which it earns hundreds of billions of dollars in ad revenue. The tables have since turned, at least somewhat. Google has gotten ahead of the potential existential threat by integrating the AI Overviews, which are turned on by default and are shown to around one billion users according to the company, into its search engine. It's further profited by integrating ads straight into the search summaries. Almost immediately, Google's search summaries caused alarm among websites and news publishers about how they could vacuum up web traffic. As a small concession, Google began including inline links to websites cited in the summaries, making them more visible than before. However, Google reiterated that it wouldn't share any ad money with the websites whose content is cited in the AI Overviews. All the while, little progress has been made regarding the quality of the summaries, which have been mocked for their frequent hallucinations, including the now infamous case of recommending you put glue on pizza. That was nearly a year ago; to this day is still provides a steady drip of brain-meltingly stupid answers. Nonetheless, Google argues that its AI summaries are a positive force in the world of web search. "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered," a company spokesperson told Reuters. "Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites."

Google's AI search harms students with 'low-quality, unverified' summaries, Chegg claims

TL;DR: Chegg has sued Google, alleging its AI-powered search results unfairly divert traffic from educational publishers, harming student access to quality resources. Chegg has officially filed a lawsuit against Google, accusing the tech giant of unfairly diverting traffic from educational publishers with its AI-powered search results. In a recent Q4 earnings call, the ed-tech company claimed that Google's AI Overviews, which provide instant, AI-generated answers at the top of search results, are negatively impacting student learning and the online education ecosystem. "Google AIO has transformed Google from a 'search engine' into an 'answer engine,' displaying AI-generated content sourced from third-party sites like Chegg," said Chegg CEO Nathan Schultz The lawsuit, filed in the U.S. District Court for the District of Columbia, argues that Google's AI Overviews unfairly retain traffic that would typically go to Chegg and other content providers. Chegg claims this practice is harming students by reducing access to step-by-step educational resources, replacing them with low-quality, unverified AI summaries. "We believe this isn't just about Chegg - it's about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries." Schultz said. However, Chegg has been no stranger to controversy in the past. The company has been criticized for enabling cheating, with students using its study resources to access test answers and homework solutions rather than learning the material. Some universities have even blocked Chegg due to concerns that it facilitates academic dishonesty. On the flip side, AI summaries presented by companies like Google and OpenAI have been known for their unreliable, and sometimes baffling outputs. A BBC study found that 1 in 5 AI news summaries introduced factual errors, and Apple notably shut down their AI news feature last month for similar reasons. While the outcome will be up to the Colombian district court, one thing's for certain: AI will only continue to disrupt the lives of students and businesses alike.

One educational company accuses Google's AI summary of leading to a 'hollowed-out information ecosystem of little use and unworthy of trust' in latest lawsuit

Chegg, an American educational company, has accused Google of disincentivising original content "in favor of low-quality, unverified AI summaries" -- a recent technology that scrapes information from websites and gives it to the user without having to click into a page. In a lawsuit filed on Monday (via Reuters) Chegg argues Google's AI overview will lead to a "hollowed-out information ecosystem of little use and unworthy of trust". This announcement coincides with Chegg's declaration of its full-year financial results for 2024, which it put out to the public via a press release. In that press release, Chegg CEO Nathan Schultz starts with two central announcements on behalf of the company. The first is that Chegg is currently exploring a "range of alternatives to maximize shareholder value, including being acquired, undertaking a go-private transaction, or remaining as a public standalone company". The second is the filing of its complaint against Google and its parent company Alphabet Inc. Schultz argues these two decisions are directly linked as he alleges Google "has unjustly retained traffic that has historically come to Chegg, impacting our acquisitions, revenue and employees". Google officially unveiled its AI overview search system in April last year, and it has already rolled out to over 100 countries since. If you use Google and haven't chosen to actively turn AI summaries off, there's a good chance you have used it today. Google itself has invested significantly into AI over the last few years and even launched Google Gemini, a competitor to OpenAI's ChatGPT, back in 2023. Google's AI overview links out to sources it takes information from, but the case argues: "Traffic is being blocked from ever coming to Chegg because of Google's AIO and their use of Chegg's content to keep visitors on their own platform". As some users may not be given a reason to click on the page that Google's AI summary is reliant on, this case argues that AI summaries are effectively taking Chegg's traffic as its own. Schultz argues it's about much more than Chegg and that it's "about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries". In response to this complaint, Reuters reports Jose Castenada, a Google spokesperson, is critical of the suit's argumentation: "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites." This is one of many antitrust lawsuits brought against Google over the last few years, with U.S. District Judge Amit Mehta, who previously argued Google runs an illegal monopoly with Chrome last year, overseeing Chegg's case. Google has reportedly attempted to appeal the decision and is looking to have the case dismissed entirely.

Chegg sues Google over AI Overviews

Sheena Vasani writes about tech news, reviews gadgets, and helps readers save money by highlighting deals and product recommendations for The Verge. Online education company Chegg filed a lawsuit on February 24th against Google claiming that the company's AI-generated summaries of search results have hurt its traffic and revenue, Reuters reports. It's believed to be the first antitrust lawsuit filed by a single company over the AI Overviews feature, Reuters says. Chegg claims Google uses its power as a monopoly to coerce companies into using their content for AI Overviews, "reaping the financial benefits of Chegg's content without having to spend a dime," CEO Nathan Schultz says in prepared remarks for investors. Chegg, which offers textbook rentals and homework help, is now considering getting acquired and going private as a result. "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," Schultz says. "Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," says Google spokesperson Jose Castaneda in a statement to Reuters. The lawsuit comes as a number of media outlets have expressed concern over how Google's AI summaries have impacted traffic. Last year, the News/Media Alliance -- an organization that represents over 2,000 news publishers -- published a press release saying its impact will be "catastrophic."

Online education company Chegg sues Google, says AI is killing business

Chegg said it needs to pursue "strategic" options such as a sale of the company because it has lost much of the traffic it had before Google started AI search summaries. A new lawsuit against Google alleges that the search giant's artificial intelligence summaries have hurt online education company Chegg's traffic and revenue so much that the company may not survive in its current form. Chegg, which provides students with homework help and test answers, filed the suit against Google and parent company Alphabet this week in federal court. In its quarterly report released Monday, the company tied its recent financial struggles to AI-generated search summaries and claimed Google has "unjustly retained traffic" that once flowed to Chegg's site. Chegg reported $144 million in revenue in its fourth quarter, a 24 percent decrease from the same period last year. It's one of the first instances of a publicly traded company going to court to claim that a search engine's AI has severely affected business. The traffic decline that Chegg blames on Google's AI overviews has forced the education company to consider "strategic alternatives" such as going private or being acquired, chief executive Nathan Schultz said during a Monday call with analysts. The company alleged in its complaint that Google uses its dominant position in online searches to force Chegg to supply proprietary content to be included in search results rather than sending them to the original source. "Google is reaping the financial benefits of Chegg's content without having to spend a dime," Schultz said. "Our complaint challenges Google's unfair competition, which is unjust, harmful and unsustainable." In an email to The Washington Post, Google spokesperson José Castañeda called Chegg's claims "meritless." Google's AI overviews send traffic to more sites and create opportunities for users to discover content and craft helpful searches, Castañeda wrote. Online learning during the pandemic brought booming business to companies such as Chegg and Course Hero that promised homework and test answers. Students could pay for a subscription to these sites and receive swaths of course information, including, in some instances, copies of entire exams with the answers already provided. But the rise of generative AI has introduced cheaper, easier ways for students to seek answers, leaving Chegg and other traditional homework help companies struggling to keep up. Chegg's non-subscriber traffic plummeted 49 percent in January compared with the same month last year, a significant drop from the 8 percent year-over-year decrease the company reported in the second quarter of 2024, when Google rolled out its AI search summaries. At its peak in February 2021, Chegg's stock price reached $113 a share. Shares closed Tuesday at $1.07. AI isn't a new problem for Chegg. In May 2023, the company's then-CEO, Dan Rosensweig, said OpenAI's ChatGPT was affecting its business, although Chegg later developed a learning companion chatbot with OpenAI. But when Google last year said it would add AI to search results, some experts argued that the move would boost the tech giant's already tight control over the internet. In February 2024, tech research firm Gartner predicted that internet traffic from search engines would fall by 25 percent by 2026, due in large part to AI chatbots and summaries usurping clicks. Search engine optimization experts have become less "apocalyptic" about AI's impact on revenue in the past year, said Ross Hudgens, CEO of search engine optimization consultancy Siege Media. However, Google's AI-generated summaries have hurt some industries more than others, he said. So far, Google's AI summaries have mainly affected purely informational queries -- such as those for news and homework help -- rather than purchase-related queries, said Lily Ray, SEO strategy and research vice president at Amsive. Google also hasn't fully rolled out all of its AI-supported search features, meaning that most companies haven't felt the full effect of its search changes yet, she added. "In the case of websites that purely make money through traffic and page views, it's a devastating threat to the whole business model," Ray said. "This is still pretty early, but there are a lot of companies that are certainly upset about it." Multiple publishers last year sounded alarms that the search giant's use of AI to summarize search results would cripple traffic to news websites. But websites that offer clear-cut, straightforward information -- including answers to true-or-false science homework or multiple-choice math questions -- have generally seen a greater dip in traffic than those offering more complex information, Hudgens said. "For a grade school question on a test, you wouldn't feel the need to go click through to that website at all," he said. Chegg relied on matching Google-searched homework questions to answer pages on its site. Now, summaries and chatbots that offer free help have made Chegg an "obvious first victim" of AI-generated search summaries, Hudgens said. "They're probably freaking out," he said.

Google Sued Over AI Overviews Despite Last Year's Fixes: Critics Say Search Still Hurts Publishers

Google has long touted artificial intelligence as playing a key role in the future of search, but its controversial AI-powered overviews have now landed the company at the center of a legal firestorm. Chegg, an online education company, has filed a lawsuit against the tech giant, accusing the tool of siphoning traffic and potential revenue from its website. Last year, Google addressed the initial backlash against its AI-generated summaries with a list of fixes, including improved detection mechanisms and increased safeguards. Chegg Files Lawsuit On Monday, Feb. 24, Chegg announced that it had filed a lawsuit against Google, claiming the tech giant "unjustly retained traffic that has historically come to Chegg." In a statement in the company's full-year results, Nathan Schultz, CEO of Chegg, claimed Google's AI overviews had impacted its acquisitions, revenues, and employees. Despite Chegg's "brand awareness, engagement, and retention," Schultz claimed that Google's AI-generated summaries were blocking traffic and keeping users from leaving its site. "As we allege in our complaint, Google AI Overviews has transformed Google from a "search engine" into an "answer engine," displaying AI-generated content sourced from third-party sites like Chegg," he added. The company claimed that Google's AI overviews have contributed to its non-subscriber traffic plummeting to negative 49% in January 2025. Google Aware of AI Issues In May 2024, shortly after the launch of AI Overviews, Google was in defense mode following the backlash. The tech giant's AI-generated summary tool came under fire for a slew of questionable responses, such as advising a user to put glue on pizza. After someone searched "cheese not sticking to pizza," Google recommended adding "⅛ cup of non-toxic glue to the sauce to give it more tackiness." Elsewhere, a user shared Google's generated response claiming that eating a rock a day was important for digestive health. These responses, while shared with humor, highlighted the issue of misinformation within Google's AI Overviews. Liz Reid, Google's vice president and head of Search claimed in May that many of the AI Overview replies circulating on social media are fake. However, she admitted that some shared responses had been produced by the AI tool. "One area we identified was our ability to interpret nonsensical queries and satirical content. Let's take a look at an example: "How many rocks should I eat?" Prior to these screenshots going viral, practically no one asked Google that question. You can see that yourself on Google Trends," she said. To combat these concerns, Reid announced multiple new measures that she said would prevent misleading advice from Google's AI generation. First, the company improved detection mechanisms to limit the inclusion of satirical and humorous content. It also implemented content source restrictions and reduced the use of user-generated content in responses. According to Reid, less than one in every 7 million unique queries where AI Overviews appeared contained a content policy violation. "As AI continues to expand the universe of queries that people can ask, 2025 is going to be one of the biggest years for search innovation yet," Pichai said in Alphabet's February earnings call. In the near future, Google plans to add more AI systems into its search engine, essentially making it closer to OpenAI's ChatGPT. "I think the [Search] product will evolve even more," Pichai said. "As you make it more easy for people to interact and ask follow-up questions, etc., I think we have an opportunity to drive further growth." AI Challenges It's not just Google that has come under fire for AI missteps; the rapid advancements in AI development have highlighted the technology's issues with accuracy. From generating misleading or outright false information to failing to properly credit original sources, AI-powered tools have repeatedly demonstrated their current limitations. Critics argue that while AI can streamline information access, it often does so at the cost of nuance and factual integrity . As tech giants like Google push forward with AI-powered search, the risks of misinformation continue to fuel heated debates over the future of how we receive digital information.

Google's AI previews erode the internet, US edtech company says in lawsuit

Alphabet's Google internet search engine is eroding demand for original content and undermining publishers' ability to compete with its artificial intelligence-generated overviews, a U.S. educational technology company said in a lawsuit filed on Monday. Chegg, an online education company that offers textbook rentals, homework help, and tutoring, said in the lawsuit filed in Washington, D.C., that Google is co-opting publishers' content to keep users on its own site, erasing financial incentives to publish. This will eventually lead to a "hollowed-out information ecosystem of little use and unworthy of trust," the company said. The Santa Clara, California-based company has said Google's AI overviews have caused a drop in visitors and subscribers. The company is now considering a sale or take-private transaction as a result, the company's CEO Nathan Schultz said on Monday. Google spokesperson Jose Castaneda called the claims meritless. "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," Castaneda said. Chegg shares closed at $1.57 on Monday, down more than 98% from its peak price in 2021. The company announced it would lay off 21% of its staff in November. Schultz said Google is profiting off the company's content for free. "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," he said. Publishers allow Google to crawl their websites to generate search results, which Google monetizes through advertising. In exchange, the publishers receive search traffic to their sites when users click on the results, Chegg said. But Google has started coercing publishers to let it use the information for AI overviews and other features that result in fewer site visitors, the company said. Chegg argued the conduct violates a law against conditioning the sale of one product on the customer selling or giving its supplier another product. The lawsuit is believed to be the first where a single company accuses Google of violating antitrust law through AI overviews. An Arkansas newspaper made similar claims against Google in a class action on behalf of the news industry in 2023. U.S. District Judge Amit Mehta, who ruled in a case brought by the U.S. Department of Justice that Google holds an illegal monopoly in online search, is overseeing the news publisher case. Google has said it will appeal that decision, and has asked the judge to dismiss the newspaper's case.

Chegg sues Google over AI search summaries | TechCrunch

Edtech company Chegg has sued Google claiming that the tech giant's AI summaries of search results have hurt Chegg's traffic and revenue. In the suit, filed in the U.S. District Court for the District of Columbia, Chegg accuses Google of unfair competition -- specifically reciprocal dealing, monopoly maintenance, and unjust enrichment. Google, Chegg claims, forces companies to supply their content in order to be included in Google Search, unfairly exercising its monopoly power in search to reap the benefits of third-party IP. Chegg is seeking compensatory damages and other forms of relief, as well as an injunction on Google's alleged "unlawful and unfair" conduct. Chegg is only the latest publisher to take issue with Google's efforts to inject Google Search with AI. A number of news outlets claim they've seen an impact on traffic from Google's AI summaries in search, which draw from sources around the web to answer Google Search user queries. We've reached out to Google for comment and will update this post if we hear back.

Google faces massive legal setback for hurting AI with traffic that Sundar Pichai said helps search grow

Educational technology company Chegg has filed a lawsuit in federal district court against tech giant Google, claiming that artificial intelligence summaries of search results have hurt the company's traffic and revenue. The legal move comes nearly two years after former CEO Dan Rosensweig said students engaging with OpenAI's ChatGPT assistant were cutting into Chegg's new customer growth, according to news agency Reuters. The internet search engine is eroding demand for original content and undermining publishers' ability to compete with its artificial intelligence-generated overviews, a US educational technology company said in a lawsuit filed on Monday. The Reuters report said Chegg, an online education company that offers textbook rentals, homework help, and tutoring, said in the lawsuit filed in Washington, D.C., that Google is co-opting publishers' content to keep users on its own site, erasing financial incentives to publish. It argues that Google's actions will ultimately lead to a "hollowed-out information ecosystem of little use and unworthy of trust." "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," Schultz stated. He further accused Google of profiting from Chegg's content without compensation. ALSO READ: Mysterious bruise on Trump's right hand sets social media buzzing; White House intervenes The Santa Clara, California-based company has said Google's AI overviews have caused a drop in visitors and subscribers. The company is now considering a sale or take-private transaction as a result, the company's CEO Nathan Schultz said on Monday. Google forces companies like Chegg to "supply our proprietary content in order to be included in Google's search function," said Schultz, adding that the search company uses its monopoly power, "reaping the financial benefits of Chegg's content without having to spend a dime." Google spokesperson Jose Castaneda called the claims meritless. "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," Castaneda said. ALSO READ: Starbucks is shaking up its drinks menu amid layoffs. Here's a list of what it's removing and why: 10 points Chegg's stock closed at $1.57 on Monday, marking a decline of over 98% from its peak in 2021. In November, the company announced plans to lay off 21% of its workforce. Chegg CEO Dan Rosensweig accused Google of profiting from the company's content without compensation. "Our lawsuit goes beyond Chegg -- it concerns the entire digital publishing industry, the future of internet search, and the risk of students losing access to high-quality, step-by-step learning in favor of low-quality, unverified AI summaries," he stated. Typically, publishers allow Google to index their websites for search results, which Google monetizes through ads. In return, publishers receive traffic when users click on their links. However, Chegg claims that Google is now pressuring publishers to let it use their content for AI overviews and other features, resulting in reduced website visits. ALSO READ: It wasn't love at first sight for Elon and Trump. When Musk reportedly called US President 'f***ing moron' Chegg argues that Google's actions violate antitrust laws by tying access to one product to the provision of another. This lawsuit is believed to be the first in which a company accuses Google of breaching antitrust laws through AI-generated content. A similar case was filed in 2023 by an Arkansas newspaper as part of a class action representing the news industry. Both cases are being overseen by U.S. District Judge Amit Mehta, who previously ruled that Google holds an illegal monopoly in online search. (With inputs from Reuters)

Google Faces Lawsuit from Chegg Over AI Summaries

Edtech company Chegg has sued Google, accusing the technology giant's AI search summaries of damaging its website traffic and sales. The complaint, which was filed in the US District Court of Columbia, alleges unfair competition, monopolistic practices, reciprocal dealing, and unjust enrichment against Google. Chegg argues that Google forces companies to make their content accessible so that Google Search can index it. The Edtech company further accuses the search engine of leveraging its market power to profit from third-party . Google's AI summaries pull content from its platform. The company believes this will reduce direct traffic and affect ad revenue and subscription services. The Chegg lawsuit seeks compensatory damages. It also aims for an injunction against what the company refers to as .

Chegg sues Google, explores sale after AI search summaries hit revenues

Chegg is suing Google parent Alphabet over claims the search engine's artificial intelligence summary tool has hit its revenues, leading the US-listed educational technology group to weigh up a sale of the business. California-based Chegg, which provides study tools for students, filed the complaint on Monday claiming that Google AI Overviews, which presents users with summary answers to their queries, serves to keep users on Google's own site. Chief executive Nathan Schultz said the search giant's AI search changes had "unjustly retained traffic that has historically come to Chegg, impacting our acquisitions, revenue and employees." He added this was "materially impacting" revenues, leading the company to instigate a strategic revenue in which it would explore "a range of alternatives to maximize shareholder value, including being acquired, undertaking a go-private transaction, or remaining as a public standalone company." Google said: "With AI Overviews, people find search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites. We will defend against these meritless claims." Chegg's move comes as developments in AI shake global industries, from health care to education and the automotive sector. The fast development of generative AI since OpenAI launched ChatGPT in November 2022 has upended demand for edtech companies' paid-for online learning tools, leading their valuations to plummet.

Educational tech company Chegg sues Google over AI Overviews

Google is 'reaping the financial benefits of Chegg's content without having to spend a dime,' Chegg alleges. Educational tech company Chegg has sued Google in federal court claiming that its "AI Overviews" that appear ahead of search results have hurt its traffic and revenue. In order to be included in Google's search results, Chegg alleges, it must "supply content that Google republishes without permission in AI-generated answers that unfairly compete for the attention of users on the internet in violation of antitrust laws of the United States." Previously, publishers like The New York Times have sued AI companies over copyright infringement, accusing them of training large language models (LLMs) on IP material without permission. However, Chegg is taking another approach, instead accusing Google of abusing its monopoly position to force companies to supply materials for its "AI Overviews" on its search page. Failing to do so, it says, means it could effectively be excluded from Google Search altogether. Chegg included a screenshot of a Google AI Overview that takes details from Chegg's website without attribution, though the page in question appears lower down in the search results. Google told CNBC that it would defend itself against the suit. "Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," a spokesperson said. Google's use of its monopoly power in this way "amounts to a form of unlawful reciprocal dealing that harms competition in violation of the Sherman Act," Chegg claimed, while citing a federal judge's ruling from last year that Google is a monopolist in search. The tech-ed company said that it is particularly affected by these practices because the "breadth, depth, quality and volume of Chegg's educational content holds enormous value for artificial intelligence applications." Chegg is the latest in a long list of companies suing Google over alleged misappropriation of IP content, though as mentioned, using the Sherman Act is a novel approach. As of January 2025, 38 copyright lawsuits related to AI have been filed in the US, according to a site keeping track of the claims -- so far with mixed results.

Edtech Firm Sues Google Over AI Search Tool Affecting Revenue

Disclaimer: This content generated by AI & may have errors or hallucinations. Edit before use. Read our Terms of use Edtech platform Chegg has filed a lawsuit against Google alleging that its AI Overview (AIO) feature spurred anti-competitive practices. Chegg's announcement came within its disclosure of the company's financial results for the latest quarter, where it spoke about the issue at length. Its argument against Google, filed in the U.S. District Court for the District of Columbia, claims three key aspects: Launched in May 2024, the AI Overview feature in Google Search provides users with an AI-generated summary of queries with links to the source web pages. Upon its launch, the feature received severe criticism for generating inaccurate or nonsensical responses, struggling to distinguish between satire and genuine sources, prompting Google to rectify it. Coming back to Chegg's complaint, it claims that AIO has transformed Google's search engine into an "answer engine", displaying content sourced from third parties like Chegg. Further, as this feature expands, the need to navigate to third-party websites reduces, with traffic remaining on Google itself. Accordingly, Chegg notes that its non-subscriber traffic plunged 49% in January 2025, a sharp trough from the 8% decline reported in Q2 2024. Besides the complaint against Google, Chegg CEO Nathan Schultz announced a strategic review process and the potential exploration of alternatives to "maximize shareholder value". The latter comprises debating whether the company should consider being acquired, go private, or remain a public standalone. Schultz attributed this decision to Google's launch of AI Overview, which "retained traffic that has historically come to Chegg" and negatively affected its revenue, acquisitions, and workforce. To improve the level of personalisation it offers students, Chegg integrated AI and machine learning within its product stack and enhanced its AI-powered Question and Answer feature in 2024. The company also integrated an AI-enabled tool called 'Speaking Practice' within its language learning service 'Busuu', allowing instant, personalised feedback. Moving forward to 2025, the company expects to ramp up its recently launched product 'Solution Scout' which allows students to compare answers from multiple large language models (LLMs) including that of Chegg's. Chegg isn't the only application harmed by the expansion of Google's AI overview. Previously digital news publishers have expressed concerns that the advent of this feature sounds a death knell for traffic to their websites. Moreover, a study by Seer Interactive found a 0.6% drop in organic click through rate from AIO, alongside a 58.5% 'no-click' rate in US searches, meaning users didn't visit any website. While news publishers grappled with this concern, Google during its Q2FY24 earnings call, announced and later implemented its plans to monetize its AIO by embedding advertisements labelled as "sponsored" within this section. Announcing this lawsuit, Schultz claimed that Chegg's litigation pursuit seeks to represent the digital publishing industry and the future of internet search. Responding to Chegg's allegations, a Google spokesperson speaking to CNBC stated that the company sends "billions of clicks" to various websites and AIOs send traffic to a "greater diversity of sites". During its argument, Chegg also alleged that despite borrowing details from its website, the AIO doesn't attribute the same. On the contrary, the relevant Chegg page does come lower in search results. Chegg's concerns align with those of digital news publishers, who worry about AI answering 75% of queries without requiring a click-through if integrated within search, as reported by The Wall Street Journal. Moving forward, Chegg also cited an August 2024 ruling of the U.S. District Court for the District of Columbia, which classified Google as a monopolist in the search market, CNBC reported. For context, the court concluded that Google maintained exclusivity through deals, had no competition, caused feedback loops, and limited innovation through its dominance. Notably, through the exclusivity contract that Google has with Apple, the company receives 95% of all general search queries made on iPhones. With Google capitalizing on AI Overview, the key question that remains is: How will digital news publishers and other websites adapt to declining traffic?

Google's AI Previews Erode the Internet, Edtech Company Says in Lawsuit

(Reuters) - Alphabet's Google internet search engine is eroding demand for original content and undermining publishers' ability to compete with its artificial intelligence-generated overviews, a U.S. educational technology company said in a lawsuit filed on Monday. Chegg, an online education company that offers textbook rentals, homework help, and tutoring, said in the lawsuit filed in Washington, D.C., that Google is co-opting publishers' content to keep users on its own site, erasing financial incentives to publish. This will eventually lead to a "hollowed-out information ecosystem of little use and unworthy of trust," the company said. The Santa Clara, California-based company has said Google's AI overviews have caused a drop in visitors and subscribers. Chegg was trading at around $1.63 on Monday, down more than 98% from its peak price in 2021. The company announced it would lay off 21% of its staff in November. Nathan Schultz, CEO of Chegg, said on Monday that Google is profiting off the company's content for free. "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," he said. Publishers allow Google to crawl their websites to generate search results, which Google monetizes through advertising. In exchange, the publishers receive search traffic to their sites when users click on the results, Chegg said. But Google has started coercing publishers to let it use the information for AI overviews and other features that result in fewer site visitors, the company said. Chegg argued the conduct violates a law against conditioning the sale of one product on the customer selling or giving its supplier another product. The lawsuit is believed to be the first where a single company accuses Google of violating antitrust law through AI overviews. An Arkansas newspaper made similar claims against Google in a class action on behalf of the news industry in 2023. U.S. District Judge Amit Mehta, who ruled in a case brought by the U.S. Department of Justice that Google holds an illegal monopoly in online search, is overseeing the news publisher case. Google has said it will appeal that decision, and has asked the judge to dismiss the newspaper's case. (Reporting by Jody Godoy in New York; Editing by David Gregorio)

Google's AI Overviews Erode the Internet, US EdTech Firm Says in Lawsuit

Alphabet's Google internet search engine is eroding demand for original content and undermining publishers' ability to compete with its artificial intelligence-generated overviews, a US educational technology company said in a lawsuit filed on Monday. Chegg, an online education company that offers textbook rentals, homework help, and tutoring, said in the lawsuit filed in Washington, DC, that Google is co-opting publishers' content to keep users on its own site, erasing financial incentives to publish. This will eventually lead to a "hollowed-out information ecosystem of little use and unworthy of trust," the company said. The Santa Clara, California-based company has said Google's AI overviews have caused a drop in visitors and subscribers. The company is now considering a sale or take-private transaction as a result, the company's CEO Nathan Schultz said on Monday. Google spokesperson Jose Castaneda called the claims meritless. "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," Castaneda said. Chegg shares closed at $1.57 (roughly Rs. 136) on Monday, down more than 98 percent from its peak price in 2021. The company announced it would lay off 21 percent of its staff in November. Schultz said Google is profiting off the company's content for free. "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," he said. Publishers allow Google to crawl their websites to generate search results, which Google monetizes through advertising. In exchange, the publishers receive search traffic to their sites when users click on the results, Chegg said. But Google has started coercing publishers to let it use the information for AI overviews and other features that result in fewer site visitors, the company said. Chegg argued the conduct violates a law against conditioning the sale of one product on the customer selling or giving its supplier another product. The lawsuit is believed to be the first where a single company accuses Google of violating antitrust law through AI overviews. An Arkansas newspaper made similar claims against Google in a class action on behalf of the news industry in 2023. US District Judge Amit Mehta, who ruled in a case brought by the US Department of Justice that Google holds an illegal monopoly in online search, is overseeing the news publisher case. Google has said it will appeal that decision, and has asked the judge to dismiss the newspaper's case. © Thomson Reuters 2025

Google's AI previews erode the internet, edtech company says in lawsuit

Feb 24 (Reuters) - Alphabet's Google (GOOGL.O), opens new tab internet search engine is eroding demand for original content and undermining publishers' ability to compete with its artificial intelligence-generated overviews, a U.S. educational technology company said in a lawsuit filed on Monday. Chegg (CHGG.N), opens new tab, an online education company that offers textbook rentals, homework help, and tutoring, said in the lawsuit filed in Washington, D.C., that Google is co-opting publishers' content to keep users on its own site, erasing financial incentives to publish. This will eventually lead to a "hollowed-out information ecosystem of little use and unworthy of trust," the company said. The Santa Clara, California-based company has said Google's AI overviews have caused a drop in visitors and subscribers. Chegg was trading at around $1.63 on Monday, down more than 98% from its peak price in 2021. The company announced it would lay off 21% of its staff in November. Nathan Schultz, CEO of Chegg, said on Monday that Google is profiting off the company's content for free. "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries," he said. Publishers allow Google to crawl their websites to generate search results, which Google monetizes through advertising. In exchange, the publishers receive search traffic to their sites when users click on the results, Chegg said. But Google has started coercing publishers to let it use the information for AI overviews and other features that result in fewer site visitors, the company said. Chegg argued the conduct violates a law against conditioning the sale of one product on the customer selling or giving its supplier another product. The lawsuit is believed to be the first where a single company accuses Google of violating antitrust law through AI overviews. An Arkansas newspaper made similar claims against Google in a class action on behalf of the news industry in 2023. U.S. District Judge Amit Mehta, who ruled in a case brought by the U.S. Department of Justice that Google holds an illegal monopoly in online search, is overseeing the news publisher case. Google has said it will appeal that decision, and has asked the judge to dismiss the newspaper's case. Reporting by Jody Godoy in New York; Editing by David Gregorio Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Boards, Policy & RegulationRegulatory Oversight Jody Godoy Thomson Reuters Jody Godoy reports on tech policy and antitrust enforcement, including how regulators are responding to the rise of AI. Reach her at [email protected]

Chegg accuses Google of using AI to crush traffic, revenue in...

Chegg has filed a federal antitrust lawsuit against Google - alleging that the company's use of AI-generated summaries in search engine results has crushed its website traffic and revenue. In a lawsuit filed in US District Court in Washington DC, the online learning platform focused on Sundar Pichai-led Google's use of "AI Overviews" - a controversial feature automatically generates answers to user queries at the top of search results while effectively demoting links to other sites. Chegg CEO Nathan Shultz said Google "has unjustly retained traffic that has historically come to Chegg, impacting our acquisitions, revenue and employees" and described the search giant's conduct as "harmful and unsustainable." The company has retained Goldman Sachs as part of strategic review and will explore going private or selling itself. "Chegg has a superior product for education, as evident by our brand awareness, engagement, and retention," Schultz added in the company's earnings call. "Unfortunately, traffic is being blocked from ever coming to Chegg because of Google's [AI Overviews] and their use of Chegg's content to keep visitors on their own platform." Chegg shares have plunged nearly 90% over the last 12 months and were trading at a scant $1.04 as of Tuesday morning. The company's valuation has fallen to just $110 million. Google is accused in the lawsuit of violating the Sherman Antitrust Act. Schultz said Google "forces companies like Chegg to supply our proprietary content in order to be included in Google's search function." Google is also alleged to have engaged in monopoly maintenance by flexing its dominance over online search to "muscle out" smaller rivals, and of improperly benefitting from Chegg's content "without having to spend a time," the Chegg CEO said. Chegg's traffic from non-subscriber sources fell by a whopping 49% in January compared to the same month one year ago. The company detailed its lawsuit against Google alongside dismal fourth-quarter results. Chegg reported a net loss of $6.1 million on total revenue of $143.5 million - a decrease of 24% year-over-year. Google spokesperson José Castañeda pushed back on the lawsuit's claims, asserting that "people find search more helpful and use it more" thanks to the AI Overviews feature. "Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," Castañeda said in a statement. "We will defend against these meritless claims." As The Post has reported, Google has faced an avalanche of criticism over its AI-generated summaries since they launched last year, with one prominent trade group, the News Media Alliance, warning that the feature would do "catastrophic" damage to cash-strapped publishers, bloggers and content creators. AI Overviews were also shown to be prone to giving bizarre responses, such as advising users to eat rocks or add glue to their pizza sauce. Publishers have also accused Google of improperly scraping their websites for data to train their AI products without proper credit or compensation - and then using the products to compete against them. Google has denied wrongdoing. Chegg's lawsuit marks another headache for Google after US District Judge Amit Mehta found last year that the company has an illegal monopoly over online search. Mehta is expected to hold court hearings in April while considering potential remedies to address Google's tactics. His final decision is expected by this summer. In a separate lawsuit, the Justice Department has accused Google of maintaining a "trifecta" of monopolies in the digital advertising sector by controlling platforms on the buy and sell side of ad deals as well as the marketplace that connects advertisers to websites.

Publisher sues Google over AI theft of search traffic

US-listed educational online publisher Chegg is suing Google for stealing traffic with its AI answers. In the US, displays an AI summary above regular search results containing a comprehensive answer to the preliminary search question. Organic results are no longer visible and therefore lose clicks. announced earlier this week, at the release of its annual results, to sue in federal court. AI Overviews undermine the publisher's earning power. "The impact on our business is clear. Traffic from non-subscribers dropped 49 percent in , significantly more than the modest eight percent drop we reported in the second quarter 2024." AI Overviews do not exist in 's European search results. A roundup by Emerce of several types of companies reveals that traffic from AI answer engines is growing but involves no more than a fraction of incoming traffic at websites. Clearly less than five percent.

Chegg Sues Google Over AI-Generated Search Results, Citing Revenue Loss | PYMNTS.com

Chegg has filed a federal antitrust lawsuit against Google, alleging that the tech giant's AI-generated summaries in search results have significantly diminished its website traffic and revenue. According to the New York Post, the online learning platform contends that Google's AI Overviews -- an automated feature providing direct answers to user queries -- have unfairly diverted potential visitors away from Chegg's site. The lawsuit, filed in the U.S. District Court in Washington, D.C., targets Google's practices under the leadership of CEO Sundar Pichai. Chegg argues that AI Overviews prioritize instant answers at the top of search results while simultaneously lowering the visibility of external links, including Chegg's own educational resources. In the lawsuit, Chegg CEO Nathan Schultz criticized Google's approach, stating that the company has "unjustly retained traffic that has historically come to Chegg, impacting our acquisitions, revenue, and employees." As reported by the New York Post, Schultz described Google's actions as "harmful and unsustainable." Read more: DOJ Antitrust Nominee Grilled on Google, Apple Cases and Enforcement Chegg, which has retained Goldman Sachs to assist in a strategic review, is now considering options such as going private or selling the company. Schultz highlighted Chegg's strong market presence, emphasizing its "brand awareness, engagement, and retention." However, he argued that due to Google's AI-generated content, traffic that would typically land on Chegg's site is instead being kept within Google's ecosystem. According to the New York Post, Chegg's financial struggles have been exacerbated by the decline in traffic, with its stock price plummeting nearly 90% over the past year. As of Tuesday morning, Chegg's shares were trading at just $1.04, bringing the company's valuation down to approximately $110 million. The lawsuit claims Google has violated the Sherman Antitrust Act by allegedly forcing companies like Chegg to provide proprietary content in order to be included in Google's search results. Schultz asserted that this practice puts content providers in a difficult position, as their work is being leveraged to sustain Google's own platform without fair compensation.

Chegg Sues Google, Says AI Search Results Are Killing Its Business

The online textbook and homework help company has seen its stock price crater since the pandemic and the rise of ChatGPT. Chegg is sort of on its last dying breath at this point, but it will go out fighting. The online education company, which started out renting textbooks and later expanded into online homework help, sued Google on Monday for anticompetitive practices, saying it is unfairly scraping material from Chegg for its AI-powered search results. The lawsuit is not anything groundbreaking or novel -- Google has been attacked over the years by the likes of Yelp over claims it uses its search dominance to copy its products and keep users on its own website. Chegg argues that by scraping websites and surfacing snippets directly in the search results page, Google is killing demand for original content and eroding the financial incentives for companies like Chegg to actually invest in producing the material that powers AI programs. While big tech companies have lined up in support of President Trump, some of the new administration remains skeptical of the industry, so it is not a guarantee that Google will be able to dodge the case. Though, it is notable that Chegg's stock is down 30% the day after the lawsuit was filed. Google and others in tech have argued their use of others' material in chatbots is fair use because they are transforming the content significantly. And they say new tools like AI-powered summaries do not reduce traffic to third-party sites because they can help users find the information they want faster; people will always want to dive in deeper when they find something of interest. But with a website like Chegg that can provide straightforward answers to math problems to lazy students, it seems users could simply copy-paste the response from Google and move on. Chegg has had a rollercoaster of a ride since 2020. Besides textbook rentals, the company offers the ability to seek homework help from a group of online experts, and demand for its services immediately skyrocketed at the onslaught of the pandemic. The return to classroom instruction and the launch of ChatGPT reversed all those gains, however. Chegg's stock is trading at just $1 per share today, down from a peak of $113 in 2021 after shedding hundreds of thousands of subscribers in 2024. The company, by suing Google for scraping websites to use in chatbots, does have a point that the tech giant is supporting the dead internet theory, the idea that the internet is being overrun by bot activity and automatically generated content (see: Facebook, YouTube AI slop). Chegg itself has rushed to compete with its own AI-assisted answers, and users on forums like Reddit have alleged the provided solutions are regularly not correct. In a sense, companies like Google are to blame for that. Chegg had to do something to try and keep up, but its answers are hard to trust at this point (besides the vetted textbook solutions). Other websites like StackOverflow, a Q&A website for programmers, have similarly been hollowed out by the advent of chatbots. Something that is overlooked about using a site like StackOverflow is that struggling through problems helps one gain foundational knowledge more than getting an answer returned immediately with no reasoning. StackOverflow requires one to read multiple expert discussions to get the full picture. It is slower, but one comes out better understanding not just the solution to a problem but why it worked. Chegg has said it wants to target "curious learners" with more comprehensive and vetted answers, assisted of course, by AI. Chegg might not be the most sympathetic character, but there is real concern about what tools like Google's AI summaries are doing to the internet if websites like theirs and StackOverflow cannot survive and produce the detailed, step-by-step knowledge that supports AI models in the first place. Unfortunately, it seems like many consumers do not care, however, and will accept Google's AI answers out of sheer laziness even if they are aware it is prone to making errors.

Chegg sues Google over claims AI search tool blocks user traffic

Chegg is suing Google parent Alphabet over claims the search engine's artificial intelligence summary tool has hit its revenues, leading the US-listed educational technology group to weigh up a sale of the business. California-based Chegg, which provides study tools for students, filed the complaint on Monday claiming that Google's AI Overviews, which presents users with summary answers to their queries, serves to keep users on Google's own site. Chief executive Nathan Schultz said the search giant's AI search changes had "unjustly retained traffic that has historically come to Chegg, impacting our acquisitions, revenue and employees". He added this was "materially impacting" revenues, leading to the company to instigate a strategic revenue in which it would explore "a range of alternatives to maximise shareholder value, including being acquired, undertaking a go-private transaction, or remaining as a public standalone company". Google said: "With AI Overviews, people find search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites. We will defend against these meritless claims." Chegg's move comes as developments in AI shake global industries, from healthcare to education and the automotive sector. The fast development of generative AI since OpenAI launched ChatGPT in November 2022 has upended demand for edtech companies' paid-for online learning tools, leading their valuations to plummet. The company's shares were down 22 per cent in pre-market trading on Tuesday. Chegg's stock is down more than 80 per cent over the past year. Edtech businesses are grappling with how to harness the benefits of generative AI, often integrating some of the tools into their own products, while also being wary of AI companies establishing rival platforms, such as OpenAI's recently launched ChatGPT Edu and Google's LearnLM. In November, Chegg announced it was cutting another fifth of its workforce, having implemented a round of redundancies just six month earlier. The company's experience marks a wider trend of falling investment in online education companies, which last year fell to its lowest level in a decade in part because of the rapid rise of free generative AI tools. Edtech businesses received just $3bn of investment in 2024, compared with $17.3bn at the peak of the pandemic in 2021, according to data from PitchBook. Chegg reported on Monday that total net revenues for the three-month period to end December dropped nearly a quarter to $143.5mn compared with the previous year, while the number of service subscribers fell 21 per cent to 3.6mn. Total net revenues for the full year were down 14 per cent at $617.6mn, the company said, while the number of service subscribers also fell 14 per cent to 6.6mn.

Edtech Chegg sues Google over alleged loss caused by AI

Chegg's losses are forcing the company to consider being acquired, it said. Edtech company Chegg has filed a lawsuit against Google and its owner Alphabet, alleging that the search giant's artificial intelligence (AI) Overviews hurt its online traffic. According to Chegg, the Overviews retain traffic that historically came to its website, "materially impacting" the company's revenue and employees. The online learning platform made a net loss of $837m in 2024, suffering a 14pc loss in total net revenue and a 14pc decline in subscription revenue when compared to the year before. "Unfortunately, traffic is being blocked from ever coming to Chegg because of Google's AIO [AI Overviews] and their use of Chegg's content to keep visitors on their own platform," Nathan Schultz, the company's president and CEO said yesterday (24 February). As a result, the company is reviewing alternatives to maximise shareholder value, including considering being acquired or undertaking to go private, Chegg announced. According to Schultz, the company wouldn't need to consider such changes if Google hadn't launched AI Overviews. Launched last May in the US, Google's AI Overviews are generative AI (GenAI) responses displayed at the top of a search result which provide a summarised answer to a search query from a variety of sources. At the time, Google VP head of Google Search Liz Reid said that users visit a greater diversity of websites using AI Overviews. "We see that the links included in AI Overviews get more clicks than if the page had appeared as a traditional web listing for that query", Reid said. However, Schultz believes otherwise. "The impact on Chegg's business is clear. Our non-subscriber traffic plummeted to negative 49pc in January 2025, down significantly from the modest 8pc decline we reported in Q2 2024," he said. In its legal complaint filed at the District Court of Columbia, the edtech alleges that Google forces companies like Chegg to supply its proprietary content in order to be included in Google search functions. It added that the search giant "unfairly exercises" its monopoly power and employs other anti-competitive conduct to "muscle out" companies like Chegg. Through these tactics, Chegg alleges that Google unjustly enriches itself from Chegg's content "without having to spend a dime". However, a Google spokesperson told CNBC that the company intends to defend itself against the lawsuit. "Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites," the Google spokesperson said. Chegg's legal battle against Google reflects an ongoing trend around content creators and publishers alleging misappropriation of proprietary content by companies using AI. Just last week, more than a dozen top news publishers , including Forbes, Condé Nast, Vox, The Guardian and Politico filed a joint lawsuit against Cohere, a Canadian AI company for alleged systematic copyright and trademark infringement. While The New York Times launched a similar legal battle against OpenAI and Microsoft in late 2023 which is still ongoing. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Chegg sues Google for hurting traffic with AI as it considers strategic alternatives

Chegg seen at the New York Stock Exchange on Feb. 13, 2025. Danielle DeVries | CNBC Chegg on Monday filed suit in federal district court against Google, claiming that artificial intelligence summaries of search results have hurt the online education company's traffic and revenue. The legal move come nearly two years after former CEO Dan Rosensweig said students engaging with OpenAI's ChatGPT assistant were cutting into Chegg's new customer growth. Chegg is worth less than $200 million, and in after-hours trading Monday, the stock was trading just above $1 per share. Chegg has engaged Goldman Sachs and will look at strategic options, including getting acquired and going private, President and CEO Nathan Schultz told analysts on a Monday earnings call. Chegg reported a $6.1 million net loss on $143.5 million in fourth-quarter revenue, a 24% decline year over year, according to a statement. Analysts polled by LSEG had expected $142.1 million in revenue. Management called for first-quarter revenue between $114 million and $116 million, but analysts had been targeting $138.1 million. The stock was down 18% in extended trading. Google forces companies like Chegg to "supply our proprietary content in order to be included in Google's search function," said Schultz, adding that the search company uses its monopoly power, "reaping the financial benefits of Chegg's content without having to spend a dime." Despite the suit, Chegg has its own AI strategy. It has drawn on Meta's open-source Llama, as well as models from privately held Anthropic and Mistral, Schultz said. Chegg has also partnered with OpenAI, which the education company views as a competitor, alongside Google. The company reported that 3.6 million students had subscriptions in the fourth quarter, down 21%. Subscriptions include access to AI-powered learning assistance. AI Overviews, as Google's artificial intelligence summaries are called, are available in the company's search engine in over 100 countries, with more than 1 billion users, the company said in October. Chegg "depends on referrals from Google's monopoly search engine for a large portion of the revenue that it devotes to producing original online content," the company said in the filing. A federal judge in August ruled that Google holds a monopoly in the search market. The ruling came after the Department of Justice in 2020 filed its landmark case, alleging that Google controlled the general search market by creating strong barriers to entry and a feedback loop that sustained its dominance. Google did not immediately respond to a request for comment.

Google Sued Over AI Search Overviews -- Education Company Says Tech Giant Is Stealing Content And Driving Publishers Out Of Business - Alphabet (NASDAQ:GOOG), Chegg (NYSE:CHGG)

On Monday, Chegg Inc. CHGG sued Alphabet Inc.'s GOOG GOOGL Google, alleging that its AI-generated search overviews are unfairly using publishers' content, reducing site traffic, and threatening the future of online publishing. What Happened: Chegg, a provider of textbook rentals and online tutoring, filed the lawsuit in Washington, D.C., claiming that Google's AI overviews are diminishing demand for original content and harming publishers' competitiveness, reported Reuters. Chegg CEO Nathan Schultz stated, "Our lawsuit is about more than Chegg - it's about the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries." See Also: After Google Stands Firm On 'Gulf of America' Label, Mexico Says It's Waiting For A New Response Or 'Will Proceed To Court' Google spokesperson Jose Castaneda dismissed the claims, stating, "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered." Why It Matters: Previously, publishers like The Atlantic have also expressed concerns over Google's AI search capabilities, fearing reduced web traffic as users receive direct answers without visiting external sites. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Alphabet reported total revenue of $96.5 billion for the fourth quarter, reflecting a 12% increase from the previous year. However, this figure fell slightly short of the Street consensus estimate of $96.6 billion. At the time, Google also revealed that its AI-driven search features are now generating monetization rates on par with traditional search results. Price Action: At the time of writing, Alphabet's Class A shares dipped 0.14% in after-hours trading to $179.01, while Class C shares inched up 0.011% to $181.21, according to Benzinga Pro data. Meanwhile, Chegg shares have plummeted over 98% from their 2021 peak. Photo Courtesy: Shutterstock.com Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Elon Musk's $97.4 Billion OpenAI Takeover Bid Reportedly Not Received By ChatGPT Parent: 'Another One Of His Tactics,' Says Sam Altman Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. CHGGChegg Inc$1.18-17.5%OverviewGOOGAlphabet Inc$181.21-0.20%GOOGLAlphabet Inc$179.01-0.36%Market News and Data brought to you by Benzinga APIs