Online education company Chegg has filed a landmark lawsuit against Google, accusing the tech giant of using AI-generated search summaries to divert traffic away from publishers. The lawsuit, filed Monday, in a federal district court, claims that Google’s AI Overviews have significantly reduced Chegg’s website traffic and revenue, forcing the company to explore options like going private or seeking acquisition.
According to Reuters, which first broke the news, this marks the first antitrust lawsuit of its kind by a single company against Google’s AI Overviews feature.
Chegg filed its complaint on the same day it released the company’s fourth quarter and annual financial results for 2024. The education company’s total net revenue for the fourth quarter decreased 24% compared to the same period during the prior year. Annual total net revenues decreased 14% year over year. Because of these significant reductions, Chegg has hired Goldman Sachs to explore potential options, such going private or getting acquired.
Why Chegg is suing Google over AI
In his prepared remarks, Chegg CEO Nathan Schultz directly attributed these negative outcomes to Google’s search engine monopoly and use of artificial intelligence overviews. “We would not need to review strategic alternatives if Google hadn’t launched AI Overviews, or AIO, retaining traffic that historically had come to Chegg, materially impacting our acquisitions, revenue, and employees… Unfortunately, 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,” he said.
Schultz went on to explain that with the generative AI overviews, Google has shifted from a “search engine” into an “answer engine.” He also laid out the three main arguments the complaint makes against Google:
- Reciprocal dealing: Google forces companies like Chegg to provide access to proprietary content in order to be included in its search engine.
- Monopoly maintenance: Google unfairly leverages its monopolistic hold over search engines to engage in anti-competitive conduct against companies like Chegg.
- Unjust investment: Google reaps the benefits of Chegg’s content without spending any money to produce it.
AI Overviews’ broader impact on publishers
While Chegg is the first individual company to take legal action, concerns over Google’s AI Overviews extend far beyond the education sector.
Last year, the News/Media Alliance, which represents over 2,000 publications, said that AI Overviews will have a “catastrophic” impact on web traffic and revenue.
A new study from brand management company Terakeet, published earlier on Tuesday, helped to quantify the impact that Google’s AI Overviews are having on search engine results. The study found that web pages included in AI Overviews had 3.2x as many clicks as pages that were excluded when it comes to top-ranked transaction queries.