Image: © Koshiro K/Stock.adobe.com
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 features retains 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, 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.
Apple, meanwhile, has halted a similar AI summaries feature, after it posted inaccurate news updates.
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.
