Chegg Sues Google Over AI-Driven Traffic Loss

In a surprising turn of events, Chegg, the online education platform, has filed a lawsuit against Google, alleging that the tech giant's use of AI summaries in search results has hurt the company's traffic and revenue. The lawsuit comes as Chegg is considering strategic alternatives, including acquisitions and going private, to address the challenges posed by Google's AI Overviews.



Chegg, which offers textbook rentals, homework help, and tutoring services, has long depended on referrals from Google's search engine for a significant portion of its revenue. However, the company claims that Google's AI Overviews, which provide summaries of search results, have led to a decline in traffic and subscribers, ultimately impacting Chegg's financial health.



According to Chegg's lawsuit, Google's use of AI summaries violates a law against conditioning the sale of one product on the customer selling or giving its supplier another product. The company argues that Google is profiting from Chegg's content without proper compensation, effectively co-opting publishers' content to keep visitors on its own platform.

Chegg's lawsuit is believed to be the first of its kind, with a single company accusing Google of violating antitrust law through AI overviews. The case is being overseen by U.S. District Judge Amit Mehta, who previously ruled that Google holds an illegal monopoly in online search.



As Chegg explores strategic alternatives, the outcome of the lawsuit could significantly influence the company's decisions and the broader digital publishing industry. A favorable ruling could force Google to share revenue generated from AI Overviews that use Chegg's content, providing Chegg with an additional revenue stream and potentially reducing the need for a strategic review process. Additionally, a win for Chegg could encourage regulators to take a closer look at Google's practices and impose stricter regulations on how the company uses publishers' content in its AI summaries.

In conclusion, Chegg's lawsuit against Google highlights the growing concern among digital publishers about the impact of AI-driven search results on traffic and revenue. As the case unfolds, investors and industry observers will be watching closely to see how the outcome influences Chegg's strategic decisions and the broader digital publishing landscape.