Chegg Sues Google, Claims AI Overviews Are Destroying Online Publishing

Key Points:

• Chegg alleges Google's AI overviews have significantly reduced its web traffic.

• The lawsuit warns that publishers will lose financial incentives to maintain online content.

• This marks the first standalone antitrust lawsuit against Google over AI-generated content.

Alphabet's Google is eroding demand for original content and undermining publishers' ability to compete by generating AI-driven search overviews, U.S. educational technology company Chegg alleged in a lawsuit filed on Monday.

Chegg, an online education company offering textbook rentals, homework help, and tutoring, filed the lawsuit in Washington, D.C., accusing Google of co-opting publishers' content to retain users on its platform, thereby eliminating financial incentives for content creation.

This practice, the company claimed, would ultimately lead to a "hollowed-out information ecosystem of little use and unworthy of trust."

The Santa Clara, California-based company attributed a decline in website visitors and subscribers to Google's AI overviews. CEO Nathan Schultz stated on Monday that Chegg is now considering a sale or a take-private transaction as a result.

Google spokesperson Jose Castaneda dismissed the allegations as 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, reflecting a decline of over 98% from their peak in 2021. The company previously announced a 21% staff reduction in November.

Schultz accused Google of profiting from Chegg's content without compensation.

"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 stated.

Chegg argued that while publishers allow Google to crawl their websites for search indexing, Google monetizes this content through advertising. In return, publishers benefit from referral traffic when users click on search results. However, Google has increasingly pressured publishers to permit their content to be used for AI-generated overviews, which, according to Chegg, has led to a decrease in site visitors.

The company claimed that Google's actions violate laws prohibiting the conditioning of one product's sale on the forced provision of another product.

This lawsuit is the first instance of a single company directly accusing Google of antitrust violations over AI-generated content. In 2023, an Arkansas newspaper raised similar claims in a class-action lawsuit representing the news industry.

U.S. District Judge Amit Mehta, who ruled in a Department of Justice case that Google holds an illegal monopoly in online search, is overseeing the news publisher lawsuit.

Google has stated it will appeal that ruling and has requested the judge dismiss the newspaper's case.

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