Online education company Chegg has filed a lawsuit against Google, alleging that the search giant’s AI-generated summaries are negatively impacting its web traffic and revenue. The lawsuit, filed in federal district court on Monday, accuses Google of leveraging its monopoly power to benefit from Chegg’s proprietary content without proper attribution or compensation.
This legal move comes nearly two years after former CEO Dan Rosensweig acknowledged that OpenAI’s ChatGPT was cutting into Chegg’s new customer growth. Chegg’s financial struggles have intensified, with the company reporting a $6.1 million net loss on $143.5 million in fourth-quarter revenue—a 24% decline year-over-year. Chegg’s stock has plummeted to just above $1 per share, bringing its market value below $200 million.
Amid financial turbulence, Chegg has engaged Goldman Sachs to explore strategic options, including a potential sale or privatization. The company’s current president and CEO, Nathan Schultz, claims that Google forces businesses like Chegg to supply proprietary content for its search functionality while simultaneously profiting from AI-generated summaries that reduce direct visits to Chegg’s site.’
Despite suing Google, Chegg has embraced AI technology itself, integrating models from Meta’s Llama, Anthropic, Mistral, and OpenAI. However, competition remains fierce, with Chegg’s student subscription base dropping 21% to 3.6 million in the last quarter.
Google, which launched AI Overviews in over 100 countries, denies any wrongdoing, arguing that its AI-generated responses help diversify traffic. The lawsuit cites a federal judge’s 2023 ruling that confirmed Google’s monopoly in the search market. Chegg argues that Google’s AI models were trained on its database of 135 million questions and answers, creating direct competition without proper attribution. The legal battle underscores the growing tension between AI innovation and content ownership, with implications for the broader digital ecosystem.
