Google sued by Chegg over AI Overviews hurting traffic and revenue
Will other companies follow suit and go after Google for sending less traffic to sites and publishers with these new AI Overviews?
Chegg, the publicly traded education technology company, has sued Google over its AI Overviews, claiming they have hurt its traffic and revenue. The company said that AI Overviews is “materially impacting our acquisitions, revenue, and employees.”
What Chegg said. Chegg wrote:
Second, we announced the filing of a complaint against Google LLC and Alphabet Inc. These two actions are connected, as 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. Chegg has a superior product for education, as evident by our brand awareness, engagement, and retention. 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. We retained Goldman Sachs as the financial advisor in connection with our strategic review and Susman Godfrey with respect to our complaint against Google.
More details. CNBC reports that “Chegg is worth less than $200 million, and in after-hours trading Monday, the stock was trading just above $1 per share.” Chegg has engaged Goldman Sachs to look at options to get acquired or other strategic options for the company.
Chegg reported a $6.1 million net loss on $143.5 million in fourth-quarter revenue, a 24% decline year over year, according to a statement. Analysts polled by LSEG had expected $142.1 million in revenue. Management called for first-quarter revenue between $114 million and $116 million, but analysts had been targeting $138.1 million. The stock was down 18% in extended trading.
The report goes on to say that Google forces companies like Chegg to “supply our proprietary content in order to be included in Google’s search function,” said Schultz, adding that the search company uses its monopoly power, “reaping the financial benefits of Chegg’s content without having to spend a dime.”
Here is more from Chegg’s statement:
While we made significant headway on our technology, product, and marketing programs, 2024 came with a series of challenges, including the rapid evolution of the content landscape, particularly the rise of Google AIO, which as I previously mentioned, has had a profound impact on Chegg’s traffic, revenue, and workforce. As already mentioned, we are filing a complaint against Google LLC and Alphabet Inc. in the U.S. District Court for the District of Columbia, making three main arguments.
- First is reciprocal dealing, meaning that Google forces companies like Chegg to supply our proprietary content in order to be included in Google’s search function.
- Second is monopoly maintenance, or that Google unfairly exercises its monopoly power within search and other anti-competitive conduct to muscle out companies like Chegg.
- And third is unjust enrichment, meaning Google is reaping the financial benefits of Chegg’s content without having to spend a dime.
As we allege in our complaint, Google AIO has transformed Google from a “search engine” into an “answer engine,” displaying AI-generated content sourced from third-party sites like Chegg. Google’s expansion of AIO forces traffic to remain on Google, eliminating the need to go to third-party content source sites. The impact on Chegg’s business is clear. Our non-subscriber traffic plummeted to negative 49% in January 2025, down significantly from the modest 8% decline we reported in Q2 2024.
We believe this isn’t just about Chegg—it’s about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries. It’s about the digital publishing industry. It’s about the future of internet search.
In summary, our complaint challenges Google’s unfair competition, which is unjust, harmful, and unsustainable. While these proceedings are just starting, we believe bringing this lawsuit is both necessary and well-founded.
Why we care. Will Chegg win in a court against Google? Will Google have to rethink its AI Overviews and find better ways to send traffic to publishers and site owners? It is hard to imagine but this may be the first large lawsuit over Google’s new AI Overviews.
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