Chegg, a leading education technology company based in Santa Clara, California, is taking a bold step by filing a lawsuit against Alphabet and Google. The case, lodged in the U.S. District Court for the District of Columbia, alleges that Google is unfairly leveraging its monopoly power in search to push out competitors like Chegg through the use of AI Overviews.
Google’s AI Overviews Under Fire
According to Chegg’s lawsuit, Google’s AI Overviews—short summaries generated by artificial intelligence and displayed alongside search results—are redirecting traffic away from Chegg. In its 2024 fourth-quarter earnings announcement, Chegg reported a 24% year-over-year decline in net revenue, totaling US$143 million. CEO Nathan Schultz linked this decline directly to the impact of AI Overviews, which he claims have materially affected Chegg’s acquisitions, revenue, and workforce.
Schultz stated, “We would not need to review strategic alternatives if Google hadn’t launched AI Overviews, which block traffic that historically came to Chegg.” He further emphasized that despite Chegg’s superior educational products, the new AI-driven feature on Google’s platform prevents users from accessing Chegg’s content.
Allegations of Anti-Competitive Practices
In its court filing, Chegg contends that Google forces companies to provide proprietary content for inclusion in its search results. The lawsuit argues that this practice, coupled with Google’s dominant position in the market, unfairly benefits the search giant by capturing traffic—and therefore revenue—that should rightfully go to content creators like Chegg.
A Google spokesperson, José Castañeda, countered these claims, stating, “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. We will defend against these meritless claims.”
Impact on Content Creators and the News Ecosystem
Industry experts warn that AI Overviews could have far-reaching consequences beyond education technology. Ben James, founder of an online 3D content creation company, noted that these summaries act as a shortcut, reducing the need for users to visit original sources. This reduction in traffic can have a direct impact on publishers’ ad revenue and subscription models.
Mark N. Vena, president and principal analyst at SmartTech Research, explained, “Publishers could see a decline in website traffic and ad revenue, weakening their financial viability. This shift ultimately undermines the competitive landscape for original content, as quality journalism struggles to compete with readily available, AI-curated summaries.”
Dan Kennedy, a journalism professor at Northeastern University, expressed concern that AI Overviews could sever the vital link between search engines and news organizations—a link that has long been crucial for driving traffic and revenue to media sites.
The Doom Loop for the News Industry
JD Harriman, a partner with the Foundation Law Group, described a potential “doom loop” in the news industry. With reduced traffic and revenue, media companies may be forced to cut costs by reducing content and staff. This cycle could lead to a diminished quality of journalism and a homogenized media landscape, where sensationalism overtakes rigorous reporting.
Vena added that without adequate financial support, news organizations may also cut back on investigative journalism and fact-checking, ultimately harming public discourse and transparency.
Legal Hurdles and Future Implications
While Chegg’s lawsuit presents a compelling case against Google’s practices, experts acknowledge that winning such a case will be challenging. Martin Balaam, CEO of a global product information management platform, noted, “Legally, this appears like it will be a tough battle. Courts have historically been slow to impose strict limitations on tech giants, and time here is critical.”
Rob Enderle, president of the Enderle Group, mentioned that summarizing content often falls under “fair use” for purposes like criticism, comment, and news reporting. However, the current dispute centers on whether Google’s use of AI Overviews constitutes an infringement on content creators’ rights, or if it falls within acceptable bounds of fair use.
Greg Sterling, co-founder of a market research firm, speculated, “If Chegg has any success, others will follow suit. But the problem is that no individual publisher is entitled to traffic, and Google is entitled to have some control over its search results.”
A Precedent in the Making
The outcome of Chegg’s lawsuit could set a significant precedent in the realm of digital content and AI. With increasing regulatory scrutiny around AI and digital monopolies, the case may pave the way for future legal actions by other content creators and publishers who feel that their traffic—and revenue—is being unfairly siphoned off by AI technologies.
As the debate continues, the balance between innovative technology and the protection of original content remains a critical question for the future of online media and education technology.
Stay tuned for more updates on this developing story. If you have any comments or thoughts on the impact of AI Overviews on content creation, feel free to share below!