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Chegg Sues Google Over AI Overviews Impacting Publishers
Alphabet’s Google search engine is reportedly impacting the demand for original content and hindering publishers’ competitiveness by favoring its own AI-generated summaries, according to a lawsuit filed by the educational technology firm Chegg on Monday in Washington, DC. The lawsuit alleges that Google’s practices are diminishing the financial motivations for publishers to create and share content.
Chegg, based in Santa Clara, California, highlights concerns that Google’s AI-generated overviews are causing significant declines in website traffic and subscriber numbers for content creators. In light of these challenges, the company is exploring options that may include a sale or transitioning to a private entity, as indicated by CEO Nathan Schultz.
In response, Google spokesperson Jose Castaneda dismissed the allegations as unfounded. He asserted that with the introduction of AI Overviews, users find the search experience more beneficial, which in turn results in increased visibility for a broader range of websites. Castaneda emphasized that Google directs billions of clicks daily to various sites across the internet, suggesting that its AI features enhance site traffic rather than diminish it.
Chegg’s stock performance has been troubling, closing at $1.57 on Monday—over 98 percent lower than its highest point in 2021. In conjunction with these developments, the company has disclosed plans to reduce its workforce by 21 percent by November.
Schultz claimed that Google’s actions are exploiting the content created by Chegg without providing adequate compensation. He articulated that the lawsuit is not just a matter concerning Chegg, but rather reflects a broader issue affecting the digital publishing industry and the quality of information available to students, which he argues is at risk due to a reliance on low-quality AI-generated summaries.
Traditionally, publishers have permitted Google to index their websites to facilitate search results, for which they benefit from associated web traffic. However, Chegg asserts that Google is essentially pressuring publishers to allow the use of their information for AI-generated summaries and related features, which ultimately leads to a reduction in direct visitors to publisher websites.
The lawsuit claims that such conduct contravenes laws designed to prevent the coercive conditioning of product sales, where one product’s sale is dependent on the sale or provision of another product. This case is notable as it may be the first instance where a single company directly accuses Google of breaching antitrust laws through its AI practices, although a similar class-action lawsuit from an Arkansas newspaper representing the news industry was filed in 2023.
The proceedings are being overseen by US District Judge Amit Mehta, who previously ruled against Google in a case brought by the US Department of Justice, determining that the company possesses an illegal monopoly in the online search space. Google has expressed intentions to appeal this ruling and has requested that the judge dismiss the newspaper’s case.
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