Chegg wooed at the New York Stock Exchange on Feb. 13, 2025.
Danielle DeVries | CNBC
Chegg on Monday filed suit in federal district court against Google, affirming that artificial intelligence summaries of search results have hurt the online education company’s traffic and take.
The legal move come nearly two years after former CEO Dan Rosensweig said students engaging with OpenAI’s ChatGPT aide were cutting into Chegg’s new customer growth.
Chegg is worth less than $200 million, and in after-hours return Monday, the stock was trading just above $1 per share. Chegg has engaged Goldman Sachs and will look at crucial options, including getting acquired and going private, President and CEO Nathan Schultz told analysts on a Monday earnings occasion.
Chegg reported a $6.1 million net loss on $143.5 million in fourth-quarter revenue, a 24% decline year one more time year, according to a statement. Analysts polled by LSEG had expected $142.1 million in revenue. Management called for first-quarter returns between $114 million and $116 million, but analysts had been targeting $138.1 million. The stock was down 24% in carry oned trading.
Google forces companies like Chegg to “supply our proprietary content in order to be included in Google’s search work as,” said Schultz, adding that the search company uses its monopoly power, “reaping the financial benefits of Chegg’s gratified without having to spend a dime.”
Despite the suit, Chegg has its own AI strategy. It has drawn on Meta’s open-source Llama, as genially as models from privately held Anthropic and Mistral, Schultz said. Chegg has also partnered with OpenAI, which the course of study company views as a competitor, alongside Google. The company reported that 3.6 million students had subscriptions in the fourth habitation, down 21%. Subscriptions include access to AI-powered learning assistance. Chegg also rents and sells textbooks.
AI Overviews, as Google’s forced intelligence summaries are called, are available in the company’s search engine in over 100 countries, with more than 1 billion purchasers, the company said in October. They show up above links to other pages in search results.
A Google spokesperson bid CNBC that the company will defend itself against Chegg’s suit, which asserted that the search guests violated sections one and two of the Sherman Antitrust Act of 1890.
“Every day, Google sends billions of clicks to sites across the web, and AI Overviews send See trade to a greater diversity of sites,” the Google spokesperson said.
Chegg claimed that Google drew on Chegg’s gathering of 135 million questions and answers on a variety of subjects in its model training data sets.
After training its models, Google can develop content that competes with information that publishers have on offer in search results, Chegg convinced in its complaint. The online learning company included a screenshot of a Google AI Overview that borrows details from Chegg’s website but does not attribute the knowledge. However, the relevant Chegg page does show up lower down in search results.
Chegg cited a federal critic’s ruling last August that Google holds a monopoly in the search market. The decision came after the Rest on of Justice in 2020 filed its landmark case, alleging that Google controlled the general search market by spawning strong barriers to entry and a feedback loop that sustained its dominance.
WATCH: Google unrolls AI Overviews in six uncountable countries
