Educational Tech Firm Chegg Sues Google Over AI Overviews

US educational technology company Chegg has filed a lawsuit against Google over its artificial intelligence-generated overviews, arguing they reduce demand for human-generated content and undermine publishers’ ability to compete with AI tools.

In the lawsuit, filed in Washington DC, Chegg said Google’s overviews were making use of publishers’ content to keep traffic on its own site, removing publishers’ financial incentives and damaging the “information ecosystem”.

The search giant’s practices will eventually lead to a “hollowed-out information ecosystem of little use and unworthy of trust”, Chegg argued.

AI overviews

The lawsuit came after Chegg reported a sharp loss in subscribers and revenue in the fourth quarter, which the company attributed in part to Google’s AI Overviews, or AIO.

“2024 came with a series of challenges, including the rapid evolution of the content landscape, particularly the rise of Google AIO, which has had a profound impact on Chegg’s traffic, revenue, and workforce,” said Chegg chief executive Nathan Schultz in a statement.

“Unfortunately, traffic is being blocked from ever coming to Chegg because of Google AIO and their use of Chegg’s content to keep visitors on their own platform,” Schultz added.

Chegg reported a drop of 23 percent in subscription services revenue and a 21 percent drop in the number of paid subscribers over a year earlier.

As part of a strategic review announced with the latest results, Chegg said it would consider options including a sale of the company, a transaction to go private or remaining as a publicly traded standalone firm.

On Monday the company’s shares were trading at 98 percent below their peak in 2021.

Schultz said the lawsuit was about “the digital publishing industry, the future of internet search, and about students losing access to quality, step-by-step learning in favor of low-quality, unverified AI summaries”.

Chegg argued Google is violating the law by using coercion to force publishers to allow it to access their content, without providing them traffic in return.

Competition law

The lawsuit claims Google is violating a law that prohibits the conditioning of the sale of one product on the customer selling or giving the supplier another product.

An Arkansas newspaper made similar claims against Google in a class action lawsuit on behalf of the news industry in 2023, which Google has said it will appeal.

Google was found last year to have violated antitrust law through its search engine practices, with remedies yet to be determined.

Tech firms have been rushing to build out AI tools that can generate content automatically, but these must be trained on huge amounts of human-generated content.

As AI-generated content proliferates online, researchers say it could end up being used in AI training, degrading the quality of the AI-generated content.

A Cornell University study published in May 2023 found that the “use of model-generated content in training causes irreversible defects in the resulting models, where tails of the original content distribution disappear”.

The researchers termed the phenomenon “model collapse”.