Chegg sues Google for hurting traffic as it considers alternatives

MT HANNACH
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Chegg saw on the New York Stock Exchange on February 13, 2025.

Danielle Devries | CNBC

Check Federal legal action brought on Monday against GoogleAffirming that the summaries of the artificial intelligence of research results have harmed traffic and income from the online education company.

The legal move occurs almost two years after the former CEO Dan Rosensweig said that students engaged in the Openai Chatgpt assistant cut in Chegg New customer growth.

Chegg is worth less than $ 200 million and, in the after-hour, the shares were negotiated just over $ 1 per share. Chegg has hired Goldman Sachs and will examine strategic options, including obtaining and becoming private, President and Chief Executive Officer, Nathan Schultz, analysts told Monday winning calls.

Chegg declared a net loss of $ 6.1 million out of $ 143.5 million in income in the fourth quarter, a drop of 24% from one year to the next, according to a statement. The analysts interviewed by LSEG expected $ 142.1 million in income. Management called for income in the first quarter between $ 114 million and $ 116 million, but analysts were at $ 138.1 million. The action has dropped by 21% of prolonged exchanges.

Google obliges companies like Chegg to “provide our owner content in order to be included in Google’s research function,” said Schultz, adding that the research company uses its monopoly power, “collecting the financial advantages of the content of Chegg without having to spend a penny.

Despite the costume, Chegg has its own AI strategy. He shot on Meta- Llama Open-Source, as well as models of anthropogenic and mistral private, said Schultz. Chegg also joined forces with Openai, which the education company considers a competitor, alongside Google. The company said that 3.6 million students had subscriptions in the fourth quarter, down 21%. Subscriptions include access to learning help fueled by AI. Chegg also rents and sells manuals.

The IA glimps, such as the summaries of Google’s artificial intelligence are called, are available in the company’s search engine in more than 100 countries, with more than a billion users, said the Company October. They appear above the links to other pages of search results.

Chegg “depends on the references of the Google monopoly search engine for a large part of the income he devotes to the production of original online content,” said the company in the file. Chegg said Google was based on the collection of 135 million Chegg questions and answers on a variety of subjects in its model training data sets.

After having formed its models, Google can generate content that competes with the information that publishers offer in the research results, argued Chegg in its complaint. The online learning company included a screenshot of an overview of Google AI which borrows the details of the Chegg website but does not attribute the information. However, the relevant chegg page is displayed lower in search results.

Chegg cited a federal judge decision Last August Google holds a monopoly on the research market. The decision was made after the Ministry of Justice in 2020 has tabled its benchmarkAlleging that Google controlled the general research market by creating strong obstacles to entry and a feedback loop which supported its domination.

Google did not immediately respond to a request for comments.

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