On Monday, Chegg Inc. (NYSE:CHGG) sued Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, alleging that its AI-generated search overviews are unfairly using publishers' content, reducing site traffic, and threatening the future of online publishing.
What Happened: Chegg, a provider of textbook rentals and online tutoring, filed the lawsuit in Washington, D.C., claiming that Google’s AI overviews are diminishing demand for original content and harming publishers’ competitiveness, reported Reuters.
Chegg CEO Nathan Schultz stated, "Our lawsuit is about more than Chegg – it's 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."
See Also: After Google Stands Firm On ‘Gulf of America’ Label, Mexico Says It’s Waiting For A New Response Or ‘Will Proceed To Court’
Google spokesperson Jose Castaneda dismissed the claims, stating, "With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered."
Why It Matters: Previously, publishers like The Atlantic have also expressed concerns over Google’s AI search capabilities, fearing reduced web traffic as users receive direct answers without visiting external sites.
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Alphabet reported total revenue of $96.5 billion for the fourth quarter, reflecting a 12% increase from the previous year. However, this figure fell slightly short of the Street consensus estimate of $96.6 billion.
At the time, Google also revealed that its AI-driven search features are now generating monetization rates on par with traditional search results.
Price Action: At the time of writing, Alphabet’s Class A shares dipped 0.14% in after-hours trading to $179.01, while Class C shares inched up 0.011% to $181.21, according to Benzinga Pro data. Meanwhile, Chegg shares have plummeted over 98% from their 2021 peak.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
