Edtech

An education technology firm, Chegg, based in Santa Clara, California, has filed a lawsuit against Alphabet and Google in the U.S. District Court in Washington, D.C., over the tech giant’s use of AI-generated summaries in search results. Chegg argues that Google’s new AI Overviews, which present brief answers to user queries, have significantly reduced traffic to its platform, directly affecting its revenue and operations. The company claims that Google’s approach not only unfairly favors its own services but also damages content-driven businesses like Chegg that rely on visibility in search results.

Chegg’s legal complaint accuses Google of abusing its dominant position in search by effectively blocking users from reaching Chegg’s website. This, the company asserts, has undermined their user acquisition efforts and had a substantial impact on their financial health. In conjunction with the lawsuit, Chegg announced that it is exploring several strategic alternatives to maintain shareholder value, including the possibility of being acquired or going private. The company suggests that these drastic steps would not have been necessary if not for the launch of AI Overviews.

Chegg maintains that it offers a better educational product than Google, backed by strong engagement, retention, and brand recognition. However, the company alleges that Google’s AI-generated responses, which draw from Chegg’s proprietary content, are keeping users within Google’s ecosystem, bypassing the original content source altogether. According to Chegg, this tactic not only deprives them of traffic but also profits from their intellectual property without fair compensation.

In response to the allegations, Google defended its AI Overviews as a feature that enhances the user experience by offering quicker, more diverse access to information. A Google spokesperson stated that the company continues to send billions of visits to websites each day and argued that AI Overviews actually broaden the reach to a wider array of sources. Google signaled its intent to contest what it described as baseless claims in court.

Industry experts have noted that the trend of AI summarizing content without requiring users to visit the source could pose a significant threat to digital publishers. As users grow accustomed to consuming condensed information directly on platforms like Google, the incentive to visit original content sources diminishes. This, in turn, affects the ad-based revenue models of these publishers and challenges the sustainability of in-depth reporting.

Several analysts argue that if users no longer need to visit the original site for detailed information, content creators may reduce their output, particularly high-quality or investigative work. This could lead to a broader degradation of content quality online. Over time, original journalism might lose out to algorithm-generated summaries, which could undermine public discourse and weaken transparency in a democratic society.

Experts also warn of a potential downward spiral for content-based websites. Reduced traffic translates to lower revenue, leading to budget cuts, which then result in less compelling content. This diminished content appeal could further erode user engagement, creating a cycle that’s difficult to break. Such a scenario could accelerate the decline of the very platforms that AI models rely on for their knowledge.

From a legal standpoint, Chegg’s case faces an uphill battle. Historically, courts have been reluctant to impose strict restrictions on tech giants, especially when claims hinge on nuanced interpretations of fair use laws. While summarizing content can fall under the protections of fair use for educational or research purposes, the line between fair use and exploitation is increasingly blurred in the age of AI.

Though the odds may be long, Chegg’s lawsuit could set a precedent if it succeeds. Regulatory scrutiny of AI and digital monopolies is growing, particularly in Europe where such concerns receive more serious legal attention. However, without clear definitions around the use of AI-generated content and the protection of original journalism, the outcome remains uncertain. The case highlights a growing tension between content creators and the platforms that both depend on and disrupt their visibility and viability.