Chegg accuses Google of using AI to crush traffic, revenue in antitrust lawsuit: ‘Harmful and unsustainable'

Core Viewpoint - Chegg has filed a federal antitrust lawsuit against Google, claiming that Google's use of AI-generated summaries in search results has significantly harmed Chegg's website traffic and revenue [1][4]. Group 1: Chegg's Allegations - Chegg alleges that Google's "AI Overviews" feature has unjustly retained traffic that historically came to Chegg, negatively impacting its acquisitions, revenue, and employees [2]. - The lawsuit accuses Google of violating the Sherman Antitrust Act and engaging in monopoly maintenance by using its dominance in online search to disadvantage smaller competitors like Chegg [4][5]. - Chegg's traffic from non-subscriber sources has reportedly fallen by 49% in January compared to the same month the previous year [5]. Group 2: Financial Performance - Chegg reported a net loss of $6.1 million on total revenue of$143.5 million for the fourth quarter, marking a 24% decrease year-over-year [6]. - The company's shares have plummeted nearly 90% over the last 12 months, with a current trading price of $1.04, leading to a valuation of just$110 million [3]. Group 3: Google's Response - Google has denied the allegations, asserting that the AI Overviews feature enhances user experience by providing more helpful search results [6][10]. - A Google spokesperson stated that the AI Overviews send traffic to a greater diversity of sites, countering Chegg's claims [7]. Group 4: Broader Context - Chegg's lawsuit adds to the mounting legal challenges facing Google, which has been previously found to have an illegal monopoly over online search by US District Judge Amit Mehta [12]. - The Justice Department has also accused Google of maintaining monopolies in the digital advertising sector [13].