- Chegg is suing Google for that company’s AI-powered search results. The online education company says the scraping of its content is harmful to its business. Investors panicked, with Chegg’s stock losing one-third of its value.
A little under two years ago, online education company Chegg’s CEO warned: “I’m the poster child for getting your ass kicked in the public markets by AI.” Earlier this week, the company decided to fight back.
Chegg has sued Google, saying the company’s AI search results have scraped material from its site, extinguishing demand from users and threatening its business.
“Because AI overviews and featured snippets often provide the answers to questions posed by search users, and because the answers are featured advantageously on Google’s SERP [search engine results page], they generate lower click-through rates to the original sources from which Google generates the answers, if Google provides links to those sources at all,” the suit reads. “Google’s foray into digital publishing is designed to make Google a destination, rather than a search origination point to other websites.”
Investors in Chegg did not welcome the news. Shares lost one-third of their value after the suit was filed, and the stock now hovers just above the $1 mark. Should it fall below $1, that could cause delisting rules to come into play. (The drop also comes two years after shares fell 50% when Chegg said customers were turning to ChatGPT instead of paying to use its tools.)
Chegg started as a textbook-rental company, but has expanded to offer homework help from online experts. It saw a big surge in usage during the pandemic years. As students have returned to the classroom, though, that demand has ebbed. Four years ago, shares topped $113.
Chegg, of course, isn’t the first company to sue Google (or other AI companies) for scraping material. It’s also protecting its own AI interests, having launched a suite of AI-powered tools in late 2023. In its filing, however, it warned that should Google (and presumably other AI companies) be allowed to scrape and repurpose content from other sites, it could have a calamitous effect on the online world.
“If not abated, this trajectory threatens to leave the public with an increasingly unrecognizable internet experience, in which users never leave Google’s walled garden and receive only synthetic, error-ridden answers in response to their queries—a once robust but now hollowed-out information ecosystem of little use and unworthy of trust,” the suit reads.
