US Edtech Company Claims Google's AI Overviews 'Hollowing Out' the Internet

Chegg, a US-based educational technology company, has filed an antitrust lawsuit against Google, alleging that its AI-generated overviews are siphoning traffic and undermining publishers' financial incentives, Reuters reports.

The lawsuit, filed in Washington, D.C., contends that Google's AI is co-opting publishers' content to keep users on its own search engine, ultimately leading to a "hollowed-out information ecosystem of little use and unworthy of trust."

Chegg, which offers textbook rentals, homework help, and tutoring, claims that Google's AI overviews have caused a significant drop in website traffic and subscribers, prompting the company to consider a potential sale or take-private transaction.

"Google is using its dominant power in search to divert traffic away from publishers and to its own AI-generated content," said Chegg CEO Nathan Schultz. "This is hurting publishers' ability to sustain themselves, and it is depriving students of access to quality educational materials."

Google has refuted these claims, calling them "meritless." A spokesperson for the tech giant emphasized the benefits of AI Overviews, stating that they "make Search more helpful and use it more, creating new opportunities for content to be discovered." Google also highlights that it sends "billions of clicks" to websites across the web, with AI Overviews expanding the reach to a wider range of sites.

Despite this, Chegg's stock price has plummeted over 98% since its peak in 2021, and the company recently announced layoffs affecting 21% of its workforce. Schultz argues that Google is profiting from publishers' content without fair compensation.

"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," Schultz said.

Chegg's lawsuit alleges that Google violates antitrust law by conditioning the use of its search engine on publishers allowing the use of their content for AI overviews and other features that reduce traffic to their websites. This case is believed to be the first standalone antitrust action against Google concerning AI overviews. A similar class-action lawsuit was filed in 2023 by an Arkansas newspaper on behalf of the news industry.

US District Judge Amit Mehta, who previously ruled in a case brought by the Department of Justice that Google holds an illegal monopoly in online search, is overseeing the newspaper's case. Google has indicated that it will appeal that decision and has asked the judge to dismiss the newspaper's case.