Google’s AI previews erode the internet, US edtech company says in lawsuit

Alphabet’s Google has introduced a new tab in its internet search engine, which is diminishing the need for original content and weakening publishers’ capacity to compete with its AI-generated summaries, a U.S. educational technology firm stated in a lawsuit submitted on Monday.

Chegg, an online education firm providing textbook rentals, tutoring, and homework assistance, stated in a lawsuit lodged in Washington, D.C., that Google is appropriating publishers’ content to retain users on its platform, diminishing financial motivations to publish. The company stated that this will ultimately result in a “hollowed-out information ecosystem that is largely ineffective and not deserving of trust.”

The company located in Santa Clara, California, has reported that Google’s AI summaries have led to a decline in both visitors and subscribers. The CEO of the company, Nathan Schultz, stated on Monday that they are now contemplating a sale or a take-private deal. Google representative Jose Castaneda described the allegations as baseless.

“With AI Overviews, people find Search more helpful and use it more, creating new opportunities for content to be discovered. Every day, Google sends billions of clicks to sites across the web, and AI Overviews send traffic to a greater diversity of sites,” Castaneda said.

Chegg shares closed at $1.57 on Monday, down more than 98% from its peak price in 2021. The company announced it would lay off 21% of its staff in November . Schultz said Google is profiting off the company’s content for free.

“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,” he said.

Publishers permit Google to index their sites to create search results, which Google profits from via ads. In return, Chegg stated that the publishers gain search traffic to their websites when users select the results. However, Google has begun pressuring publishers to allow it to utilize the information for AI summaries and other functionalities that lead to reduced site traffic, the company stated.

Chegg contended that the behavior infringes a regulation prohibiting the sale of one item based on the condition that the consumer sells or provides another item to its supplier. The legal action is thought to be the first instance in which one company charges Google with breaching antitrust regulations via AI summaries. In 2023, a newspaper from Arkansas raised comparable allegations against Google in a class action representing the news sector.

U.S. District Judge Amit Mehta, who made a ruling in a case initiated by the U.S. Department of Justice stating that Google possesses an unlawful monopoly in online search, is managing the news publisher case. Google announced its intention to appeal that ruling and requested the judge to reject the newspaper’s lawsuit.