Chegg seen on the New York Inventory Alternate on Feb. 13, 2025.
Danielle DeVries | CNBC
Chegg on Monday filed go well with in federal district court docket towards Google, claiming that synthetic intelligence summaries of search outcomes have damage the web training firm’s visitors and income.
The authorized transfer come practically two years after former CEO Dan Rosensweig stated college students participating with OpenAI’s ChatGPT assistant have been slicing into Chegg’s new buyer progress.
Chegg is price lower than $200 million, and in after-hours buying and selling Monday, the inventory was buying and selling simply above $1 per share. Chegg has engaged Goldman Sachs and can have a look at strategic choices, together with getting acquired and going non-public, President and CEO Nathan Schultz informed analysts on a Monday earnings name.
Chegg reported a $6.1 million internet loss on $143.5 million in fourth-quarter income, a 24% decline 12 months over 12 months, based on a assertion. Analysts polled by LSEG had anticipated $142.1 million in income. Administration known as for first-quarter income between $114 million and $116 million, however analysts had been concentrating on $138.1 million. The inventory was down 18% in prolonged buying and selling.
Google forces firms like Chegg to “provide our proprietary content material with the intention to be included in Google’s search perform,” stated Schultz, including that the search firm makes use of its monopoly energy, “reaping the monetary advantages of Chegg’s content material with out having to spend a dime.”
Regardless of the go well with, Chegg has its personal AI technique. It has drawn on Meta’s open-source Llama, in addition to fashions from privately held Anthropic and Mistral, Schultz stated. Chegg has additionally partnered with OpenAI, which the training firm views as a competitor, alongside Google. The corporate reported that 3.6 million college students had subscriptions within the fourth quarter, down 21%. Subscriptions embrace entry to AI-powered studying help. Chegg additionally rents and sells textbooks.
AI Overviews, as Google’s synthetic intelligence summaries are known as, can be found within the firm’s search engine in over 100 international locations, with greater than 1 billion customers, the corporate stated in October. They present up above hyperlinks to different pages in search outcomes.
With its assortment of 135 million questions and solutions on quite a lot of topics, Chegg “will depend on referrals from Google’s monopoly search engine for a big portion of the income that it devotes to producing unique on-line content material,” the corporate stated within the submitting.
Chegg cited a federal choose’s ruling final August that Google holds a monopoly within the search market. The choice got here after the Division of Justice in 2020 filed its landmark case, alleging that Google managed the overall search market by creating robust limitations to entry and a suggestions loop that sustained its dominance.
Google didn’t instantly reply to a request for remark.
WATCH: Google unrolls AI Overviews in six extra international locations
