Posted by Sophia Miceli.
Chegg is an online learning platform that helps students with homework and tutoring and provides textbook rentals. Chegg is provided through Google, the most popular search engine in the world. On Monday, February 24th, Chegg filed suit in federal district court against Google. Chegg is claiming that AI summaries from Google search results are diminishing the platform’s revenue and success. Chegg “depends on referrals from Google’s monopoly search engine,” and as a result, a large portion of Chegg’s revenue stems from their original content. So, Google’s Open AI ChatGPT machines using Chegg’s content are causing Chegg to lose money as it is cutting into Chegg’s growth.
Chegg is currently worth less than $200 million and on Monday, the stock was trading only just above $1 per share. There is a reported 24% decline in this company with a $6.1 million net loss on the $143.5 million in fourth-quarter revenue. This is a lot less than what analysts expected for this company to have in revenue. Google abuses monopoly power by using other platforms’ content for the AI machine results without paying for the costs of the other platforms. Chegg is stating that this reduces financial incentives to continue to publish their original content as their content is being used without them gaining the revenue they deserve.
Chegg is engaging with Goldman Sachs to consider strategic options of “getting acquired and going private.” The lawsuit states that Google’s actions violate sections one and two of the Sherman Antitrust Act of 1890. Google intends to defend itself against Chegg’s suit by stating that its intentions are to provide an excellent user experience and that its AI feature sends traffic to many sites. While I do think the technology of artificial intelligence is very impressive and beneficial, I do not think it should take over everything, steal other platforms’ original content, and run them out of business. This suit will determine the answers to the future of AI usage and fair compensation.
Sophia is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2028.