The ed-tech platform Chegg on Monday filed a suit in the federal district court against Google, claiming that the artificial intelligence summaries Google shows on their search results have hurt the company’s website traffic and revenue. This move comes nearly two years after the company’s former CEO, Dan Rosensweig, said that students who are using OpenAI’s ChatGPT are cutting into Chegg’s customer base and that the revenue of the company has fallen nearly 40% after the release and prominence of ChatGPT.
The company’s current CEO, Nathan Schultz, said that Google forces companies like Chegg to “supply our proprietary content in order to be included in Google’s search function.” He added that the company uses its monopoly to “reap the financial benefits of Chegg’s content without having to spend a dime.”
Chegg’s market capitalization has fallen below $200 million, with shares hovering just above $1 during after-hours trading on Monday. CEO Nathan Schultz revealed during an earnings call that Chegg is considering strategic options, including a potential acquisition or transition to a private company, after engaging Goldman Sachs.
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In the fourth quarter, Chegg experienced a net loss of $6.1 million alongside $143.5 million in revenue, marking a 24% decline from the previous year and falling short of analyst expectations of $142.1 million. For the first quarter, management estimates revenue will fall between $114 million and $116 million, while analysts had anticipated approximately $138.1 million. As a result, the stock price fell by 24% during extended trading hours.
