Chegg Shares Plummet as Google Lawsuit Dismissed
Chegg Inc.'s (CHGG) shares plummeted 9% after a lawsuit against Google (GOOGL) was dismissed. Chegg, which provides online homework help, filed the lawsuit in February last year over claims that Google's AI Overviews product caused unfair competition. The case also involved Rolling Stones owner Penske Media as a plaintiff.
Judge Amit P. Mehta dismissed the case on Wednesday, stating that Chegg failed to allege plausible claims of reciprocal dealing. Despite integrating AI and machine learning into its platform, Chegg has struggled to compete with Google's free AI tools available to students.
Chegg didn't immediately respond to Seeking Alpha's email request for comment. In his opinion, Judge Mehta wrote that Chegg pleaded only an 'expectation' that Google would send them search traffic if they made their content available for free, but 'an expectation is not an agreement.'