Chegg to explore strategic alternatives, files lawsuit against Google

Chegg (CHGG) on Monday announced that it has filed a lawsuit in federal district court against Google (GOOGL), claiming that AI summaries of search results have hurt the online education company’s traffic and revenue. The company also said it has engaged Goldman Sachs (GS) to consider strategic options, including acquisitions and going private. Chegg said the actions are “connected, as we would not need to review strategic alternatives if Google hadn’t launched AI Overviews or AIO, retaining traffic that has historically had come to Chegg, materially impacting our acquisitions, revenue and employees. “Chegg has a superior product for education as evident by our brand awareness, engagement and retention. Unfortunately, traffic is being blocked from ever coming to Chegg because of Google’s AIO and their use of Chegg’s content to keep visitors on their own platform. We retained Goldman Sachs as the financial adviser in connection with strategic review and Susman Godfrey with respect to our complaint against Google.” Chegg shares are down 24% in premarket trading.