Opinion
The AI revolution in search engines: The lawsuit against Google that threatens to change the rules
Whether the lawsuit is accepted or not, it is clear that this legal battle is not the last. It marks a new stage in the struggle surrounding the impact of AI on search engines, content producers, and the information presented to users.
Chegg's recently launched lawsuit against Google is about more than just unfair competition - it represents a significant manifestation of the new business and legal implications of the widespread use of artificial intelligence (AI) tools and their impact on traditional industries.
According to Chegg, a publicly traded U.S. company that creates educational content, which has lost more than 90% of its market cap in the past year, its business model has completely collapsed due to Google's prioritization of content that eliminates the need to visit Chegg's website. This is an excellent example of how potential exposures related to AI technologies extend far beyond the realm of AI regulation, even without dedicated legislation, through the application of existing legal norms to the new technology.
Chegg's central claims, such as abuse of monopolistic position, diversion of user traffic, and appropriation of content without compensation, are not new to the legal world. They rely on well-known principles of antitrust law and intellectual property. However, the key innovation lies in applying these principles to a new AI product ("AI Overviews") and its ability to summarize, process, and make information accessible.
In fact, we are witnessing an attempt to apply antitrust law to a new phenomenon: the transition from traditional search engines to AI-based "answer engines" that draw information from external sources but do not direct traffic to the original sites. The implications are much broader than the Chegg case - both regarding f the change in how AI based search engines work, and beyond that - regarding the implications of integrating AI tools into various services and products.
Alongside antitrust claims, the lawsuit alleges claims based on the protection of original content in the AI era. Traditional law has already dealt with AI related IP issues, but now faces a new challenge: AI takes existing content, summarizes it, and presents it as independent information. Courts will have to determine whether this constitutes fair use or prohibited commercial exploitation.
Broader Implications and Risk Management
Chegg's battle against Google serves as a warning sign for businesses and legal advisors, who need to consider the possible implications of integrating AI into activities of any kind. This is another example that the use of AI will have far-reaching implications, well beyond the need to comply with specific regulations.
Technological developments require adjustments in risk management, including due diligence processes in various acquisition and investment transactions in legal and business DD alike - a thorough examination of the myriad risks related to AI must be included. Another aspect is risk and liability allocation in commercial agreements – as exposure scenarios related to AI are numerous. In almost any context of a significant commercial contract, parties must adopt a broad view regarding AI related exposures and then try to allocate risk and liability for each exposure. Additionally, it is expected that as technology advances, new insurance coverages will develop in relation to the various exposures involved in AI.
Consideration must also be given to unique exposures for entities subject to specific regulatory regimes. For example, the lawsuit demonstrates the vulnerability of a company declared a monopoly to claims related to its AI development or usage practices. Similar vulnerability may affect any entity subject to specific regulatory regimes – be it a licensed portfolio manager, a publicly traded company under the supervision of the SEC, a licensed engineer, or the owner of a database subject to privacy regulations, and similarly anyone subject to a specific compliance regime.
The fact that Google is the main defendant in this case gives the lawsuit special precedential and business importance. Whether the lawsuit is accepted or not, it is clear that this legal battle is not the last. It marks a new stage in the struggle surrounding the impact of AI on search engines, content producers, and the information presented to users.
This lawsuit further clarifies the fact that while the law is still seeking dedicated ways to deal with the AI revolution, existing doctrines will naturally be applied to new technologies. Thus, the question is not whether there will be more lawsuits - but which creative causes of action will develop and what surprising effects they will have on the business and technology sectors.
The author is a Senior Partner and the Head M&A, at Firon Law Firm, and leads the firm's AI task force.
