Chegg Lays Off 388 Employees, Replaces CEO Amid AI Crisis

UPDATE: Chegg has announced a drastic restructuring plan that includes laying off 388 employees, representing 45% of its workforce, amid a fierce competitive landscape dominated by AI technologies like ChatGPT. This urgent shift follows a significant decline in revenue and user engagement, as revealed by Chegg officials on Monday.

The company is grappling with the fallout from AI advancements that have resulted in a staggering 99% drop in its stock price since its peak in November 2022, wiping out approximately $14.5 billion in market value. Chegg’s struggles stem from increased competition, particularly from AI tools that provide instant educational assistance, diminishing its once-thriving model.

According to Reuters, a Chegg representative confirmed that “the new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg’s traffic and revenue.” The rise of AI platforms has altered the educational landscape, leaving Chegg to confront the harsh truth of dwindling subscriptions and engagement.

Chegg, which experienced a remarkable 345% surge in stock price during the COVID-19 pandemic, had relied on a robust system of 46 million searchable textbooks and a large team of experts in India. However, the introduction of AI chatbots has rendered those resources less appealing to students seeking quick answers.

In a desperate response, Chegg filed a lawsuit against Google in February, alleging that Google used its proprietary content to enhance its AI capabilities without compensation. The company’s efforts to pivot and adapt included launching its own chatbot, but these attempts have not yielded the anticipated results.

Now, in a bid to revive its fortunes, Chegg has reinstated former CEO Dan Rosensweig, a move that signals a return to past leadership strategies. The company also conducted a review regarding going private or selling itself, but has ultimately decided to remain public under Rosensweig’s guidance.

As the company navigates these turbulent waters, the impact on employees and its future direction remains uncertain. Industry analysts and stakeholders will be closely watching how Chegg plans to adapt in an era increasingly defined by AI innovations.

The urgent question now is: can Chegg reclaim its position in the educational technology landscape, or has it missed the opportunity to innovate and evolve? As developments unfold, the educational community and investors alike are bracing for what may come next.