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Chegg Lays Off 319 Workers, Struggles Against AI and Google’s Search Evolution Chegg’s Layoffs Amid Financial Struggles
- Chegg, an online education company, has laid off 319 workers, or 21% of its workforce, as it faces deep challenges from generative AI tools and Google's search evolution.
- The company's Q3 report saw losses exceeding $212 million, marking a pattern of declining revenues over the past three years.
- Chegg CEO Nathan Schultz acknowledged that the layoffs and broader restructuring effort aim to cut costs and reshape the company's focus to save between $60 and $70 million in 2025.
- Two major factors eroding Chegg's business are advancements in AI and changes to Google's search platform. Chatbots like OpenAI's ChatGPT provide free and highly capable alternatives to Chegg's paid services, while Google's AI-powered search summaries offer direct answers and overviews without the need to visit other websites.
- Chegg has lost more than 500,000 subscribers since ChatGPT's launch in 2022, and revenue has declined for three consecutive years.
- Chegg is attempting to pivot toward a future that embraces AI rather than fights it. The company formed an "arena" to evaluate various AI models and is working to integrate AI technology into its broader learning platform.
- While this shift could open up new opportunities, Chegg's leadership acknowledges that the road to recovery will be difficult.
- Chegg's dramatic fall reflects both the broader slowdown in the edtech sector and the company's specific struggles to adapt to AI-driven competition.
- The rise of tools like ChatGPT and Google's AI-enhanced search platform has fundamentally reshaped how students access information and educational resources.
- Chegg's challenges highlight the disruptive impact of generative AI on traditional industries, particularly those reliant on subscription-based models.
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