Chegg Reduces Workforce, Appoints New CEO Amid AI Advancements

Chegg, a leading education technology company, has announced significant changes in response to challenges posed by artificial intelligence advancements. The company is reducing its workforce and appointing a new CEO amid declining traffic and revenue.

Workforce Reductions and New Leadership

In a major restructuring effort, Chegg is cutting 388 positions, representing 45% of its total workforce. This decision follows a noticeable drop in user engagement and revenue.

Dan Rosensweig, who previously served as CEO during the company’s peak success, has been reinstated. His leadership comes at a crucial time as Chegg adapts to a rapidly changing educational landscape influenced by AI technologies.

Impact of AI on Chegg’s Business

The rise of AI tools like ChatGPT has posed significant competition for Chegg. A representative acknowledged that these new technologies, combined with reduced referrals from Google, have led to a substantial decline in traffic and revenue.

Chegg’s stock price saw an alarming decrease, dropping 99% from its peak. From March 2020 to January 2021, the stock had surged by 345%, largely due to its unique resources:

• A searchable database of 46 million textbooks.
• A dedicated team of approximately 70,000 experts based in India, ready to assist students.

Despite these strengths, Chegg’s market position eroded as competitors introduced AI solutions that simplified access to information.

Legal Challenges and Future Plans

In February 2023, Chegg took legal action against Google, alleging that the tech giant used its proprietary content for AI functions without compensation. This lawsuit highlights the ongoing threats posed by large technology firms in the educational sector.

There were discussions about the possibility of transitioning Chegg to a private company or exploring sale options. Ultimately, the decision was made to remain public and pivot back to familiar leadership, indicating a strategic retreat to past frameworks.

The future remains uncertain for Chegg as it navigates the evolving market landscape heavily influenced by AI innovations. The company aims to rebuild and redefine its role in educational support as it faces stiff competition and ongoing technological advancements.