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Chegg cuts 22% of staff as AI tools disrupt traditional edtech business and engagement.
Due to increased competition from AI-powered educational products, Chegg, a US-based edtech startup, is laying off roughly 248 workers, or 22% of its workforce. The company's main justification for restructuring was the growing dependence of students on ChatGPT, Google's AI Overviews and other generative AI platforms. Chegg a prominent player in the online education market was established as a platform that provided homework assistance, tutoring and textbook rentals.
However, Chegg's conventional approach is losing ground as students turn to AI-powered learning resources that provide immediate, conversational, and frequently free assistance. The business has noticed a consistent drop in user engagement and site traffic which it has previously warned might continue.
By retaining traffic within its search ecosystem with AI Overviews and Gemini, Chegg further charged Google with aggravating the problem by lowering demand for unique educational content. Furthermore it has been stated that OpenAI and Anthropic have increased student access to AI tools by providing academic users with free trials further pressuring firms such as Chegg.
Chegg will drastically reduce marketing, product development, and administrative expenses as part of its reorganization, which includes closing its locations in the United States and Canada by the end of 2025. The corporation expects to save between $45 and 55 million in 2025 and up to $110 million by 2026.
In terms of finances Chegg reported a 30% loss in income and a 31% drop in subscribers earning $121 million in the first quarter of 2025. Revenue from subscription services also decreased over a third to $108 million. This is a major change in the edtech sector and demonstrates how quickly generative AI is affecting conventional educational platforms and their economic structures.
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