Chegg reduces 4% of employees as AI risks business


US-based online learning platform Chegg announced its plans to reduce around 4% of its employees. Just weeks after its CEO acknowledged that OpenAI’s ChatGPT was killing its business as more students were turning to artificial intelligence for homework help.

The company stated that the reduction would affect “about 80 employees” and “better position the company to execute against its AI strategy and to create long-term sustainable value for its students and investors”, according to reports.

The business estimates that these actions will result in “charges of approximately $5 million to $6 million, primarily consisting of cash expenditures for severance payments, employee benefits and related costs,” according to a regulatory filing.

A rising number of detractors have expressed alarm about the popularity of OpenAI’s chatbot and warned that it may encourage students to cheat on assignments, result in significant job losses, disseminate false information online, or even result in the extinction of humanity.

According to the research, ChatGPT offers a serious threat to Chegg’s business model, which is focused on the subscription-based provision of homework assistance, textbook rentals, test preparation, and other educational tools for students.

OpenAI’s chatbot offers free access to a lot of the same knowledge as Chegg with a few keystrokes.

After Chegg acknowledged that its finances had been impacted by the AI chatbot ChatGPT last month, the entire edtech industry descended into chaos.

The stock of language learning platform Duolingo fell by 10%, Pearson’s stock, which is listed in London, fell by nearly 15%, and US-listed education company Udemy fell by more than 5% on Tuesday, according to reports. Chegg’s shares, meanwhile, sank by 50%.

Dan Rosensweig, CEO of Chegg, stated: “We now believe it’s (AI) having an impact on our new customer growth rate.” With the help of OpenAI, the business has introduced its own AI chatbot, called CheggMate, in an effort to keep pupils.

"Exciting news! Elets Education is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest insights!" Click here!
Be a part of Elets Collaborative Initiatives. Join Us for Upcoming Events and explore business opportunities. Like us on Facebook , connect with us on LinkedIn and follow us on Twitter , Instagram.