AI Disruption: Chegg Lays Off 248 Due to ChatGPT

AI’s Education Revolution: Chegg Lays Off 22% of Workforce as Students Embrace ChatGPT

Let’s face it: AI is reshaping education in ways few predicted even a year ago. The latest casualty in this seismic shift is Chegg, the once-dominant online education platform that’s now slashing 248 jobs—about 22% of its workforce—and shuttering its U.S. and Canada offices. This dramatic move, announced May 12, 2025, is a direct response to students’ rapid adoption of AI-powered tools like ChatGPT and Google’s AI Overviews, which are making traditional academic help platforms look, well, a little old-school[2][4][5].

The Numbers Don’t Lie: Chegg’s Freefall

Chegg’s downward spiral is reflected in stark numbers. The company’s first-quarter 2025 results reveal a 31% drop in subscribers—down to 3.2 million—and a 30% decline in revenue to $121 million. Subscription revenue, Chegg’s bread and butter, also tumbled to $108 million. For context, that’s a net loss of $17.5 million in just three months[3][5].

CEO Nathan Schultz didn’t mince words: “Macroeconomic trends and AI competition are putting unprecedented pressure on our business.” Chegg’s stock, perhaps counterintuitively, rose 4.8% after the announcement, a sign that investors see cost-cutting as the only viable path forward—at least for now[2][5].

Why Are Students Ditching Chegg for AI?

The answer lies in the convenience and immediacy of generative AI. Platforms like ChatGPT offer instant, free (or low-cost) answers to complex academic questions, often with explanations that rival what you’d get from a tutor. Students, especially those raised in the TikTok era, expect fast, frictionless help. Why pay for a Chegg subscription when AI can answer your homework in seconds—and, let’s be honest, sometimes even write your essay for you[2][4]?

Chegg isn’t alone in feeling the pinch. The entire edtech sector is scrambling to adapt. As someone who’s followed AI for years, I’m struck by how quickly the tables have turned. Just two years ago, Chegg was warning investors about the impact of ChatGPT on its business. Now, the threat has become existential[5].

The Google Lawsuit: A Desperate Bid for Relevance

In February 2025, Chegg took the extraordinary step of suing Google, accusing the tech giant of using AI-generated summaries to siphon traffic away from original content creators. The lawsuit claims Google’s AI Overviews—which provide instant answers at the top of search results—are undermining publishers’ ability to compete and survive[2][5].

It’s a David vs. Goliath scenario, but Chegg’s legal gambit highlights a broader industry anxiety: How can traditional content providers compete when AI can summarize, rewrite, and even generate original content at scale? And does Google—or any AI developer—have a responsibility to ensure fair play in the digital ecosystem?

The Human Cost: Layoffs and Restructuring

Behind the numbers and legal battles are real people. Chegg’s layoffs, which began May 12, 2025, affect 248 employees across the company. Offices in the U.S. and Canada will close by year’s end, and Chegg plans to slash marketing, product development, and administrative expenses. The restructuring will cost $34–$38 million in the short term but is expected to save $45–$55 million in 2025 and up to $110 million in 2026[2][5].

As someone who’s seen tech layoffs before, I can’t help but wonder: How much of this is about efficiency, and how much is about survival? For many of Chegg’s employees, the answer is academic—literally.

The AI Disruption Playbook: Who’s Next?

Chegg’s story is a harbinger for the broader edtech industry. Other platforms—think Quizlet, Course Hero, and even traditional textbook publishers—are facing similar pressures. The rise of AI tutors, personalized learning assistants, and automated grading systems signals a new era in education, one where human tutors and traditional platforms must either adapt or risk obsolescence[2][5].

Interestingly enough, some edtech startups are embracing AI rather than fighting it. Companies like Khan Academy and Duolingo are integrating generative AI into their offerings, offering students personalized feedback and interactive learning experiences. The difference? These platforms are building with AI, not against it[2].

The Future of Education and Work

So, what does this all mean for students, educators, and the future of work? For starters, the demand for digital literacy and AI fluency is skyrocketing. Students who can harness AI for learning will have a clear edge. Educators, meanwhile, face the challenge of adapting curricula to ensure students are learning—not just copying—from AI[2][4].

On the flip side, the job market for traditional academic support roles—tutors, content creators, even some administrative staff—is shrinking. The shift is forcing everyone to rethink what it means to be “educated” in the age of AI.

Chegg vs. ChatGPT: A Side-by-Side Comparison

The Road Ahead: Adaptation or Extinction?

Chegg’s fate is a cautionary tale for any company that thinks it can rest on its laurels in the age of AI. The winners in this new landscape will be those who embrace AI as a partner, not a competitor. For students, the future is bright—if they use AI wisely.

But let’s not forget the human cost. As we marvel at AI’s capabilities, we must also ask: How do we ensure that technological progress doesn’t leave people behind? For Chegg’s 248 laid-off workers, and countless others in the edtech sector, that question is anything but academic.

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