Edtech firm Chegg to cut 4% of staff amid AI threat to business model

Chegg has revealed its plans to cut about 4% of its workforce, weeks after its CEO admitted that ChatGPT was crushing its business as students are turning to artificial intelligence for homework

US-based online learning platform Chegg has revealed its plans to cut about 4 per cent of its workforce, just weeks after its CEO admitted that OpenAI's ChatGPT was crushing its business as more students are turning to artificial intelligence for homework assistance.

The company said that the cut would amount to "about 80 employees" and would "better position the company to execute against its AI strategy and to create long-term sustainable value for its students and investors", reports New York Post.

According to a regulatory filing, the company expects to "incur charges of approximately $5 million to $6 million in connection with these actions, primarily consisting of cash expenditures for severance payments, employee benefits and related costs".

The popularity of OpenAI's chatbot has sparked concerns among a growing number of critics, who have warned that it has the potential to fuel student cheating on school assignments, cause massive job losses, spread online misinformation, or even cause humanity's demise.

ChatGPT poses a significant threat to Chegg's business model, which is based on subscription-based homework help, textbook rentals, test prep, and other educational resources for students, the report said.

With a few keystrokes, OpenAI's chatbot provides free access to much of the same information as Chegg.

Last month, the global edtech sector went through a mayhem after Chegg admitted AI chatbot ChatGPT affected its finances.

While Chegg's shares plunged by half, London-listed Pearson's stock fell about 15 per cent, language-learning platform Duolingo's stock went down by 10 per cent and US-listed education company Udemy dropped by more than 5 per cent on Tuesday, reports The Financial Times.

According to Chegg CEO Dan Rosensweig: "We now believe it's (AI) having an impact on our new customer growth rate."

The company has launched its own AI chatbot, dubbed CheggMate, in collaboration with OpenAI, to retain students.

--IANS

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