Chegg Slashes 45% of Workforce, Blames 'New Realities of AI' (cnbc.com) 31
Chegg says it will lay off about 45% of its workforce, or 388 employees, as the "new realities" of artificial intelligence and diminished traffic from internet search have led to plummeting revenue. From a report: The online education company, founded 20 years ago, has been hit by the rise of generative AI software tools, such as OpenAI's ChatGPT, which have become increasingly popular among students.
Chegg also sued Google in February, arguing that AI summaries of search results have hurt its traffic and sales. The company reiterated that claim on Monday, saying AI and "reduced traffic from Google to content publishers" have damaged its business. "As a result, and reflecting the company's continued investment in AI, Chegg is restructuring the way it operates its academic learning products," the company said. The cuts come after Chegg in May laid off 22% of its workforce, citing increasing adoption of AI. Chegg's market cap has fallen 98.8% in recent years to about $135 million.
Chegg also sued Google in February, arguing that AI summaries of search results have hurt its traffic and sales. The company reiterated that claim on Monday, saying AI and "reduced traffic from Google to content publishers" have damaged its business. "As a result, and reflecting the company's continued investment in AI, Chegg is restructuring the way it operates its academic learning products," the company said. The cuts come after Chegg in May laid off 22% of its workforce, citing increasing adoption of AI. Chegg's market cap has fallen 98.8% in recent years to about $135 million.
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No way (Score:5, Insightful)
It's hard, if not impossible, to think you can fire almost half your employees and not have it royally fuck your business into the mud.
If you CAN let that many people go without disastrous consequences, then those dunderheads have been wildly overstaffed to the point of criminal incompetence.
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They said "Chegg it!"
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It's hard, if not impossible, to think you can fire almost half your employees and not have it royally fuck your business into the mud.
If you CAN let that many people go without disastrous consequences, then those dunderheads have been wildly overstaffed to the point of criminal incompetence.
It's usually a sign the company was dying before, AI is just a convenient excuse for poor management.
Troubling (Score:5, Insightful)
The democratization of information is an incredibly valuable tool for a well-functioning society, but de-genAI is hardly that. It is a consolidation of information into a small cadre of for-profit (or soon to be for-profit) entities that will have a chilling effect on the ability of people to sustain themselves with bringing new or interesting ideas to the world.
It is easy to laugh at the downfall of the "Education Industry" and all of its shady financial motivations, but this is merely the first of many dominos to fall. How many are left before information on the web is either paywalled or accessed exclusively through an AI chatbot?
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It's big "tech", mind you. They're product last, stakeholders first.
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I read this around the rim of my glasses and I thought it said "snakeholders"...
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It's definitely snakeoil most of the time.
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If they had a prosperity-preacher actually waving snakes around and squeezing them for oil, that would be much more entertaining though.
But only as live entertainment, not some janky AI-video.
This isn't necessarily the canary (Score:3)
Chegg predominantly exists for you to be able to pay somebody to do your homework. That was their entire business model but they pretended to be a tutoring platform.
AI can do your homework just as well as the underpaid grad students and Indians they were hiring.
Basically they took the practice of paying somebody to do your homework and turned it into a business. People have also used it for online tests.
This isn't a case of losing
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There are LOTS of specialized niche forms of business that AI can do to a certain degree. Often as well as, or better than, people. (Remember, LLMs are only one facet of AI, though a very publicized one.) More usually, at least right now, the AI can only do a part of the job better than people, and totally can't handle another part. But that means you need fewer people.
OTOH, expect most AI applications to fail. That was what happened when computers first started to be widely applied. But the ones we r
Economic employment tipping point (Score:3)
The official u6 rate for unemployment which theoretically includes underemployed and unem
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Mod up for "degenerative AI", but I think no hyphen is appropriate. My spelling checker isn't complaining. Maybe you wanted the hyphen for emphasis, but I prefer the implicit comparison to degenerative diseases.
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Make all of the snarky comments that you like, this is a frightening canary around the realities of de-generative AI and the new "economies" it is creating. I despise Big Tech as much as the next guy, but at least content creators and businesses saw SOME slice of the advertising-revenue pie.
I have as much concern for job stability as anyone else, but as one, who has suffered through educational software that long I can only say: it couldn't have hit a more deserving target. I really wish, that all companies in this same business environment go extinct soon. They really have it coming.
You can call AI output degenerative all day long, but it's still miles ahead of what I have seen in educational software products: English language testing requiring exactly the expected wording of the answer, end
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Ailing company most people have never heard of uses AI as its dog-ate-my-homework excuse
which isn't really news.
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It is easy to laugh at the downfall of the "Education Industry" and all of its shady financial motivations,
Well no, the fact that there is an "education industry" in your country should cause weeping, rather than laughter.
It means that education isn't being valued, isn't delivering value or purpose.
And the downfall isn't due to AI, it's due to a company not delivering a product or service that is valuable enough to pay for.
Oh no! (Score:1)
Who the hell is Chegg again? Is that the tall guy with black hair, who used to sit near the kitchenette?
Check is basically a cheating platform (Score:3, Insightful)
It's no surprise they are in free fall because AI can basically do the same thing for free with roughly the same accuracy.
It was a nice scam while it lasted. Basically an entire website you could pay people to do your homework. But I'm not surprised AI has killed it.
If they were an actual tutoring platform they would survive because AI isn't a very good tutor. But as a homework cheating platform yeah they don't stand a chance.
Chegg was always a scam (Score:5, Insightful)
Homework help? That's kind of a euphemism. More like homework cheat site. AI does it even better, for sure.
Good luck suing Google for changing their algorithms in a way that leads to new winners and new losers. They've been doing this since the beginning of Google. If you build a business based on the expectation that Google will consistently send you new customers, you're dooming yourself. Tying your fortunes to the good graces of Google, isn't a winning strategy.
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The BS they would make you do to get answers and homework taken down was the give away. They would want proof of copyright to remove the materials but if it was individual questions (most all but separated) or placed under the wrong school they'd not remove it.
WTF is chegg? (Score:2)
Company you've never heard of is having problems, which doesn't sound like it's my problem.
Ad revenue (Score:2)
Much of the internet runs on ad revenue..
And people go to fewer and fewer websites. Gone are the days that people just browsed around on websites. Social media feeds you what you want now.
So yeah, it's time for a business model disruption.
Big AI companies can now own a new window to all apps. Making ad revenue hard to share.
The Chegg CEO Told His Company ... (Score:2)
I worked at a company acquired by Chegg, back when AI was starting to become commonly used (about two years ago).
The CEO of the company came to an All Hands meeting and told the entire company that Chegg had all the data on what professors required what, how students studied, and so on. Since OpenAI didn't have that data, the company had nothing to worry about from them. Chegg would just embrace AI, use its data, and remain the best at serving students.
It sounded a lot like he'd just learned what AI was,