Chegg Announces Major Workforce Reduction Amid AI Disruption

Chegg, the education technology company, is cutting 388 jobs—nearly 45% of its workforce—as it grapples with competitive pressure from AI tools like ChatGPT and declining Google search traffic. The two-decade-old firm has seen its traditional homework-help services lose relevance as students increasingly turn to generative AI for academic assistance.

Legal action against Google in February underscored Chegg's struggle. The company alleges that AI-generated answers appearing directly in search results have diverted traffic from its platform, eroding revenue. Monday's announcement reiterated these concerns, with leadership citing AI adoption and reduced Google referrals as primary challenges.

This marks the second round of layoffs in 2024. In May, Chegg eliminated 22% of positions, similarly attributing the cuts to AI disruption. The restructuring includes an immediate CEO transition, with Dan Rosensweig replacing Nathan Schultz, who will remain as an advisor.

Chegg has opted to remain independent after evaluating strategic alternatives. The board unanimously rejected acquisition proposals, signaling confidence in its standalone path despite mounting industry headwinds.