Chegg, a leading online education company, has announced plans to lay off 22% of its workforce, impacting approximately 248 employees.
The decision comes as AI-powered tools such as ChatGPT and Google’s AI Overviews reshape the education technology (edtech) industry, leading to declining web traffic and reduced demand for traditional learning platforms.
The layoffs are part of a broader restructuring effort, which includes shutting down its U.S. and Canada offices by the end of 2025.
Chegg aims to cut costs and streamline operations, anticipating significant financial savings in the coming years.
AI’s Growing Influence on EdTech
Chegg has been facing a steady decline in subscribers, with numbers dropping 31% in Q1 2025 to 3.2 million.
Revenue also fell 30% to $121 million, with subscription services revenue declining by nearly a third to $108 million.
The company attributes these losses to the rise of AI-driven learning tools, which provide instant answers and personalized tutoring, reducing reliance on traditional edtech platforms.
- Google’s AI Overviews keep users within its search ecosystem, limiting traffic to external sites.
- OpenAI and Anthropic offer free access to AI-powered academic tools, further disrupting Chegg’s business model.
Financial Impact on Chegg and Cost-Cutting Measures
Chegg expects to incur restructuring charges between $34 million and $38 million in the second and third quarters of 2025.
However, the company anticipates cost savings of $45–$55 million in 2025 and $100–$110 million in 2026 due to these layoffs and operational adjustments.
In addition to workforce reductions, Chegg plans to scale back marketing and product development efforts, focusing on core business areas that remain profitable.
Legal Battle Between Chegg and Google
In February 2025, Chegg filed a lawsuit against Google, alleging that the company’s AI-driven tools were reducing demand for original content.
The lawsuit also accused Google of undermining publishers’ ability to compete by prioritizing AI-generated summaries over traditional sources.
The lawsuit highlights the growing tension between traditional edtech firms and AI-driven platforms, as companies struggle to retain users in an increasingly automated learning environment.
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