Chegg Layoffs 22% of Workforce as AI Rivals Erode Market Share

Chegg, the online education company known for textbook rentals and tutoring services, announced on May 12, 2025, that it will lay off approximately 248 employees, representing 22% of its current workforce.

This tough decision comes amid declining user engagement and increasing competition from AI-powered tools that have eroded the market share of Chegg.

These latest layoffs will primarily affect the Chegg Study division and corporate services, while subsidiaries like Busuu and Chegg Skills will remain unaffected.

As part of the restructuring, Chegg plans to close its U.S. and Canada offices by the end of the year and reduce expenditures in marketing, product development, and administrative areas. The company anticipates incurring charges between $34 million and $38 million in the next two quarters but expects to save $45–$55 million in 2025 and $100–$110 million in 2026.

• Chegg attributes the downturn to the rise of AI tools like ChatGPT and Google's AI Overviews, which provide direct answers to user queries, reducing traffic to Chegg's platform.

In February, Chegg filed a lawsuit against Google, alleging that its AI Overviews unlawfully leverage monopoly power to disadvantage content publishers by keeping users within Google's ecosystem.

The company's first-quarter 2025 results reflect these challenges, with a 31% drop in subscribers to 3.2 million and a 30% decline in revenue to $121 million that too after it lost almost $14.5 billion in 3 years of AI taking the stage.

Chegg's CEO, Nathan Schultz, stated:

"Technology shifts have created headwinds for our industry and Chegg’s business specifically."

Despite the setbacks, Chegg is exploring ways to integrate AI into its services to better meet the evolving needs of students and to stay around for at least a few more years.

The company aims to adapt by focusing on its core strengths and targeting more serious students in a try to regain its market share.$14.5 billion in 3 years