Chegg to Cut 22% of Jobs Amid AI Disruption in EdTech Sector

Chegg, a U.S.-based online education company known for services like textbook rentals, tutoring, and homework help, announced on May 13, 2025, that it will lay off approximately 22% of its workforce—around 248 employees—as part of a major restructuring strategy. This move comes in response to increasing challenges posed by the rapid adoption of AI-powered tools by students, such as ChatGPT, which are significantly impacting traditional edtech platforms.

The company has been facing a continuous decline in web traffic over the past several months, a trend it anticipates will worsen before improving. Chegg attributed a major part of this decline to changes in how users interact with online search and educational content. Notably, Google’s expansion of its AI Overviews feature has confined more web traffic within its own ecosystem, reducing the need for users to visit external sites like Chegg. Additionally, Google's transition of search functionalities toward its Gemini AI platform further diminishes the visibility and utility of third-party content providers.

Chegg also pointed to other players in the AI space—such as OpenAI and Anthropic—who are increasingly offering free subscription-based access to educators and academics, thereby capturing the audience that would traditionally rely on Chegg’s services. These AI platforms are providing more interactive and efficient solutions to student queries, significantly altering user behavior in the education space.

In response, Chegg has decided to implement sweeping cost-cutting measures. Alongside the layoffs, the company will shut down its physical offices in the U.S. and Canada by the end of 2025. It also plans to scale back its marketing, product development, and general administrative expenditures in an attempt to become leaner and more agile in a rapidly evolving tech landscape. The restructuring will result in financial charges estimated between $34 million and $38 million, with most of those costs being realized in the second and third quarters of 2025.

Despite these upfront costs, Chegg anticipates significant long-term savings. The company projects it will save between $45 million and $55 million in 2025, and as much as $100 million to $110 million in 2026 as a result of the changes. These savings are expected to support the company’s goal of adjusting its business model in light of the AI-driven transformation of the education sector.

Chegg has also taken legal action to address its concerns over diminishing traffic. In February 2025, the company filed a lawsuit against Google, accusing the tech giant of undermining the reach and competitiveness of original content providers through its AI-generated overviews. According to Chegg, this shift is eroding demand for authentic educational content and causing a sharp drop in website visitors and paying subscribers.

As of December 31, 2024, Chegg had 1,271 employees. The upcoming layoffs reflect both a defensive move against mounting pressure from AI rivals and an attempt to adapt to a new educational landscape dominated by intelligent automation. Whether Chegg can reinvent itself and remain competitive will likely depend on how well it can integrate AI into its own offerings while navigating the ongoing disruption in the edtech industry.