Education technology firm Chegg is cutting 45% of its global workforce as artificial intelligence reshapes how students learn. The California-based company, once a leader in online tutoring and textbook rentals, has seen demand for its paid services collapse due to free AI tools like ChatGPT. Following a strategic review, Chegg reinstated veteran executive Dan Rosensweig as CEO and launched aggressive cost-cutting measures, including office closures and restructuring charges of up to $35 million. Despite these steps, revenue has dropped 30% year-on-year, with subscriptions falling 31%, leaving analysts uncertain about whether Chegg can successfully transition into the AI-powered learning era.

Acceleration of AI adoption — We believe that we will see startups currently adopting the traditional edtech model rapidly shift toward models centred around AI-integrated tools and adaptive learning methodologies.

Market consolidation — If Chegg’s struggles are indicative of industry norms, smaller or larger legacy edtech firms could merge or exit as AI-native startups enter the market and gain traction. We could also see established edtech firms acquire promising startups to leverage their talent and AI capabilities.

Shift in student expectations — It is evident that the consumer landscape is significantly changing: Learners increasingly prefer instant, AI-driven solutions over subscription-based tutoring. Edtech startups must adapt and formulate strategies to create seamless and personalised solutions which meet consumer expectations.

New competitive benchmarks — Free or low-cost AI alternatives will redefine pricing and value across educational technology. Startups must focus on exploring innovative revenue models to remain competitive, as widespread AI adoption will lead to prioritisation of cost-efficiency.