Chegg’s Embrace of AI Failed to Stop ChatGPT From Winning the Day

Online learning platform Chegg has struggled to keep up with the disruptive power of artificial intelligence (AI) offered by rival ChatGPT. The company had been considering the possibility of AI supplanting human instructors on the platform but had believed this would not happen until at least 2025. Chegg executives believed that students would continue to prefer human-generated study guides and homework help at this stage of AI development. However, ChatGPT’s popularity increased after OpenAI released its most powerful model, GPT-4 earlier this year, leading to significant losses in Chegg’s market value. Chegg’s management eventually partnered with OpenAI to create CheggMate, an AI learning companion powered by GPT-4 with an estimated repository of 100 million study questions. The deal aimed to erect a barrier against ChatGPT but it was not enough to stop the loss in subscribers. Chegg’s shares dropped by 48% after the announcement that it will not provide revenue forecasts for the second half of this year due to the rise of ChatGPT.