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Chegg Slashes 22% of Workforce Amid AI Disruption in EdTech Sector

Chegg, Inc., a leading online learning platform, announced on May 12, 2025, that it will lay off 248 employees, approximately 22% of its global workforce, as part of a major restructuring plan to counter the growing impact of artificial intelligence (AI) tools on its business. The cuts, primarily affecting Chegg Study and corporate services, come as the company grapples with a 30% revenue drop and a 31% decline in subscribers in the first quarter of 2025, driven by competition from free AI tools like ChatGPT and Google’s AI-powered search overviews.

CEO Nathan Schultz cited the rapid rise of generative AI and changes in search engine dynamics as key pressures on Chegg’s core homework-help model. “Despite promising developments, we believe the trends impacting our business will worsen before they improve,” Schultz said in a statement. The company is also terminating its headquarters lease to further reduce costs, projecting annual savings of $45 million to $55 million in 2025 and up to $110 million in 2026. These measures follow two prior restructuring rounds in 2024, which together aim to deliver cumulative savings of up to $175 million this year.

Chegg reported Q1 2025 revenue of $121.4 million, down from $174.3 million the previous year, with a net loss of $17.5 million. Subscription services, which account for the bulk of its revenue, fell 30% to $107.6 million, reflecting a subscriber base that shrank to 3.2 million. The company has also pivoted to diversify its revenue, securing $4 million in Q1 from licensing its question-and-answer content to AI companies, with an additional $7 million expected in Q2.

The layoffs and cost-cutting measures underscore broader challenges in the edtech industry, where AI tools are reshaping how students access educational resources. Chegg’s lawsuit against Google, filed earlier this year, alleges that Google’s AI overviews are diverting traffic and undermining its business model by using publishers’ content without fair compensation. Schultz emphasized the broader implications, stating, “This is about more than Chegg—it’s about the future of digital publishing and quality education.”

As Chegg explores strategic alternatives, including a potential sale or going private, analysts warn that the company faces an uphill battle to regain its footing in a market increasingly dominated by free and AI-driven solutions. The restructuring charges, estimated at $34 million to $38 million, reflect the steep cost of adapting to a rapidly evolving industry landscape.

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Trump Ousts Copyright Office Director Amid Controversy Over AI Training Report

President Donald Trump has abruptly dismissed Shira Perlmutter, the director of the U.S. Copyright Office, following the release of a contentious report on May 11, 2025, that raised concerns about the use of copyrighted materials in training artificial intelligence (AI) models. The report, which sparked intense debate in tech and creative industries, prompted Trump to fire Perlmutter, citing a need for new leadership to address the rapidly evolving intersection of AI and intellectual property.

The Copyright Office’s report highlighted significant gaps in current copyright law regarding AI training data, noting that many AI systems rely on vast datasets that often include copyrighted works without explicit permission from creators. It called for clearer guidelines to balance innovation with the rights of artists, authors, and other content creators, igniting criticism from both AI developers and copyright holders. Tech companies, including OpenAI and Google, argued that restrictive policies could stifle AI advancement, while creative industries demanded stronger protections against unauthorized use of their work.

Trump, in a statement, described the report as “inadequate” for addressing the complexities of AI and copyright, accusing Perlmutter of failing to provide actionable solutions. “We need a Copyright Office that supports American innovation and protects our creators without getting bogged down in bureaucracy,” he said. The move aligns with Trump’s broader push to reshape federal agencies, though it has raised questions about the administration’s stance on AI regulation.

Perlmutter, who had led the Copyright Office since 2020, was widely respected for her efforts to modernize copyright systems. Her firing has drawn mixed reactions. Some industry groups praised the decision, hoping for a director who might prioritize looser AI training regulations, while others, including the Authors Guild, expressed concern that her departure could weaken advocacy for creators’ rights. “This is a critical moment for ensuring fair compensation in the AI era,” said Mary Rasenberger, CEO of the Authors Guild.

The dismissal leaves the Copyright Office without a permanent director as it navigates one of the most pressing legal challenges of the digital age. Trump has not yet named a replacement, but sources suggest the administration may appoint someone with a strong pro-tech background. Meanwhile, the report’s findings continue to fuel lawsuits against AI companies, with courts increasingly tasked to decide the legality of using copyrighted data for AI training.

As the debate intensifies, the firing underscores the high stakes of AI policy under the new administration, with implications for innovation, creative industries, and the global AI race.

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Other Top AI News Today

ChatGPT's Deep Research Enhances GitHub Codebase Integration

OpenAI's ChatGPT has introduced an advanced Deep Research feature that can now understand and work with GitHub codebases. This allows developers to leverage AI for analyzing and manipulating code repositories more effectively, boosting productivity in software development. This development was highlighted in posts on X, indicating significant community interest.

NASA Leverages AI in Citizen Science and Health Research

NASA is utilizing AI to engage citizen scientists in its latest missions and to study human health in space using "tissue chips." These initiatives showcase AI's role in advancing scientific research, from mapping microscopic plankton to exploring astrobiology, demonstrating its growing impact beyond traditional tech sectors.

Instagram's Quiet AI Feature Launch Sparks Buzz

Instagram has introduced a new AI-driven feature, though details remain limited. The social media world is abuzz with speculation about its potential to enhance user experiences, possibly through improved content personalization or automation. This reflects AI's increasing integration into social platforms.

DeepSeek’s R1 Model Gains Traction as Cost-Effective Alternative

Chinese startup DeepSeek’s R1 AI model, launched in January 2025, continues to draw attention for its cost-efficiency and performance, rivaling OpenAI’s o1 model. With only $6 million and 2,048 GPUs used for training, it’s a standout in the race for affordable, high-quality AI solutions.

Ethical AI Concerns Rise with Deepfake Tools

Researchers from the Oxford Internet Institute have reported a dramatic increase in AI tools designed to create deepfake images of identifiable individuals. This development raises significant ethical concerns about misinformation and privacy, prompting renewed calls for responsible AI regulation.

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Trending AI Tools Today

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• Migma lets you go from a simple prompt to a complete, on-brand email in seconds. Migma fetches live content, generates images, and ensures your emails look perfect everywhere. Once created, choose your audience and hit send. 200x cheaper and faster.

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Business Tip of the Day

Streamline Your Business: Build Modular Automations for Maximum Efficiency

In today’s fast-paced business landscape, automation is a game-changer, but sprawling, monolithic workflows can become unwieldy and hard to maintain. A smarter approach gaining traction in 2025 is building modular automations—breaking down complex processes into smaller, reusable components that function like LEGO blocks. This strategy, enhances efficiency, simplifies troubleshooting, and scales seamlessly with your business.

Modular automation involves creating standalone tasks—such as lead scraping, CRM updates, email outreach, or team notifications—that can be triggered independently or combined as needed. For instance, a business could use Zapier to automate lead tracking by connecting a web form to Google Sheets, logging new entries in real time. A separate module might use Make (formerly Integromat) to send personalized follow-up emails via a platform like Mailchimp when a lead is added. Meanwhile, n8n could notify your team on Slack about high-priority leads, ensuring everyone stays in the loop without manual intervention.

The beauty of this approach lies in its flexibility. Each module is self-contained, making it easier to tweak or replace without disrupting the entire workflow. If your email platform changes, you only update the email module, not the whole system. This also reduces errors and speeds up debugging, as issues are isolated to specific components. Plus, modular systems are inherently scalable—add new modules for tasks like social media posting or invoice generation as your business grows.

Small businesses can start by identifying repetitive tasks—think data entry, customer follow-ups, or report generation—and use tools like Zapier, Make, or n8n to create targeted modules. These platforms offer user-friendly interfaces and integrations with hundreds of apps, making automation accessible even for non-technical teams.

By adopting modular automations, businesses can save hours of manual work, reduce errors, and focus on strategic priorities like growth and customer engagement. In an era where time is money, this approach isn’t just efficient—it’s essential. Start small, experiment with one module, and watch your productivity soar as you build a tailored automation ecosystem.

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Cheers,

Darius @ SumoGrowth