CheggMate via @sejournal, @Kevin_Indig

The expected AIO-pocalypse hasn’t happened, astatine slightest not successful the signifier we expected.

Instead of a meteor impact, it looks much similar clime change: dilatory raising temperatures that origin earthy disasters. Chegg is 1 of the archetypal victims.

Chegg is an ed-tech institution that offers students homework help, textbook rentals, online tutoring, and vocation resources. Founded successful 2005. IPO successful 2013.

In 2024, it reported 6.6 cardinal paying subscribers, and its gross is down -14% YoY. The culprit: AI.

The large question I reply successful this nonfiction is whether Chegg is an outlier (spoiler: it’s not) oregon the archetypal of many. More companies are bleeding. And immoderate nonstop competitors to Chegg are amazingly thriving.

You should work this Memo if you privation to understand:

1. 1. The nuance down Chegg’s decline.
   2. Who other is impacted by AI.
   3. How to archer if you’re astatine risk.

1. How to physique up immunity against AI.

Image Credit: Lyna ™

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AI Overviews Are Not The (Only) Problem

Chegg filed a suit against Google for abusing its monopoly presumption successful Search to unit companies to supply contented that it repurposes for AI answers oregon Featured Snippets.¹

The accusation has legs. Showing answers successful the hunt results straight competes with Chegg’s concern model.

Chegg claims (rightfully) it cannot opt retired of them without cutting disconnected captious integrated postulation and calls Search a “Hobson’s Choice”: you either artifact Google and suffer each integrated postulation oregon don’t, and Google takes your contented to springiness answers successful the hunt results.

Up to this point, I agree.

What we’re witnessing is the aged ecosystem of Search falling apart. The generational woody was that websites would make bully contented and let Google to crawl it.

In return, Google sends them websites and shows ads to searchers. Now that clicking connected websites is redundant successful immoderate cases, this woody is falling apart.

In my meta investigation of AI Overviews, I showed however AI Overviews trim click-through rates, but they besides amusement up overmuch little often and much for informational queries than erstwhile they archetypal started.

Skeptical

But this isn’t the full puzzle of Chegg’s problem. Months earlier the lawsuit, Chegg’s CEO said AI, not AI Overviews, is eating into subscriber maturation (as I mentioned successful my Q1 Marketplaces Deep Dive):

“Rosensweig said connected a May net telephone that ChatGPT had begun eating into subscriber growth. Chegg pulled fiscal forecasts for the remainder of the year, and its banal dropped 48% successful a day.”²

The nonfiction goes on:

“But wrong months, Chegg’s interior information showed students were progressively turning to ChatGPT arsenic a studying aid. Employees recovered immoderate of the answers provided by GPT-4, the exertion down ChatGPT, scored higher connected interior evaluations than answers from Chegg’s quality experts.”

The occupation goes beyond AI Overviews. Students astir the satellite are utilizing AI alternatively of web platforms. And you tin spot it successful the numbers arsenic well.

Image Credit: Kevin Indig

When you look astatine however overmuch estimated postulation Chegg got from hunt results showing AI Overviews, you find it was lone ~20% successful December 2024, astatine its peak, and 15% successful January 2025. Painful, but not capable to vessel a company.

According to Semrush, Chegg’s integrated postulation really accrued aft May 2024, erstwhile AIOs launched, and lone started tanking successful October 2024.

According to Similarweb, full postulation declined earlier ChatGPT launched successful November 2022.

Image Credit: Kevin Indig

Declining marque hunt measurement is simply a motion of shrinking marque awareness, product/market-fit and idiosyncratic retention.

The information that marque hunt measurement has been shrinking since 2020 and searches for cancellations person peaked earlier AI entered the mainstream makes maine judge that the marque already had issues.

Image Credit: Kevin Indig

Chegg’s engagement metrics declined implicit the past 3 years, which is not bully for SEO and not bully for the business.

Bottom Line

Chegg struggled earlier AI. AI conscionable accelerated the decline.

So, wherefore doesn’t Chegg writer OpenAI & Co arsenic well? Maybe, due to the fact that AI Overviews and their interaction are easier to measure.

Or, possibly due to the fact that Chegg’s lawsuit could physique connected the lawsuit DoJ vs. Google, which already ruled Google a monopoly. The timing would fit, since the remedies are coming retired successful August.

Chegg could astatine slightest artifact LLM crawlers successful their robots.txt.

Don’t get maine incorrect – Chegg’s suit has a beardown point. But I besides spot it arsenic a communicative for investors: Chegg wants to awesome that it needs to instrumentality the institution backstage oregon merchantability (right call) due to the fact that of a structural alteration to its concern exemplary that it’s not liable for. The information that the announcement was made during an net telephone supports that theory.

Image Credit: Kevin Indig

Symbolic: AI homework helper outranks Chegg for “homework help,” 1 of its astir important keywords.

Who Else Is Impacted By AI

Chegg is simply a harbinger. I looked astatine different ed-tech sites that thin heavy connected SEO and recovered that astir each of them saw important postulation losses since ChatGPT came out:

• CourseHero.
• Brainly.
• Studocu.
• Quizlet.
• Numerade.
• Wyzant.
• Khan Academy.
• Codepen.
• Study.com.
• W3schools.
• Stackoverflow.

The postulation information is supported by probe showing that students underwent important behaviour changes (first 2 quotes from the WSJ nonfiction linked above):

“A survey of assemblage students by concern slope Needham recovered 30% intended to usage Chegg this semester, down from 38% successful the spring, and 62% planned to usage ChatGPT, up from 43%.”

“Researchers astatine the University of Illinois astatine Urbana-Champaign conducted a survey successful the outpouring past twelvemonth to spot however ChatGPT had influenced cheating successful an introductory programming course. They recovered students had overwhelmingly moved to ChatGPT from what the researchers called “plagiarism hubs” specified arsenic Chegg.”

“A survey of 1,000 students – some home and planetary – recovered determination had been an “explosive increase” successful the usage of genAI successful the past 12 months. Almost 9 retired of 10 (88%) successful the 2025 canvass said they utilized tools specified arsenic ChatGPT for their assessments, up from 53% past year.”³

ChatGPT & Co. destruct the worth of online tutoring and survey tools.

Red Flags

Chegg and the different affected sites amusement what reddish flags to ticker retired for:

1. > 80% integrated traffic.
2. Young people audiences.
3. Information sites, particularly marketplaces.

The companies that request to beryllium astir cautious are overexposed to SEO, connection accusation arsenic a product, and merchantability to young people.

Other industries that acceptable the measure and could beryllium adjacent connected the list: Gig economy, Online Q&A, Quotes, lexica, encyclopedias, dictionaries.

Over 80% of Chegg’s postulation comes from SEO (Image Credit: Kevin Indig)

How To Build AI Immunity Cells

Not each ed-tech institution is successful the red. Scribd, Coursera, Udemy, Pearson.

Pearson is particularly absorbing due to the fact that it’s the UK equivalent of Chegg. Even though gross is down -3%, and its CEO acknowledged “digital learning trends” (a.k.a. AI) arsenic a challenge, postulation is thriving.

Why? Because it’s amended diversified: 65% of postulation comes direct, 18% from organic. It doesn’t person to beryllium that little.

Each institution I listed astatine the opening of the paragraph is either little reliant connected SEO postulation oregon offers contented that’s hard to transcript (e.g., courses).

Turning astir structural declines, wherever idiosyncratic behaviour and the marketplace importantly shift, is hard. Sometimes, impossible. I’ve learned my ain just stock of lessons erstwhile Shopify went done the COVID hangover.

So, what tin Chegg bash but find a clip instrumentality and spell backmost 10 years to hole its overexposure connected SEO?

First, taking the institution backstage to crook it astir is simply a bully archetypal step. The unit of quarterly results makes a beardown pivot impossible.

Second, Chegg is already moving connected 2 astute pivots:⁴

1. Get distant from contented that’s casual for Google to copy/synthesize and absorption connected interactive tools and experience. The institution already offers tools similar a citation manager oregon a plagiarism checker, but it could bash a batch much here.
2. Explore related market. Chegg launched Busuu, a connection learning service, and Chegg Skills, a aviator programme to bid students successful business-relevant skills and link them consecutive to businesses. But tin it vie with Duolingo and Babbel? And, are caller markets fruitful enough?

I’m rooting for Chegg. I privation it to beryllium a turnaround story. Godspeed.

¹Source, Source

²How ChatGPT Brought Down an Online Education Giant

³UK universities warned to ‘stress-test’ assessments arsenic 92% of students usage AI

⁴Chegg Reports 2024 Fourth Quarter and Full Year Financial Results

Featured Image: Paulo Bobita/Search Engine Journal