ChatGPT puts homework help services in big trouble



It is becoming more common to use AI services such as ChatGPT

to help with homework and assignments, with 17% of students saying they use ChatGPT for assignments and exams and 11% of student papers using AI . In this situation, Chegg , a major homework help service, is in a difficult position.

How ChatGPT Brought Down an Online Education Giant - WSJ
https://www.wsj.com/tech/ai/how-chatgpt-brought-down-an-online-education-giant-200b4ff2

Chegg was founded in 2004 and initially offered a cheap textbook rental service for students. In 2014, it launched a homework Q&A service, and has since released a service that displays answers simply by taking a photo of your homework with your smartphone.



Chegg not only provides direct advice on homework answers, but also offers content to help you understand your studies and 24/7 online tutoring services.



Chegg has continued to grow its business since launching its Q&A service in 2014, and has shown phenomenal growth during the COVID-19 pandemic. However,

its stock price plummeted in the second half of 2021, and continued to fall even after the release of ChatGPT in November 2022.



A survey conducted by investment bank Needham found that 30% of students said they would use Chegg in the fall semester of 2024, down from 38% in the spring semester of 2024. Meanwhile, 62% of students said they would use ChatGPT in the fall semester of 2024, up from 43% in the spring semester of 2024.

According to the Wall Street Journal, Chegg had been considering developing a system that would automatically output answers using AI even before the release of ChatGPT. However, the development plan was rejected by executives. Also, when ChatGPT was released, there were opinions that 'ChatGPT can output incorrect answers, so it is not a threat to Chegg.'

However, a few months after ChatGPT was released, Chegg's internal data showed that 'students are increasingly using ChatGPT.' In addition, it was revealed that some of the answers output by GPT-4 were of higher quality than the expert answers accumulated on Chegg.

In response to the rapid improvement in the quality of AI, Chegg partnered with OpenAI to launch a learning service using GPT-4,

CheggMate , in April 2023. However, Chegg's performance has not recovered, and at the time of writing, Chegg executives are beginning to distance themselves from CheggMate.




Chegg announced a partnership with Scale AI in August 2023 to introduce AI into answer creation. In addition, the company has revamped its website and added a chat AI-style text box to its homepage. Despite these measures, the number of users continues to decline, and revenues fell 11% in the second quarter of 2024 compared to the second quarter of 2023. Furthermore, analysts expect revenues to fall 15% in the third quarter of 2024.



Chegg CEO Nathan Schultz told the Wall Street Journal, '91% of users are satisfied with Chegg's service. We want to target students who want better answers than they can get for free from a chat AI.'

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