After indications that ChatGPT and other AI-bots were eroding their market share surfaced on Tuesday, shares of companies that specialize in publishing school textbooks and providing online courses plunged sharply.
based in Silicon Valley The CEO of the education technology business Chegg, which offers online homework assistance and textbooks, said on Monday that the rise of generative AI chatbots has affected sales.
Chegg CEO Dan Rosensweig told investors on Monday, “In the early half of the year, we noticed no notable effect from ChatGPT on our new account growth and we were reaching expectations on new sign-ups.
“However, we have seen a sharp increase in student interest in ChatGPT since March. We now think it's affecting the pace at which we gain new customers,” he said.
The 18-year-old business specifically recorded a 7% reduction in revenue over a year as well as a 5% drop in members.
The disclosure sent shockwaves across the education technology industry, driving Chegg's share price down by over 50% and crushing rival businesses like Pearson, located in the UK, which had a 15% decline in London.
The company's CEO stated that the students' decision to switch to ChatGPT was a fluke and that customers who continued to trust its products “continue to choose us and retain us at high rates.”
He said that it unveiled CheggMate, an AI-powered tool designed specifically for students and built on GPT-4, the most recent version of the technology developed by Microsoft-backed OpenAI that underpins ChatGPT.
As with ChatGPT, Chegg has previously been accused of giving students ready-made ways to cheat, particularly during the Covid-19 pandemic when most test-taking took place online without a teacher's supervision.
The crash in education tech stocks was the most glaring example yet of ChatGPT-style AI's powers attacking a company's bottom line, even though the technology has generally been seen as a positive for the economy.
Given the inexperience of the technology, experts think that contact centers and tutoring services like those provided by Chegg and others are now the industries most at risk from AI.
As of now, “you're only going to see very specific kinds of tasks that people are willing to farm out to generative AI,” according to Vishal Gupta, an associate professor at the USC Marshall School of Business.
The “lower stakes” nature of these jobs will result from the technology's unknowns, he said.
