[New York Diary] Less Than Half a Year In... Companies Already Facing ChatGPT Backlash

Stories from Everyday Life in America,
Reported from New York

I often use ChatGPT. After drafting a complex business English email, I ask it to "polish it to sound more professional," and I also seek its opinion on what topic would be good for this week's "New York Diary." Although I immediately dismissed ChatGPT's suggestion to write about "the economic impact of climate change, including the use of renewable energy and potential economic costs caused by abnormal weather patterns."

The era of generative artificial intelligence (AI), represented by ChatGPT, will undoubtedly bring another revolution and ecosystem. And wherever there are winners, there are inevitably losers. Chegg, a U.S. online education company founded in 2005, became one of the losers less than six months after the emergence of ChatGPT. On the 2nd (local time), Chegg's stock price plummeted by a staggering 48% compared to the previous session on the New York Stock Exchange.

This was because the management directly revealed after the market closed the previous day that their business was being impacted by ChatGPT. The disappointing guidance for the second quarter of this year was also a problem. While Wall Street expected Chegg's Q2 revenue to increase by 3%, the company forecasted a 5-6% decline. Dan Rosensweig, Chegg's CEO, said, "Since March, interest in ChatGPT has surged sharply, affecting the growth rate of new customers." He explained that the company's main customers, students, are using ChatGPT for assignments and essay writing, significantly reducing their use of Chegg's services. Investment bank Jefferies also immediately downgraded its investment rating on Chegg, citing business threats from AI. On the same day, the stock prices of other online education companies with similar businesses, such as Pearson and Duolingo, also recorded double-digit declines.

The case of Chegg, which lost about half of its market capitalization in a single day, shows a glimpse of the losers who will fall behind in future AI competition. Local media also paid close attention to this week's sharp stock price drop. Economic media CNBC reported, "The tech boom has shown that some companies' revenue sources can be put at risk," adding, "Chegg is certainly not the last company to show risks related to AI." The Wall Street Journal (WSJ) stated, "Chegg's warning and stock plunge are among the most concrete signs of the disruption that could arise from the widespread adoption of generative AI chatbots," and reported, "Jobs and companies across the economy are exposed to the sudden rise of AI."

[Image source=AP Yonhap News]

Concerns are also pouring in that the future where ChatGPT takes away our jobs will arrive faster than expected. Coincidentally, around the same time, news about IBM's employment reduction due to AI automation replacement, Samsung Electronics banning internal use of ChatGPT following Wall Street investment banks, and Geoffrey Hinton, the 'godfather of AI' and professor at the University of Toronto, resigning from Google, were reported one after another, further fueling these concerns. IBM revealed that 30% of employees in its management support division could be replaced by AI automation over the next five years, and the U.S. Writers Guild went on strike for the first time in 15 years, demanding AI regulation as a condition. Bloomberg reported, "The speed of disruptive innovation brought by the global rush toward AI has become fully apparent this year."

Although OpenAI's ChatGPT has been publicly available for less than six months, its penetration and speed of impact on daily life are astonishing. This is even more so considering that we are still at the early stages of the ChatGPT and AI era. Of course, there are still many issues to discuss, such as inaccurate responses and concerns about information manipulation, personal data leaks, and copyright problems.

What does ChatGPT think about Chegg's stock plunge, which cited growth slowdown as the reason? Would it evaluate this as the future of losers in the upcoming AI competition, as local media analyses suggest? When asked directly, the response was as follows:

"AI is still a rapidly evolving field, and there are certainly risks and challenges associated with its adoption. However, the potential benefits are also significant. While some companies may struggle to leverage AI technology or adapt to the wave of change, it is important to remember that this does not mean an overall 'failure' of AI technology. Like other new technologies, there can be growing pains as companies learn how to use it effectively. Careful consideration and planning are necessary for effective utilization."

This content was produced with the assistance of AI translation services.