“Breaking News: Edtech Leaders Proclaim AI as a Friend, Not Foe – Despite Alarming Warnings!”

Just a week away from his high school exams and feeling uninspired by his textbooks, 17-year-old Australian Justin earlier this year took matters into his own hands. With a simple set of instructions, he asked ChatGPT-4 to teach him the concepts he needed to know, creating his own private tutor.

The strategy worked so well that after finishing his exams Justin developed more advanced tips and uploaded them to the GitHub coding website under the moniker “Mr. Ranedeer, AI Tutor”. Now anyone with a $4 ChatGPT-4 account 20 can copy and paste the prompts and start learning.

“I thought about the different ways a student can be taught . . . the levels of depth, the learning styles, the communication, the tone and the reasoning,” Justin, who does not wish to give his last name, told the Financial Times on Twitter. He doesn’t know how many people have used the prompts, but it was bookmarked 5,800 times on GitHub, demonstrating a high level of engagement from other users that Justin “didn’t expect at all.”

The ease with which Justin used ChatGPT technology and shared his tactics, giving students coaching tactics in almost any skill or subject, is only one way Freely available generative AI is disrupting traditional learning and education.

For edtech companies offering online tutoring and exam practice, it poses a real threat that their products could be shrunk by cheap AI, leading to predictions that parts of the industry could be rendered defunct by the new technology.

Earlier this month he shares online homework help platform Chegg half fallen after its CEO Dan Rosensweig admitted that ChatGPT had hurt its bottom line. Other industry players, including Pearson, have also seen share prices fall as a result.

“Chat GPT will certainly put pressure on purely content-based learning platforms,” Rhys Spence, head of research at edtech venture capital investor Brighteye Ventures, said, commenting on the success to Chegg. “It was interesting to see some of the most clearly threatened public and private edtech companies being among the first and fastest to react.”

Chegg’s shares, which are down about two-thirds so far this year, haven’t recovered. But the industry is trying to brave the risks ahead, with executives and some investors insisting that generative AI has the potential to make their services more attractive.

“It’s not a threat, it’s an opportunity,” said Luis von Ahn, managing director of language learning app Duolingo. “For us, artificial intelligence is a good thing.”

In March, Duolingo launched a more expensive subscription option, powered by ChatGPT, which allows users to have compelling conversations among other features.

Von Ahn said Duolingo’s goal has always been to make widely available AI platforms “as good as a human teacher” and that its app, branding, and the data it collects allow for a more personal and enjoyable experience than chatbots generics.

“We have more data on how people learn a language than any amount in history,” he said. Paid subscribers increased to 4.8 million at the end of the first quarter of this year, an increase of 63% compared to the same period in 2022.

Andy Bird, chief executive officer of legacy textbook publisher Pearson, said the company had a substantial catalog of verified and accredited course materials that could be used to create AI-powered interactive content. “We own some very rich and pure datasets. When you start putting that into generative AI models, you get better results,” Bird told the FT.

Pearson’s shares fell 15% on the day of Chegg’s warning but have recovered somewhat since then.

Using AI to improve products, provide a more attractive and user-friendly experience, and train AI on private content or data is a common strategy among edtech companies.

But some analysts concluded that contagion to other edtech companies was an overreaction. “It’s similar to how many schools have moved to ban ChatGPT in response to a perceived threat: the marketplace [had] a similar knee-jerk reaction,” said Tony Wan, head of platform at edtech investor Reach Capital.

At Nerdy, a company that offers online tutoring, CEO Chuck Cohn doesn’t think “do-it-yourself tutors” like AI student Justin are a threat because of capabilities only humans can still offer.

“Theoretically every bit of knowledge or skill you might need is already available on YouTube or a book in the library, people don’t always use it,” she said. In other words, they require structured coaching to maintain learning.

Nerdy plans to use AI to “mass-produce” content such as personalized lesson plans, which will be taught by human tutors, what he calls a “hyper-efficient” way to support human-to-human connections. “We’ve been quite excited and have already seen the benefits, producing content that historically would have been extremely expensive to introduce.”

Martyn Farrows, chief executive officer of SoapBox Labs, which makes speech recognition software for children, said the edtech is now at an “inflection point” that has presented companies with both threats and opportunities.

While companies that create relatively generic content such as study guides may suffer, the need for human oversight to create trustworthy materials, for example suitable for certain ages, means organizations with experience will add value, he said.

“They need a lot of work and this is an opportunity for companies to work with them to get the most out of these projects,” he said.

Yet there is still damage to be done. One of the companies taking proactive action on AI was Chegg: last month it launched the online learning companion ‘Cheggmate’ which offered personalized learning using AI. It didn’t stop it from being hammered by the markets.

The problem, Deutsche Bank analyst Benjamin Zoega said, was that its homework answering service was “easily replaced by ChatGPT.”

Even a basic version of the AI ​​service is free compared to the $19.95 cost for a Chegg subscription, which is the same price as the more advanced ChatGPT4.

Justin intends to continue using and improving his AI tutor. He believes companies will still have a place, but they’ll need to act quickly. “If we can turn any book into a lesson, where an AI could also generate practice questions based on the content provided. . . it could be revolutionary,” he said.