Rather than being a threat, AI can be a powerful tool for edtech companies to improve their services and stay competitive.

There has been growing concern regarding the impact of AI on publishing and related educational businesses.

In early May, shares of some major edtech companies, including Chegg, Pearson, Duolingo, and Udemy, took a hit following investor concerns about rising competition from generative AI.

“[S]ince March, we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate,” Chegg CEO Dan Rosensweig said during the company’s Q1 earnings call.

Rosenweig added that generative AI and large language models are going to affect society and business, both positively and negatively, at a faster pace than people are used to.

However, some experts believe public edtech companies could actually benefit from the rise of AI.

Public Edtech Companies Can Benefit From AI

In a recent interview, Andy Bird, CEO of publishing company Pearson, noted that the company owns some very rich, pure datasets that produce better outputs when inputted into generative AI models.

“The output of these generative AI models is largely predicted by the quality of the datasets that are inputted into them,” he said, adding:

“We are the owners of some very rich, pure datasets — when you start to input them into generative AI models, you get better outputs.”

While edtech has been a hot sector during the pandemic lockdowns, it seems to have cooled off lately. Public markets show that edtech is not immune to the general compression in multiples due to worsening macro conditions.

However, when it comes to startups, it’s arguably private sentiment that matters the most; but it doesn’t necessarily make things better for edtech.

AI Can Help Edtech Companies Improve Their Services

Despite these challenges, edtech companies should not be afraid of AI. In fact, they should be embracing it as a tool to improve their services and offerings.

Chegg, for one, has been trying to harness the power of AI tools like ChatGPT with CheggMate, a new learning assistant that is intended to provide targeted support to help students achieve their academic goals.

The new study aid tool will process data on the questions students have missed and the classes they are taking in order to offer personalized testing and guide each individual in a way that ChatGPT’s more generalized format cannot.

Other edtech companies should follow suit and look for ways to incorporate AI into their platforms.

For example, AI can help personalize learning experiences for students, offer real-time feedback and assessment, and even provide predictive analytics to identify at-risk students and intervene early.

As Bird noted, the output of generative AI models is largely predicted by the quality of datasets inputted into them. Edtech companies that can provide rich, pure datasets have an advantage in producing better outputs from AI models.

While there may be challenges in scaling edtech businesses and monetizing their offerings, AI can help address these challenges by improving the quality and personalization of their services.

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