The global edtech sector went through a mayhem after US-based online education service Chegg admitted AI chatbot ChatGPT has affected its finances, sounding a warning bugle for the Indian edtech firms too.
While Chegg's shares plunged by half, London-listed Pearson's stock fell about 15 per cent, language-learning platform Duolingo's stock went down by 10 per cent and US-listed education company Udemy dropped by more than 5 per cent on Tuesday, reports The Financial Times.
"Investors bet that artificial intelligence could upend business models following a revenue warning at edtech company Chegg," the report mentioned.
According to Chegg CEO Dan Rosensweig: "We now believe it's (AI) having an impact on our new customer growth rate."
Also Read | Chegg's stock tanks after ChatGPT warning, new threat for edtech firms
Businesses worldwide are preparing themselves for the threat posed by generative AI systems such as ChatGPT.
Big Tech companies are racing to develop superior versions of the GPT technology mastered by OpenAI.
Pearson CEO Andy Bird, however, denied that ChatGPT was a threat to the company's business model, saying it was a "fundamentally different business" to Chegg.
He told the Financial Times that the possibility of combining AI capabilities with Pearson's existing intellectual property was a lucrative opportunity.
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California-based Chegg reported a 7 per cent decline in revenue (year-on-year) at $187.6 million in the first quarter of 2023. Its subscribers dropped 5 per cent to 5.1 million.
The company launched CheggMate, a new service built with OpenAI's GPT-4, last month to retain students.
"As artificial intelligence technology continues to evolve at a rapid pace, we are embracing it aggressively and prioritizing our investments to meet this opportunity," said Rosensweig.
