AI labs begin to muscle in on $6tn education market - Financial Times

AI labs begin to muscle in on $6tn education market

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From the moment OpenAI’s ChatGPT burst on to the scene in 2022, schools and universities have been playing catch-up.

Many educators banned AI tools outright at first, but quickly saw that large language models had become a fact of life. Now, they are grappling with how to prepare their students for a world being transformed by the technology — and the world’s top AI builders are getting in on the action.

Anthropic has just launched Claude for Teachers, a free tool aimed at K-12 (kindergarten to age 18) teachers in the US that aims to help them plan lessons. OpenAI has ChatGPT for Teachers — a free, self-serve offer for verified US K-12 teachers and staff. It also offers ChatGPT Edu, a discounted enterprise subscription aimed at universities. Google, meanwhile, has a suite of tools based around its Gemini models targeting teachers and students, building on its existing cloud tools for educational institutions.

For the world’s biggest AI labs, education represents both a chance to help society adapt to the seismic changes their inventions are bringing, and an enormous business opportunity.

A report by Morgan Stanley put the size of the global education market at $6tn in 2022. And in students, AI companies have the chance to sign up tomorrow’s leaders and workers.

“Let’s not be naive, AI is absolutely a marketplace for these companies,” says Simon Buckingham Shum, professor of learning informatics at University of Technology Sydney.

Nonetheless, AI labs say there is an imperative for them to help ensure their tools aid rather than hinder future generations.

“Every student today is going to grow up with AI . . . it’s our job to help shape how students use the technology,” says Leah Belsky, vice-president of education at OpenAI and a former chief revenue officer at Coursera, the online learning platform.

The company is working with governments to bring its technology into the classroom. A partnership launched last year with Estonia has already brought tools such as ChatGPT Edu into the hands of over 30,000 university and secondary school students, teachers and researchers.

The venture is part of OpenAI’s Education for Countries programme that aims to “personalise learning” and “prepare students for the workforce”. The AI lab is working with partners in Estonia, Greece, Jordan, Kazakhstan, Slovakia, Trinidad and Tobago, the United Arab Emirates and Italy.

In each of these countries, says Belsky, the company plans to roll out customised versions of its chatbot, tailored to the local pedagogical style and built to “provoke curiosity”.

She and other education executives at AI labs acknowledge fears among teachers that the technology, with its instantaneous responses to prompts, could reduce the productive struggle that helps students learn.

But they contend that AI, if used correctly, could enhance the learning experience. Both OpenAI and Anthropic espouse a “Socratic” approach to learning, turning chatbots into tutors that guide critical thinking.

For example, Anthropic’s “Claude for Education” — intended for university teachers and students — includes a learning mode that asks “how would you approach this problem?” rather than providing answers immediately.

Drew Bent, Anthropic’s education lead, says the company’s approach is centred on “working with the educators who really understand the students best”.

Claude for Teachers gives K-12 teachers across the US free access to its Claude Cowork AI agent and is intended to help them plan lessons and assignments and provide automated reports on students.

The companies perhaps best placed to monetise AI in education are the likes of Microsoft and Google, which have longstanding relationships with many universities through their cloud services. Both companies have incorporated their AI tools — Copilot and Gemini, respectively — into their education offerings, with more powerful tools for higher-tier, paid plans.

“You’re already deeply embedded and incentivised to use those stacks,” says one education executive, who asked not to be named, speaking about competitors.

All of this could present a threat to education’s incumbent digital businesses, the edtechs — but so far, the sector has chosen to partner with the frontier labs building the big foundation AI models, rather than fight them.

Coursera has teamed up with OpenAI to integrate the learning platform’s content into ChatGPT. Instructure, which sells a so-called learning management system that hosts assessments and learning materials, is a partner with both OpenAI, and Anthropic’s Claude for Education initiative.

Edtechs are “nervous [and] afraid that the labs are going to [make them] obsolete”, says Michael Feldstein, who writes about the sector and is chief strategy officer at the education consortium 1EdTech. However, he adds that the companies’ “information on patterns of usage” in education gives them data the AI labs do not have.

For all the effort, however, adoption of AI at the institutional level has been slow. More than 40 per cent of students in higher education said AI had not been integrated into any of their courses, according to a recent study by the Digital Education Council, a global consortium of universities, colleges and schools. Of those whose courses had made use of AI, 42 per cent said it had been only “somewhat helpful”, the DEC said, while 24 per cent reported “limited learning benefit”.

In the longer term, there are questions over the commercial viability of enterprise AI in education, says Feldstein.

“There’s an open question as to whether schools are going to want to pay out for top chatbots when adequate models will run on their device for free,” he says, referring to the growing popularity among businesses of free, so-called open-weight AI models, whose parameters are released publicly, meaning they can be fine-tuned easily for specific uses.

At the University of Technology Sydney, Buckingham Shum says instructors are building their own AI products, with an internal quality assurance process to ensure the technology is suitable for students. “It’s good that big tech companies are responding” to the disruption caused by AI, he says. “But in my view, the universities that are doing their jobs are putting design tools in the hands of educators.”