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Duolingo IPO: Negative Impacts of EU Proposals to Regulate AI on Innovation

Founded in 2011, Duolingo is an American language learning company offering a website, mobile app and assessment platform that assist over 300 million global users in learning up to 40 languages. On July 28th, it went public on NASDAQ and was valued at approximately $5 billion by the closing price. However, EU proposals for regulating AI, which was released in April, threaten the use of one of Duolingo’s niftiest innovations, the English Test, in its current form. The English Test is qualified by over 3,000 educational institutions to demonstrate proficiency. But this is also a high-risk AI system according to the EU proposal. This label applies because the test uses AI, both for personalisation — questions appropriate to the taker’s skill level are generated on the fly — and for grading. The requirements for high-risk AI systems and the obligations placed on their providers take up 10 pages in the proposal, which is expensive and time consuming. This might hinder the innovation for AI-using entrepreneurs. Although we recognise the importance of regulations on data protection and privacy law, restricting the field of potential innovators just to those who can afford high upfront costs is not a good idea for long term development.