The backlash against Duolingo going ‘AI-first’ didn’t even matter

On Wednesday, Duolingo revealed it exceeded its quarterly revenue projections, a remarkable feat amid growing criticism for its decision to prioritize generative AI over human labor. The announcement was met with a nearly 30% surge in the company's stock price. In April, CEO Luis von Ahn declared Duolingo's transition to an 'AI-first' model, which included reducing reliance on contract workers. He urged teams to refrain from hiring additional staff unless they could not automate their tasks further. This shift allowed Duolingo to launch 148 new language courses, significantly expanding its catalog. Von Ahn emphasized the urgency of this transition, stating, "Without AI, it would take us decades to scale our content to more learners. We owe it to our learners to get them this content ASAP." While some users have voiced concerns that these AI enhancements have diminished the app's quality, the company's financial performance tells a more optimistic story. Duolingo now expects to surpass $1 billion in revenue this year, with a 40% increase in daily active users compared to the previous year. However, this growth is at the lower end of the company’s initial estimates of 40-45% growth, a point raised by an investor during the quarterly earnings call. Von Ahn attributed the slight miss to the backlash stemming from his comments about AI, noting, "I didn’t give enough context. Because of that, we got some backlash on social media." He emphasized the importance of positive sentiment online, explaining that the company shifted its social media strategy to foster a more favorable public image. Despite ongoing criticisms on platforms like TikTok, where users frequently question the authenticity of the company’s content, Duolingo remains focused on its financial health. The company's perspective is clear: while public opinion may fluctuate, what ultimately matters is the bottom line.