Jean-Marie Cognet, CEO of UbiCast & VP Higher Education EdTech France
What does the US market represent for the French EdTech sector ?
The United States is a big market, for several reasons :
- Customers are early adopters, so they easily release budgets to test innovations that seem relevant to them.
- Unlike Europe, there are 50 states, all speaking the same language and with more or less the same legislation.
As a result, a company, and in our case an EdTech, can rapidly scale up if the alignment between the customer’s needs and its solution works well.
There are, however, a few drawbacks. The American market is highly competitive, a little (to keep it nice) protectionist, chauvinistic and, above all, highly litigious. A few years ago, we tried to expand there with UbiCast, and we had to spend a considerable amount of money to prepare the legal ground. I even learned on that occasion that there are firms specializing in analyzing new entrants to attack them on intellectual property issues… Basically, if you don’t protect your name, for example, a third party will register it locally following your entry into the market and attack you in the process !
To conclude on this subject, I’d say that the American market is very tempting, for many good reasons, but you need to go in prepared, with a substantial budget to launch operations locally.
American investment in the EdTech sector is on the rise ($8.3 million in 2021 versus $2.3 million in 2019 and 2020). Does this have an impact on competition in the French market ?
The COVID period highlighted the contribution made by EdTech and enabled establishments to continue or even expand their activities. This spotlight has attracted the curiosity of investment funds around the world to our sector.
On the other hand, as we all know, access to these sources and the amount of funding is far greater across the Atlantic. When a French EdTech raises 2 or 3 million euros, its American competitor raises 50 or 60. The promise they make to their new shareholders is often to go out and “conquer the world”, burning through the freshly-raised capital fast and furiously.
As a result, they are entering or strengthening their presence in certain markets, such as Europe of course, with very aggressive strategies, as they need to show rapid growth in sales / number of customers / number of users, depending on their business models.
From my personal experience at UbiCast, I’ve been observing this with some dread over the last few quarters. In a series of invitations to tender in the Netherlands, we lost out on the Price part of our evaluations, whereas we were fully in the running on the Technical part. Quite honestly, I get the feeling that they’re “buying” customers at a loss… In our field of video in higher education, the operating costs of the service are not negligible: we host large volumes of data, we transcode the videos, which requires a lot of machine time, and the broadcasting is done to large audiences, implying substantial bandwidth costs. So when a university with 30,000 students producing and broadcasting several tens of TB of video per year is offered a contract at €15,000 per year, I grab my calculator and don’t understand how it’s possible.
Most recently, it went a step further when I learned that a group of 12 schools in France had been offered a platform for each school, free of charge and unlimited for a year… At UbiCast, we can’t afford to do that. That’s why I wrote a rant on social networks, which I don’t usually do. But this time, frankly, I was exasperated. I received around forty comments, which proves that we’re not alone in this type of experience.
In a year’s time, this company will be offering them a nice quote, and since it’s already in use, the solution will have been integrated with the other tools, the teaching staff will have been trained, so why on earth change the solution, even if the price is deemed too high ?
It’s difficult for a foreign company to penetrate the French market without a local office and employees. So, armed with their new funding, these American EdTech companies are playing with their resources and setting up a representative office, usually in London. But is this a response to the needs of the French market?
For my part, I invite French higher education establishments to evaluate the various offers they receive impartially and over time.
Above all, I suggest that they be attentive and vigilant on the GDPR front by not taking everything they’re told at face value. The GDPR is one of the only barriers protecting us in Europe, so let’s use it !
When an American company operates its services in an American Cloud, including one located in Europe, from offices in London, well all the lawyers in the sector will explain to you that this is incompatible with the Schrems II ruling of the European Court of Justice.
We’re not lucky enough to have a Buy European Act, or a Small Business Act in Europe, so let’s at least try to favor companies of integrity that genuinely respect the legal framework and manage personal data ethically.
What role are governments playing in the rapid development of EdTech sectors in different countries ? What’s happening in France and Europe ? Is the EdTech sector supported by strong public initiatives ?
Recently, the U.S. Department of Education expanded the definition of a third-party service provider for schools, and promised penalties if the provider company isn’t American or American-owned (source). Personally, I call this protectionism.
On a completely different note, in China, the government banned the use of companies to provide tutoring services, thereby wiping out a $260 billion market overnight… The result was the downfall of some of the sector’s biggest companies. (source)
Here in France, we have set up an association, EdTech France, which brings together 450 companies in our sector, and which aims to make our voices heard more loudly and clearly by the highest authorities. The association is itself a member of the European EdTech Alliance, which federates the various national associations in Europe.
On the public authorities’ side, we welcome the explicit invitation to establishments responding to the DemoES call for expressions of interest to co-construct their response with EdTech. In practice, however, not all relationships between establishments and EdTechs have gone according to plan, in terms of the distribution of funding. But the political will to do so is commendable, and should be pursued. The big advantage, in my opinion, is the possibility of speeding up and directing EdTech R&D towards the needs expressed by schools in the field, via public funding. We French EdTechs are extremely enthusiastic about the idea of hiring locally in France, financing doctoral students and transferring research with institutions. There’s no doubt that the needs addressed by these future solutions also exist in Germany, Belgium, Italy and Spain, and that our EdTechs will be able to disseminate their new solutions, expand and promote French know-how beyond our borders !
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