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Pearson Will Pay $1 Million Fine For ‘Understating’ 2018 Data Breach, Misleading Investors

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Education giant Pearson will pay a $1 million fine to settle charges that it misled investors about a 2018 data breach during which millions of student records were stolen. 

The U.S. Securities and Exchange Commission announced earlier this month that the London-based, multinational educational publishing and software provider “made misleading statements and omissions” to downplay the Chinese hack, which affected 13,000 school, district, and university customers.

Pearson misrepresented the incident, which had already happened, as a hypothetical risk in its July 2019 semi-annual report, the SEC found. Around the same time, the company also said in a media statement that the intrusion may have included dates of birth and email addresses, despite already knowing they were stolen.

The media statement left out millions of rows of student data, usernames, and passwords that were stolen. And Pearson claimed to have “strict protections” in place when in reality it failed to patch the vulnerability for six months, according to the SEC. 

“Pearson opted not to disclose this breach to investors until it was contacted by the media, and even then Pearson understated the nature and scope of the incident, and overstated the company’s data protections,” said Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, in a press release.

“As public companies face the growing threat of cyber intrusions, they must provide accurate information to investors about material cyber incidents.”

Pearson agreed to pay the civil penalty “without admitting or denying the SEC’s findings.”

In an emailed statement, the company said told EdWeek Market Brief it is “pleased to resolve this matter with the SEC.”

The only Pearson product targeted by the Chinese hackers starting in November 2018 — the AIMSweb 1.0 software platform — was retired in July 2019 as part of a previously scheduled plan, according to the company. The web-based software was a tool for entering and tracking students’ academic performance.

“Protecting our customers’ information is of critical importance to us,” said Laura Howe, senior vice president of global communications for Pearson, in an email statement. “Pearson continues to enhance its cyber security efforts to minimize the risk of cyberattacks in an ever-changing threat landscape.” 

The 2018 hack was part of a decade-long, global cyberattack that targeted the intellectual property and confidential business information of companies across a wide variety of industries, including COVID-19 research, according to the Department of Justice.

The federal government indicted two suspects last year, former engineering students in China who allegedly stole hundreds of millions of dollars of trade secrets, intellectual property, and other valuable information, sometimes on behalf of the Chinese government’s Ministry of State Security.

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K-12 Dealmaking: GoGuardian Receives Infusion of $200 Million; Lightspeed Ventures Funds Gaming Startup

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Classroom management and ed-tech product provider GoGuardian recently raised $200 million from Tiger Global Management, putting GoGuardian’s value at over $1 billion, according to an announcement.

“We are excited to partner with GoGuardian, with its industry-leading product offering and best-in-class growth at scale, margins and retention characteristics, as the company cements its position as a true end-to-end SaaS platform for K-12 schools,” Tiger Global partner John Curtis said in a statement.

Based in Los Angeles, GoGuardian provides a product suite that seeks to allow districts to unify their filtering, classroom management, device management, and school mental health tools into a single point of contact.

Over the past year, GoGuardian says its customer base grew by 60 percent to include more than 10,000 schools, including 23 of the top 25 largest U.S. districts.

The Tiger Global investment is intended to support GoGuardian’s growing suite of products, as the company plans to use the money for product innovation, hiring, and business development, according to the announcement.

Class Technologies Scores $100 Million Investment from SoftBank. Washington, D.C.-based Class Technologies, which develops digital teaching and learning tools that integrate with Zoom, has received a $100 million investment from SoftBank to help the company’s global expansion efforts, co-founder Michael Chasen wrote in a July 28 blog post.

The company, which made headlines earlier this year with high-profile investments from famous NFL quarterback Tom Brady among other contributors, is “committed to delivering Class to some of the most disadvantaged and hard to reach populations in the world,” Chasen wrote.

Class has already expanded to several countries outside the U.S., and has been fielding inquiries from schools, universities and companies “all over the world” who want to add educational tools to Zoom, Chasen said.

Past investors include Salesforce Ventures, Sound Ventures, and veteran talent executive Guy Oseary.

Class has raised over $160 million since it launched in September, according to an announcement.

Children’s Gaming Startup Raises Pre-Seed Funding from Lightspeed and Y Combinator. Wilmington, Del.-based live game streaming platform Kalam Labs on Aug. 13 announced a pre-seed funding round from Lightspeed and Y Combinator.

Kalam Labs plans to use the money to develop fun and immersive virtual missions for kids ages 6-14 to learn STEM topics, according to an announcement.

“The 2020s kids have been born directly into the age of iPhones, Netflix and Google. It is impractical to make them sit in front of a blackboard or a Zoom Class expecting them to remember irrelevant information,” Kalam Labs co-founder Ahmad Faraaz said in a statement. “Education is undergoing a generational change and we plan to be at the forefront of building products that will accelerate this shift.”

Kalam Labs launched in June, has drawn thousands of paying students, and is growing its user base 50 percent weekly, the company claims.

The firm said its games’ live video and chat functions make them games suitable for the education sphere. A typical Kalam Labs session involves a live instructor taking a group of students through a virtual world while explaining STEM topics via game-based exercises and providing the “right nudges” along the way, the announcement says.

“Having seen hundreds of pitches in education over the years, we thought the approach Kalam Labs had for K-12 was one of the most interesting and fresh,” Lightspeed partner Hemand Mohapatra said in a statement. “We are excited to back the Kalam team as they take on this ambitious challenge.”

Higher-Ed Accessibility Platform Raises $650 Million. Singapore-based Emeritus recently received $650 million in Series E funding.

U.S. venture capital firm Accel and SoftBank Vision Fund 2 led the investment, which brings Emeritus’ valuation to $3.2 billion, four times higher than the company’s Series D valuation reached in August 2020, according to an announcement.

Emeritus collaborates with over 50 universities across the U.S., Europe, Latin America, Southeast Asia, India, and China, to make higher education accessible to consumers, companies, and governments. The company offers short courses, degree programs, professional certificates, and senior executive programs, and claims to have educated over 250,000 people across 80 countries.

The latest investment round follows Emeritus’ recent $200 million acquisition of global K-12 STEM education company iD Tech, which expanded Emeritus into the K-12 space.

“The unbundling of higher education and continued learning has only just started,” Accel partner Anand Daniel said in a statement. “We believe that the platform and deep partnerships with the world’s best universities puts Emeritus and its partner universities at the forefront of this revolution in higher education.”

Emeritus will channel the investment into working with university partners to develop new courses, create new products and industry education content, expand its offerings for governments and companies, and close more acquisitions, the announcement says.

The investment also saw participation from the Chan-Zuckerberg Initiative, Leeds Illuminate, Prosus, Sequoia Capital India, and Bertelsmann.

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Syncing Up Technology and Curriculum: A Major Need in the COVID Era

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Vendors need to guarantee strong customer service, integration with learning management systems, and strict data privacy, say a pair of K-12 tech leaders from Indiana.

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Broad Congressional Proposal Would Raise Data Privacy Bar for Ed-Tech Companies

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Broad Congressional Proposal Would Raise Data Privacy Bar for Ed-Tech Companies

A recently released congressional proposal would trigger a swath of new requirements for how ed-tech companies handle K-12 student data they collect, and establish an independent auditing process for their data protection practices.

The drafter of the proposed measure, Rep. Lori Trahan, D-Mass., is seeking input from ed-tech companies and other members of the K-12 community on what language should ultimately be included in final legislation she plans to introduce later this year.

The proposal suggests limiting usage of student data collected by education businesses in several ways, including prohibiting targeted advertising involving students’ personal information, and banning the sale of student data except in cases of company acquisitions and sales of test-score reports for college recruitment.

Trahan presented the proposed language to allow commercial transactions for test score data as one of several points of discussion for parents, educators, students, and industry, as her office works to craft a final bill sometime around early winter, she told EdWeek Market Brief in an interview.

Sale of test score data can be a contentious issue.

Privacy advocates often argue that assessment companies don’t thoroughly inform students and parents when selling data to colleges and scholarship providers. On the flip side, some civil rights advocates  assert that colleges’ purchases of test score data are useful for enrolling students from low-income school districts who may get overlooked by traditional recruitment efforts, Trahan noted.

“I believe that we can strike a thoughtful balance, and making this a point of discussion as we work on an updated draft of the legislation is key to achieving that,” she said.

Commenters have until Oct. 31 to provide input for final legislation to be introduced later this year.

In addition to prohibiting certain uses of student data, the draft legislation also outlines several allowable cases of student data disclosure for companies, including to ensure legal and regulatory compliance, participation in the judicial process, and research purposes allowed by federal or state law.

Trahan wants companies to share their views on the issue of allowable disclosure, including their experiences navigating state laws that trigger disclosure of student information, she said.

Small and midsize companies should also comment on the draft’s provision to establish “technology impact assessments” that examine the student-data collection practices of ed-tech companies, Trahan said.

The draft would task the Federal Trade Commission with organizing a process for technology impact assessments to be conducted by independent auditors of any education company deemed to host “high-risk” platforms for student data protection purposes.

Defining “High-Risk”

The draft bill defines several criteria for what would constitute “high-risk.”

Those  criteria include software platforms that pose a significant risk to privacy or security of students; store personal student information regarding race, national origin, political opinions, religion, sexual orientation, and criminal convictions; and, platforms that present the possibility of an inaccurate, unfair, biased, or discriminatory decision that impacts a student.

The independent technology impact assessments would be required to describe the data that companies collect, provide a risk analysis considering harms to students, discrimination, and accessibility; and, explain companies’ risk mitigation processes.

The draft bill identifies the provision for independent auditors to conduct technology impact assessments as a point of discussion for K-12 stakeholders to have in the leadup to a final bill.

Ed tech, including artificial intelligence-influenced ed tech, is not subject to the same certification requirements as other critical industries, such as the legal and accounting professions, which require many practitioners to undergo continuing education and outside auditing processes, Trahan said.

“Ideally, legislation like ours could provide the incentive to scholars and standards-making bodies to create a certified [ed tech] industry,” she said. “But you don’t arrive there until you hear from small and midsized companies so that we can understand the burden that may come with them hiring potentially expensive, and currently uncertified auditors.”

Though the draft bill  has not been formally introduced in Congress yet, Trahan hopes to work across party lines, as well as with lawmakers interested in relevant tech topics like AI, as her office draws up final legislation. Twenty-seven House lawmakers compose the bipartisan Congressional AI Caucus.

The draft measure is “extremely comprehensive,” and the public participation process will allow the K-12 community to address any potential gaps they might see in the legislation, said Ariel Fox, senior counsel for global policy at Common Sense Media.

Fox lauded the proposal for  establishing a formal process for external audits of companies’ data protection practices. In recent years, such provisions have generally been left out of ed-tech legislation proposed within the U.S.

The impact assessment provisions draw from language embedded in the EU’s General Data Protection Regulation, or GDPR, and the UK’s Age Appropriate Design Code. Both of those regulations direct companies covered by the regulations to deeply vet how their software impacts users’ privacy.

“A concept that we see a lot in international laws is this notion that companies should really take a hard look at what they’re doing with data, what they’re collecting, why they’re collecting it,” Fox said. “It’s exciting to see that in her proposal as well.”

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Texas Districts Seek Online Software Programs, Instructional Supplies; Michigan School System Needs Reading Intervention Program

texas districts seek online software programs instructional supplies michigan school system needs reading intervention program

Online software platforms, instructional supplies, blended reading intervention program. A district in Texas plans to purchase multiple online software platforms, while another district in the state intends to buy instructional supplies, materials and equipment. Further, a Michigan district has issued an RFP for a reading intervention program.

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New Institute Backed by National Science Foundation to Explore AI’s Role in Education

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A ed-tech nonprofit will join four universities in launching a new institute dedicated to creating artificial intelligence tools that can be applied to human learning and education.

The effort is meant to encourage the development of products for use in K-12, influence future AI products made for K-12, and is intended to improve upon past AI technologies that were difficult for teachers to use, said Jeremy Roschelle, executive director of learning sciences research for Digital Promise, the education nonprofit involved in the initiative.

“There’s an emphasis here on what people are calling classroom orchestration – how to help teachers organize for longer-term, more complex, collaborative, problem-solving things,” Roschelle said. “I think the classroom orchestration part, in particular, could be part of a big change in what products people emphasize in the market, and how they support teachers.”

A 5-year, $20 million grant from the National Science Foundation will support the AI Institute for Engaged Learning, Digital Promise said. Analysts, policymakers, and product developers from Digital Promise will join researchers from North Carolina State University, University of North Carolina, Indiana University, and Vanderbilt University, for the initiative.

The work of the institute will have three main goals:

  1. Created platforms will incorporate story-based problem scenarios fostering communication, teamwork, and creativity.
  2. Platforms will generate AI characters capable of communicating with students through speech, facial expression, gesture, gaze, and posture.
  3. The institute will build a framework that will customize educational scenarios and processes to help students learn, based on information collected from conversations, gaze, facial expressions, gestures, and postures of students as they interact with one another, teachers, and the technology itself.

Schools, museums, and outside nonprofits will work with the institute to ensure created tools are ethically designed and advance diversity, equity and inclusion, according to the announcement.

District officials, and advocates for the ethical use of technology, have raised repeated concerns about potential pitfalls in applying AI-powered technology in schools. One fear is that because AI systems are dependent on collecting large amounts of data and using algorithms to guide policy and classroom practice, they will end up reinforcing racial, gender or other stereotypes.

For example, could an AI-powered curriculum platform, or one that recommends academic interventions for students, end up directing more students of color into remedial coursework, because of biased algorithmic assumptions?  (See Education Week’s recent special report breaking down concerns about AI’s role in classrooms.)

Data Privacy in Focus

A November report by the Center for Integrative Research in Computing and Learning Sciences cites several concerns and considerations come into play when it comes to how AI technologies safeguard student privacy.

How will AI-recorded student conversations and emotional data be used? How long will information be saved? Will it be part of a student’s record? These are all questions that come into play when AI and children interact, the report notes.

AI detection of emotions, through facial expressions, is well-developed, though challenging from a privacy and ethical standpoint, and appropriate policies must still be determined to address these challenges, the report says.

“A very strong focus of this institute … is coming together to really think about how do we tackle some of these issues of privacy, security?” Roschelle said. “None of this is going to fly if people are terrified.”

If AI can be applied creatively and responsibly, it has the power to enrich lessons across subjects, Roschelle said.

He offered an example detailing how forthcoming AI tools might generate story-based situations that promote collaboration and creativity.

Imagine a science class planning a trip to Mars over a three-week period, he said. For the purposes of that trip, they would need to measure gravity, the strength of the Sun’s energy, and air moisture. They would have to plot out measurement devices that they need, the composition of student teams to observe measurements, and what vehicles to bring.

In this case, an effective AI system could “help them along the way whenever they get stuck,” Roschelle said, and “tune the story to the choices they make.”

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Two-Minute Tip: 3 Mistakes That Hurt CEOs’ Relationships With Their Boards

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In this video, EdWeek Market Brief Reporter Emma Kate Fittes breaks down the key missteps CEOs make when it comes to building and maintaining a positive and productive relationship with their board.

The Two-Minute Tip is one of a series of videos offering advice to company officials on how to improve their work and…

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In this video, EdWeek Market Brief Reporter Emma Kate Fittes breaks down the key missteps CEOs make when it comes to building and maintaining a positive and productive relationship with their board.

The Two-Minute Tip is one of a series of videos offering advice to company officials on how to improve their work and the products they deliver to schools. It’s based on a story Emma Kate wrote in which she gathered advice from investors, advisers to boards, CEOs and ed-tech board members about how leaders of education companies can nurture trust and communication.

Those executives talked about embracing tough conversations, keeping the board fresh with new members, and seeking advice from a variety of sources.


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6 Mistakes Education Company CEOs Need to Avoid in Their Relationships With Boards

6 mistakes education company ceos need to avoid in their relationships with boards
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Many education companies face a critical moment as they attempt to transition out of the pandemic and point their businesses on the path to growth. For CEOs of those companies, finding and maintaining a strong relationship with their board members is a step they can’t afford to overlook.

Board members can be important contributors to a…

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Spending on Tech-Based Curriculum Jumps During the Pandemic, New Survey of IT Leaders Finds

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K-12 curriculum software and subscription spending grew at a higher rate than any other technology budget area for school districts last school year, as their IT budgets mostly increased from the previous school year.

In a survey of 170 district technology leaders by the Consortium for School Networking, 62 percent of participants reported their schools’ funding for curricular software/subscriptions rose between the 2019-2020 and 2020-2021 school years, with 56 percent also noting a spike in cybersecurity investment.

Another 56 percent of respondents said their district’s overall IT budget expanded, with 12 percent citing a “major” increase, according to a summary of the report.CoSNGraph

District technology leaders ranked cybersecurity as the top unmet technology need, followed by home access connectivity and interoperability.

“In a situation where even well-funded corporations in the private sector struggle to address cybersecurity issues, poorly funded districts are at a disadvantage,” CoSN said. “One respondent called the need for more cybersecurity funding as ‘desperate.’”

Cybersecurity has been a focus area for CoSN, which is one of several organizations that endorsed the Enhancing K-12 Cybersecurity Act. That bill would set a path for the federal government to guide best practices for K-12 cybersecurity and provide cybersecurity grants to schools that could benefit certain education companies.

Congressional lawmakers have not acted to advance the bill.

Big Investments in Hybrid Learning

In addition to greater curricular software and cybersecurity spending, the majority of those surveyed also noted new technology initiatives, with 64 percent saying that they added classroom technology to support simultaneous hybrid learning, such as rotating cameras, microphones and speakers; and 60 percent reporting that they now offer a remote-only instruction option.

Further, 37 percent of tech chiefs said they added “district-wide student-facing Cloud-based applications,” such as learning management systems, to their digital ecosystems, and 23 percent of districts gave devices or extra monitors to educators for home use.

Only 2 percent of participants reported not supporting new IT initiatives or existing IT efforts that weren’t already supported pre-pandemic.

Almost all district leaders are looking to the federal government for technology funding help.

About three-quarters of those questioned plan to request support from the Federal Communications Commission’s Emergency Connectivity Fund for Wi-Fi hot spots, while 90 percent of respondents said infusions provided through three stimulus bills enacted over the last 17 months significantly helped remote-learning or related IT initiatives in their districts during the pandemic. (See EdWeek Market Brief’s recent, nationwide survey showing how district officials plan to spend the new, $7 billion connectivity fund overseen by the FCC.)

The three COVID stimulus packages heaped an overall $189.5 billion financial windfall on U.S. K-12 schools. Districts have until Sept. 30, 2024, to commit the last bit of that money.

Compared with the CoSN review, a recent EdWeek Market Brief survey found a slightly lower percentage – 62 percent – of 280 district administrators interviewed, planned to seek ECF reimbursement for Wi-Fi hot spots for home use. However, the CoSN survey did not specify that the hot spots sought for reimbursement pertained only to home use.

“There is a marked shift in how school district IT leaders are preparing for this fall, compared to the back-to-school survey results from last year,” CoSN CEO Keith Krueger said in a statement. “While the federal government delivered critical funding when school districts needed it most, we must now invest in cybersecurity and ensure sustainable, secure and equitable home broadband access for students and educators into the future.”

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4 Ways for Education Companies Working Globally to Protect Their Intellectual Property

4 ways for education companies working globally to protect their intellectual property
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Lawyers, consultants, others advising education companies say there are clear steps businesses can take to protect their intellectual property abroad.

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