A pending shareholder class-action lawsuit against Duolingo, Inc. shows how the language-learning app monetizes its free users. The legal challenge alleges that the company hid how its monetization tactics, such as unskippable ads and unvetted AI content, drove free learners away. For parents and educators, the dispute reveals a tension between educational technology profits and student learning.
What Happened
According to the securities class-action lawsuit filed in Pennsylvania, Duolingo senior executives misled investors about the impact of the app's monetization strategies. Plaintiffs argue that internal testing showed that adding friction to the free tier, like replacing the old "Hearts" system with a restrictive "Energy" model, slowed user growth. The lawsuit, which has a lead plaintiff deadline of December 7, 2026, claims that these changes, unskippable ads, and errors in AI lessons led to a drop in daily active user growth. Our previous coverage of the lawsuit's educational risks details how this profit-driven friction hurts a child's learning experience.
The Bigger Picture
While Duolingo promoters pitch features like "Energy" as motivational tools, independent reviews show otherwise. In mid-2025, Duolingo began swapping its five-heart system for a new "Energy" system on iOS, according to the language learning resource Lingoly.io. Under this model, free users start with 25 energy points. A review from Android Authority found that mistakes drain this energy so quickly that free users are blocked after two or three lessons. To keep learning, students must watch ads, spend virtual currency, or buy premium tiers like Super Duolingo or Duolingo Max.
For families who pay for the premium Duolingo Max tier, which features GPT-4 tutoring, the educational value is mixed. An analysis by Agent Finder found that while AI features like "Explain My Answer" and simulated video calls offer practice for intermediate learners, they are expensive and feel scripted. Reliance on external rewards like daily streaks and leaderboards can also backfire. A study from the Jagiellonian University warns that intense gamification causes user fatigue and anxiety over maintaining streaks. Research compiled by OpenCopy supports this, citing behavioral studies that show expected external rewards, like badges and streaks, destroy a child's intrinsic motivation to learn.
What This Means for Families
Duolingo's shift to an ad-heavy, AI-driven platform raises questions for educators and parents. When apps introduce artificial limits to push families into paid subscriptions, they change the relationship a child has with learning. Instead of focusing on the language, students end up managing digital resources like "Energy" or stressing over streaks. Our analysis of aggressive marketing in EdTech shows that these systems are designed for corporate retention rather than long-term student comprehension.
What You Can Do
Parents can take several steps to counter these patterns. First, monitor how often your child is blocked from learning by ads or depleted "Energy" balances on the free tier. Second, de-emphasize the importance of the daily streak. Talk to your child about the purpose of learning a language, helping them understand that losing a streak does not mean losing their progress. Finally, supplement app usage with real-world practice like books, foreign-language media, and conversational practice to balance the limitations of AI-generated content.