Dusseldorf The Cologne district court has sentenced Go Student in 17 out of 20 points. The judgment, which is available to the Handelsblatt, shows that the education start-up has made “misleading” and “non-transparent information” on its website and thus “unjustifiably disadvantaged” competitors. The judgment is not yet final.
Go Student recognizes the judgment of the regional court in nine points. The tutoring platform has now appealed against the other eight. As soon as the judgment becomes final, Go Student will have to change its marketing and numerous clauses in the general terms and conditions (GTC), otherwise the company faces heavy penalties.
Go Student is one of numerous start-ups that have focused primarily on growth in recent years. In January 2022, the tutoring platform raised 300 million euros, which CEO Felix Ohswald wanted to use to expand. However, Ohswald and his co-founders Gregor Müller and Ferdinand von Hagen apparently went a step too far: Europe’s most valuable educational start-up violated competition law. The violations not only disadvantaged Go Student’s competitors in the tutoring market, but also customers and tutors.
Go Student has long been regarded as Austria’s flagship start-up
Patrick Nadler filed the lawsuit. The entrepreneur is the founder of Go student competitor Tutorspace. In an interview with the Handelsblatt, Nadler justified the lawsuit before the Cologne Regional Court: “In my opinion, it cannot be that the person who has the most money does not have to comply with the rules. Disruption does not equal irresponsibility.”
At the request of the Handelsblatt, Go Student said: “The judgment of the Cologne Regional Court is not yet final.” Nevertheless, the start-up is dealing intensively with the court’s assessment and has “already implemented the first changes” in order to be more transparent to customers to become.
For a long time, Go Student was considered the Austrian model start-up: within seven years, the company expanded its business to 20 countries, it currently places over 23,000 tutors worldwide and registers more than 1.5 million booked tutoring hours every month. Go Student has raised more than 590 million euros since 2017. The vision of the three Austrians seemed to come true: they wanted to set up the number one tutoring school in the world.
The Go Student competitor sued and was right on several points by the Cologne Regional Court.
(Photo: Tutor Space)
However, Go Student is no longer allowed to advertise that it is already number one. The court classified the slogan “#1 tutoring school worldwide” as misleading sole advertising. The statement was not sufficiently proven. The same applies to advertising with 100 percent data security. Go Student knows that the advertising statements are “deliberately chosen to be ambitious”. As a “young and courageous company”, they want to continue working on building the best private tuition school in the world. The subject of data security is particularly important to Go Student.
Go Student is no longer allowed to advertise with company logos
In addition, Go Student is now prohibited from using the notice “Recommended by…” on its website and displaying the logos of the media “Kurier”, “Forbes” and “Zeit” underneath it. Go Student was mentioned in these publications, but the media did not recommend the start-up. Go Student also used the logo of the Handelsblatt without rights in direct connection with the statement: “recommended by experts”.
The Austrian educational start-up is not a tutoring school per se, but acts as a platform. The 23,000 tutors work as freelancers. Go Student only collects a commission for the mediation. The various tutoring packages last from six to 36 months. The framework conditions of the contractual relationship are recorded in the General Terms and Conditions. The Cologne regional court banned several clauses.
>> Read also: Teachers criticize Go Student’s expansion course
So too: “After the term has expired, the contract is extended by another package at the same conditions (units, period and price).” The district court ruled that the clause is “ineffective” because the customers do not book a new package and it is not a subscription model. The court also declared the removal of the statutory right of withdrawal (14 days) after the first lesson used to be invalid. The same applies to the clause that tutors are obliged to find an adequate replacement if they no longer want to give private tuition; otherwise the salary would be withheld.
Go Student said: “Changed legal framework conditions for general terms and conditions clauses in Germany require ongoing adjustments to our general terms and conditions, just as is the case for all other companies on the market.” Therefore, the legal situation is constantly monitored and it would be “- if necessary – changes made”. The judgment now only confirms changes that were planned by Go Student for the benefit of all customers.
Nadler no longer wanted to tolerate Go Student’s behavior and went to court. The Tutorspace founder also chairs the Federal Association for After School and Private Tutoring. Especially in the field of education, Nadler finds Go Student’s approach to be extremely problematic: “The behavior of such market participants can have unpleasant consequences.”
When it comes to education, the fun stops
It remains unclear at first how comprehensive the consequences for Go Student are. The start-up appealed against eight out of 17 points. Now judges in the second instance will decide whether the clauses and methods will also be banned. Go Student believes these issues are not anti-competitive and hopes “that the lower court will follow our views.”
The founders of Go Student are appealing eight points in the district court’s ruling.
(Photo: Stefan Knittel)
Among other things, Go Student appealed the court’s decision to stop advertising with the statement “top tutors in your area”. Because Go Student, as an online tutoring platform, did not offer on-site tutoring. In November, however, the start-up bought on-site tutoring company Studienkreis.
Furthermore, the court ruled in the first instance that Go Student used unfair advertising methods: On “www.nachhilfe-im-vergleich.com” Go Student advertised that users could “make an inquiry – compare applicants – find the perfect teacher”. But instead of comparing tutors from different providers, only tutors from Go Student were suggested to the users. Go Student wants to have that checked too.
This court decision is likely to have the most serious financial consequences: If a student does not show up for the online course, Go Student will still bill them for the hour. However, the company did not give any of this to the teachers concerned. The court decided: This is not legal.
Months of litigation
As a placement platform, Go Student is not allowed to withhold wages from tutors. This is an “unreasonable disadvantage” for teachers. As a platform, Go Student is only allowed to pass on credit and collect a commission for it. On the basis of the judgment, tutors could claim the withheld wages should the court’s judgment become final.
>> Read also: Financing for German start-ups is collapsing
The legal dispute between Go Student and Tutorspace has been going on since March. For Nadler it is obvious: “In my opinion, Go Student tried to take advantage of every day on which the judgment is not yet final.” Go Student did not comment on the Handelsblatt.
In recent months, the education start-up has repeatedly made negative headlines: Last year, Go Student laid off hundreds of employees and missed internal targets. As the Handelsblatt reported, a large shareholder valued the company at the end of June 2022 at only the equivalent of 1.7 billion euros.
In the past, Ohswald saw himself more as a visionary than as a crisis manager. In 2021, in a “Gründerszene” interview, when asked how his best friend would describe him, he answered: “Someone who sometimes goes a step too far, according to the motto: be fast or be last.” The judgment of the Cologne Regional Court shows: Ohswald didn’t just go a step too far.
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