Education

2U acquired edX for US$800 million, unexpectedly ending the non-profit MOOC provider founded by MIT and Harvard

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When MIT and Harvard University launched edX nearly a decade ago, it was touted as a non-profit alternative to for-profit online course providers. Today, these universities announced that they will sell edX to one of the for-profit providers for $800 million.

edX has Behind the opponent It’s like Coursera, a similar platform founded by Stanford University professors in terms of fundraising and influence, even though it still has 35 million users and more than 3,000 courses.

The leaders of edX cited the pandemic as a factor leading to the sale. MIT President L. Rafael Reif wrote in a report: “Covid has promoted the explosive growth of distance learning and stimulated huge investments in edX’s commercial competitors.” Open the envelope Nowadays. “This puts edX at a financial disadvantage as a non-profit organization. This new path recognizes this reality and provides a solution that enables edX to continue to support and maintain key aspects of its mission.”

What is happening now is a bit complicated.

2U is a so-called online course management company that helps traditional universities set up and run online degree courses. The company stated that it will operate edX as an independent subsidiary that will be structured as a public interest company. This means that it will be profitable.

At the same time, the $800 million that 2U paid for edX assets will be used to create a new non-profit organization, which has not yet been named. The non-profit organization will maintain the open source platform that runs edX, called Open edX. Reif said in the letter that the non-profit organization will also “explore promising new ideas to make online learning more effective, attractive and personalized.”

Anant Agarwal, founder and CEO of edX, said in a media webinar on Tuesday that when 2U approached him about a possible acquisition, he was initially “a little bit skeptical.” But he said that Chip Paucek, 2U’s co-founder and CEO, started the conversation by asking about the importance of becoming a non-profit organization and ensuring that the DNA will be preserved.

Finally, 2U officials stated in a statement that they have promised:

  • Guarantee affordability by continuing to provide free versions of online courses
  • Protect the intellectual property rights of teachers and universities that provide courses
  • Protect the personal data privacy of all learners who use the edX platform
  • And contribute to the continuous development of the open source Open edX platform that the university will continue to oversee.

The partner universities that already offer courses on edX will not change immediately because the company said it will abide by their current arrangements and contracts with all partners.

However, one question is whether all existing university partners will choose to continue to use edX owned by 2U once the contract expires, because many universities stated that they chose to cooperate with edX because edX is non-profit.

When EdSurge asked Paucek what he was doing to persuade the university to stay, he said that the company had long believed that when establishing any partnership with the company, “the university is in control, and 2U is not.” “We have to get stakeholders to do the right thing every day,” he added.

Sean Gallagher, founder and executive director of Northeastern University’s Center for Future Higher Education and Talent Strategy, believes that this transaction marks the blurring of the once distinct boundaries between MOOCs, online degree programs, and campus programs.

For me, the most important thing is the continued consolidation of the leading position in the online learning market,” he added. “The scale is important, and the bigger ones are getting bigger and bigger. “

Phil Hill, an edtech consultant and blogger, said that although edX has grown during the pandemic, it lacks a clear direction.

“There is never a real strategy behind them, they need to do something,” he said of edX. “2U is strategy,” he added.

However, the new arrangement seems to mean that officials at MIT and Harvard University are no longer dominant in the online learning platforms they have built.

Any influence they want to have on the direction of online education must now come from new non-profit organizations that they will use sales proceeds or other efforts to operate.

As an investment, Harvard and the Massachusetts Institute of Technology each contributed $30 million in 2012 that really paid off.

“It’s like a university endowment fund,” Hill said. “These people know how to calculate their money. They are good at making money, and they did it again.”

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