2U and edX Merge to Create Online Giant

Suppose you could take an MIT course on data analysis with a Nobel Prize winner — for free. Or earn a graduate credential in integrated digital media from New York University for less than $1,000. Or a full-fledged MBA degree from Boston University for only $24,000.

You can through edX.

Recently edX was acquired by 2U, an education technology company, creating a partnership 2U calls an “industry-redefining combination that will help power the digital transformation of higher education.”

What does this merger entail, and why are some critics not exactly thrilled with it?

In 2012, online learning was gaining in popularity, and professors at Stanford and MIT sought to revolutionize higher education through massive open online courses, or MOOCs. Stanford professors would create Coursera and Udacity, while MIT faculty would team with nearby Harvard colleagues to form edX.

These ventures promised to make a world-class education available to people around the world, democratizing what has traditionally been reserved for a relative few. Yet MOOCs suffered from low student completion rates and didn’t attract the disenfranchised audiences they were intended to reach, instead largely serving the continuing education needs of degree holders.

As a result, MOOCs were considered failures and left for dead. But continued tinkering with delivery systems and one global pandemic that thrust the educational world online resulted in a rebirth of MOOCs.

Today, MOOCs truly live up to their “massive” billing. Coursera claims to serve 82 million users, while edX touts 35 million.

Coursera and edX compete directly. Through partners such as Yale, University of Michigan, Duke, Princeton, and Penn State—along with major companies like IBM and Google—Coursera provides free courses and fee-based certificate and degree programs.

Featuring some of the same universities and a range of international institutions, edX also offers free courses and unique “MicroBachelors” and “MicroMasters” programs.

Yet Coursera serves about twice the number of users. It operates as a for-profit company; edX operated as a nonprofit. This year, Coursera went public, with an IPO that resulted in a market capitalization of more than $7 billion, threatening to widen the gulf between the two.

Enter 2U, an online program management (OPM) company that helps develop and run online courses and bootcamps for over 80 university partners. In June, 2U announced it would acquire edX’s assets for $800 million in cash, resulting in a merged entity that can compete with Coursera.

Together, 2U and edX will reach more than 50 million students, partner with more than 230 universities and organizations, and offer more than 3,500 digital programs on “the world’s most comprehensive free-to-degree online education marketplace.”

“2U and edX were founded on a shared vision that online education has the power to expand access, create opportunity, and transform lives,” said Christopher “Chip” Paucek, 2U’s co-founder and CEO.

From 2U’s perspective, the company gains edX’s customer base, along with its brand and website, the announcement said. It hopes to turn a small fraction of edX users into paid customers. Increased revenue will drive down acquisition costs, which in turn will make programs more affordable, attracting more students and university partners.

For edX, the merger provides much-needed capital. Both Harvard and MIT initially invested $30 million in the nonprofit, and edX has since operated in the red.

With the $800 million, Harvard and MIT will create a new nonprofit entity, yet to be named, focused on “reimagining the future of learning for people at all stages of life, addressing educational inequalities, and continuing to advance next generation learning experiences and platforms.”

More specifically, the nonprofit will collaborate with educational institutions, governments, and other organizations to “develop and evaluate new approaches to learning and pedagogy,” with a goal of expanding opportunities to underserved communities.

“If anything the last year and a half has taught us throughout this pandemic is that there is still a huge digital divide,” said Lawrence Bacow, president of Harvard.

Not everyone thinks the merger is good for higher education. Some universities signed up with edX because of its nonprofit status, which meant profit-optimization wasn’t the organization’s primary goal.

“One question … is whether all the existing university partners will choose to continue with a 2U-owned edX once their contracts come up for renewal,” wrote Jeffrey R. Young, managing editor at EdSurge.

Jefferson Pooley, a professor of media and communication at Muhlenberg College in Pennsylvania, was more blunt, calling Harvard and MIT sellouts.

“Harvard and MIT have surrendered,” he wrote in The Chronicle of Higher Education. “Their decision to fold is a major, and potentially fateful, act of betrayal.”

“Before the sale, edX was academe’s public option,” Pooley continued, “a mission-aligned satellite of the brick-and-mortar campus. Now all the major players in the sector are profiteers, legally obligated to maximize shareholder return.”

In his view, Harvard and MIT have “auctioned off the lecture halls of the future,” implying, perhaps, that other universities in cahoots with for-profit partners are also selling their souls to the devil.

“2U’s mission is fundamentally misaligned with the university tradition,” he argued. “2U, Coursera, and their venture-funded competitors are built to squeeze profit from our students, using our faculty and course offerings.”

Naturally, executives at edX don’t see it that way.

“As edX looks to its next phase of growth and impact, joining forces with 2U marks a major milestone in our evolution,” said Anant Agarwal, MIT professor and founder and CEO of edX.

“2U’s people, technology, and scale will expand edX’s ability to deliver on its mission of providing access to high-quality education to enable all learners to unlock their potential.”

Whether the merger proves to be “industry-redefining” remains to be seen, as does the reach and influence of Harvard and MIT’s new nonprofit venture. But what’s clear is 2U’s newfound status as another 800-pound gorilla in the OPM space.

As Sean Gallagher, founder and executive director of Northeastern University’s Center for the Future of Higher Education and Talent Strategy, told EdSurge: “For me, the big story here is this continued consolidation of market leadership in online learning. … Scale matters, and the big are getting bigger.”

Feature Image: SOPA Images / Contributor / LightRocket / Getty Images