Your degree is Amazon's opportunity 📦 Transcend Newsletter XXVIII

Will BigTech muscle its way into higher education?

Big Tech (Amazon, Google, Apple, Microsoft, and Facebook) has long flirted with grabbing a piece of the 95%-margin higher education pie. This may be the time they finally bite, Scott Galloway predicts. 

Let’s explore how BigTech may enter higher education in the next few years, and how realistic Galloway’s predictions are.

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MIT@Google, iStanford, or HarvardXFacebook may be a reality in the coming years. Whether this happens will depend on the position they can take in the higher education value chain, and there’s no better framework than Jobs-To-Be-Done (JTBD=the pain point the customer is trying to solve) to map this out. 

Many argue the main JTBD of higher education is signaling your value and skills to employers and institutions. Others say it’s the education you receive, the network you make, or the personal and social growth you may experience. The reality is these needs are all evolving and served by different institutions (liberal arts colleges, community colleges, public universities, private nonprofits, Ivy Leagues, etc).

Where can BigTech play a role here? Scott Galloway points to two directions in The Coming Disruption: strengthening the signal and creating individual courses for universities.

Signaling

“What drives those margins? Not education. It’s credentialing. The most value-added part of a university is not the professors; it’s the admissions department.
The Coming Disruption

Universities are luxury brands: they post sky-rocketing prices, create a scarcity of supply, and most importantly, they foster conspicuous consumption so students can gain recognition from their degree.

This is related to the idea of “signaling” and the sheepskin effect: students enroll in institutions that will signal their value to society more than the actual value of their degree, as argued in “A Case Against Education”. For top schools, getting accepted is more important than finishing your degree to boost your signal.

BigTech surely would want to leverage those global brands through institutional partnerships (with co-branding programs like the ones Galloway listed) and willing to break the bank to do so.

I’m not so sure this moves the needle for universities though, at least not the ones BigTech would want to partner with. Striking deals with the largest companies in the world could risk their nonprofit status and government contributions that sustain their economic model. So focusing on doubling the signaling power is likely not a desirable option.

Course Creation

BigTech could opt for a more “modular” approach – one where they focus on independent courses that are connected to the company’s technology, applications, or operating principles. Galloway says:

“I just can’t imagine what the enrollments would be if Apple partnered with a school to offer programs in design and creativity. These would be huge enrollments. The tech company would be responsible for scale and the online group part. The university would be responsible for the accreditation.”

This sounds more reasonable and aligned with the strategic interests of these corporations. If corporations are willing to give away full product suites for free (such as G-Suite or AWS credits), why wouldn’t they build massive courses that will reach millions of students?

There’s already an industry for this. OPMs (Online Program Management) helps universities finance, develop, market and support online courses, in exchange for a share of the tuition revenue or a flat fee. Universities can then focus on their brand and the certification of the program, and let external organizations do the rest. It’s one of the fastest-growing sectors in edtech.

The power in that value chain is in a) acquiring the customers (some universities pay up to $2,500 to acquire one student) and b) issuing an accredited certificate.

Only universities can fulfill the latter for now. But BigTech may be interested in the former, using their endless balance sheets and distribution to finance, develop and distribute individual courses for universities and gather a percentage of the revenue.

The university could provide the students with a classroom, teachers, and brand, issuing the ultimate certificate. In online environments, a third OPM player could provide the learning support and education technology. 

Starting with individual courses and reaching deep into their user base to find students will be BigTech’s first move into higher education.

Facebook could target every single marketing undergrad to get a Digital Marketing certificate in partner schools and offer them the most industry-relevant skills and product knowledge. Amazon could replicate it for AWS courses, and Apple could take over product design. 

Eventually, they may even gain leverage in this value chain and squeeze universities and other organizations out of it. Let’s remember these brands can go global to an extent no educational institution can. 

What about… the students?

There is a business case for corporations here already, but how does this make students better off? I’m skeptical it would contribute to solving education’s most pressing issues (such as the student debt crisis, the middle-skills gap, or the digital skills gap). 

To address these, employers, universities, and governments will have to work together to make higher education more affordable, relevant to societal needs, and accessible to the off-campus, part-time student (read more about our thinking in University Redefined). 

If instead, these partnerships focus only on the top schools that can turn a profit for BigTech, this may just increase the opportunity gap between students who can access the luxury brands and those who cannot. It’s not what the future of learning needs, but it may be what we deserve.

What do you think? Please leave a comment or reply to this email with you thoughts!

🎤As higher education prepares for a rocky year, ASU is launching Remote Summit, a free conference for university faculty and administrators. 

🏋️Transcend Fellow Ray Batra (Shift_Up) spoke to Superlearners about learning gyms and the future of education. 

👟How can founders build communities that power their products’ user experience? Stephen Wemple gives us a wonderful breakdown of Product-Led Communities (and mentions Transcend!). 

🚚The future of work in Europe will obviously change after this pandemic – this report looks at the dangerous intersection of jobs at risk of automation and those at risk due to this crisis.

👩‍🏫Girls will be particularly vulnerable to the loss of school funding and programs that result from the current crisis, this CGD report shows.

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Thanks to Stew Fortier, Padmini Pyali, Richie Bonilla (title inspiration!) Tom Critchlow, Ana Kozlova, Bhaumik Patel, Dan Hunt, and the Compound Writing community for the great feedback on this piece!