Microsoft (MSFT) Acquires Edtech Platform TakeLessons

Microsoft Corporation (MSFT) and educational technology—or edtech, as it is more popularly known—might not be the most obvious of connections. The company is more well known for its productivity software and more recently for its cloud computing unit. But Microsoft is quietly becoming a force to reckon with in education as well.

While edtech is not a line item on the company's balance sheet, Microsoft is already among the top technology providers to schools thanks to its productivity suite of applications. In recent times, it has branched out in other directions, such as investing in startups that use artificial intelligence in education.

Last week, Microsoft made another such move and acquired TakeLessons, an online platform that connects students with individual tutors in various subjects such as music, crafts, and languages. The acquisition amount was not disclosed. Founded in 2006, San Diego-based TakeLessons has raised at least $20 million from investors. The number of users on its platform is not known.

Microsoft and Educational Technology

The market for educational technology showed much promise in the early part of the previous decade. However, it failed to live up to that hype, and several high-profile startups crashed after raising funding in the hundreds of millions of dollars.

The numbers for edtech remain sizeable, however. According to research estimates, the educational technology market was worth $89.49 billion last year and is expected to grow at a rate of approximately 20% per year.

Part of the reason for that impressive pace of growth is the growing popularity of remote learning across schools. Microsoft Teams, the company's video-conferencing software, benefitted from this trend last year and has become popular with school districts as a learning tool.

The TakeLessons acquisition bolsters Microsoft's reach in edtech. While the company has not disclosed a specific plan for the acquisition, the synergies between Teams, which was used by 100 million students during the pandemic, and lesson provider TakeLessons are difficult to ignore.

For example, TakeLessons could provide custom learning solutions for school districts or other customers. "This acquisition is in response to the growing demand for personalized hybrid opportunities and expands our product offerings to TakeLessons consumers, a leading online learning platform," a senior executive told CNBC in an email.

TakeLessons could also follow a path similar to the one charted by Lynda.com. The online learning platform was imported into the Microsoft fold after the company's acquisition of LinkedIn in 2016. It is now part of LinkedIn Learning, which produces content aimed at senior executives in organizations and is offered as part of a premium subscription to the professional networking site.

LinkedIn is a separate brand under its parent company and has its own set of products and services that do not overlap with those offered by Microsoft. It generated $3 billion in revenue, or roughly 6% of Microsoft's overall revenue, in the fourth quarter of 2021.

In a note on its website regarding the acquisition, TakeLessons stated that the company will continue to operate as before for the time being but with a wider global reach. "We expect that this change will provide greater resources for TakeLessons to build better products, attract more high-quality teachers, and offer a wider selection of subjects," the company stated.