Business Law

Mergers & Acquisitions by Byju’s

By Adv. Nikita Vaigankar & Ashlesha Suryawanshi

Introduction

Education sector is the most crucial sector for determining the development of any country as it forms a base for development. The more literate people in our country are, the stronger the base. Education has the ultimate power to change the mindset and thinking of people. 

Our topic basically speaks about mergers and acquisitions in the edu tech industry. Merger is defined as combining two or more companies or firms to form one, while acquisition is defined as when one company takes over the other one. Different mergers and acquisitions occur along with profits, losses, opportunities,etc. 

Edu-tech is basically an abbreviation of ‘education technology’ which means the use of Technology such as hardware, software, artificial intelligence for imparting education to the learners. It is basically teaching in a virtual classroom. If you go to see, the main aim of the edutech sector is to allow the students to learn in the virtual world, interpreting it positively as especially to those who are unable to attend the classes. In this covid pandemic, the edutech sector has been quite successful in fulfilling its aim. 

Since, edutech sector is very wide, we shall narrow the focus of our Article by limiting our research on Byju’s. It is a edu-tech giant and is the most popular online learning platform. Byju Raveendran is the founder and CEO of edutech startup byju’s. Raveendran cracked his CAT by securing 100% and then he helped his friends to crack the exam and ultimately he considered this as his full time job and launched 

Byju’s application in 2015. Byju’s has grown over the years as the world’s most successful edu-tech startup. Since the edu tech industry has found a complete boon in the covid-19, byju’s has been at the top of the chart. 

https://m.economictimes.com/tech/startups/byjus-to-acquire-aakash-educational-services-in-700-million-deal/articleshow/81910598.cms [Image Source]

Major Funding to Byju’s

  1. The value of Byju’s after their recent fundings, have climbed up to $16.5 billion which makes it a most valued startup in India ahead of Paytm which was valued $16 billion after its last funding around late 2019. Since the pandemic fuelled demand for online education, Byju’s has been on a fund-raising spree.
  2. Byju’s  received its first funding from Aarin capital which is headed by Ranjan Pai and Mohandas Pai. 
  3. In 2015, Byju’s app received capital from Sequoia which is about  $25 million. 
  4. In 2016 Byju’s app received funding from Chan-Zuckerberg which is $50 million. 
  5. In 2019, Byju’s secured an investment of $150 million from Qatar Investment and Out ventures which increases the value for the app up to $5.7 million  
  6. In 2020, pandemic times, Byju’s app get funds from General Atlantic, tiger global in 2020 

Acquisitions by Byju’s 

  1. Osmo – It is a learning system for children which helps them to make their learning easy. It is a maker of educational games and thus, it’s combination with Byju’s will enhance ‘play-based learning’. It was founded by Pramod Sharma and Jerome Scholler in 2013, so it is a US-based platform that was acquired for $120 million. 
  2. TutorVista – It is an online tutoring brand which was acquired by Byju’s in 2017. It has the aim to provide tutoring to the students. It provides tutoring to students across the world, including countries like India, the USA, Australia, China and Southeast Asia. 
  3. VidhyarthaVidhyartha is a guidance platform for students which was founded by Priya Mohan & Navin Balan in 2011. It has Partnered with more than 2000 schools that are mandated by the Central Board of Secondary Education. 
  4. Math Adventures –  It is also a platform that aims to guide students by various methods like posting short videos, and many more activities. It was founded by Ashok Nair and his wife Vidya Jayaraman in 2013. It also partnered with 12 schools and currently 7000 plus students used this app. It is headquartered in Bengaluru. 
  5. WhiteHat  Jr – It is an ed-tech platform where students teach coding through online video. WhiteHat app founded by Karan Bajaj in 2018, helps children to learn computer programming. It helps students in creating their own digital products, they also can easily learn music by making their signature notes. Byju’s acquired WhiteHat in Aug 2020 for the amount of $300 million. Byju’s stated that it will strive to make significant investment in WhiteHat Junior’s technology in order to expand its teacher base to cater to the demands of the new market. 
  6. Akash  Educational – It is an educational platform that provides preparation for JEE and NEET Examination. It was started in 1988 by Mr JC Chaudhary. It was both a classroom and a digital platform. Bjyu’s Acquired  Aakash Educational for the worth amount of $950  million. It was the largest buyout in the online education sector.
  7. Epic – Epic is a US based kids learning platform and Byju’s acquired the same in a $500 million cash and stock deal.  Epic has around 50 million users in the United States who access digital books for free  as well as through subscriptions.
  8. Topper – Recently, in July in 2021, Byju’s acquired this application which is a higher education platform Great learning and after-school learning application. Byju’s has spent $600 million to acquire Great Learning while $150 million have been spent on acquiring Toppr, according to media reports and regulatory filings. Great Learning provides higher learning degree, diploma and certificate courses across domains such as data science, digital marketing, artificial intelligence, and machine learning, in association with recognised universities globally.

Laws regulating Edu tech industry

With the growth in the edutech sector and involvement of more and more subjects, it has become a necessity that these edu-tech sectors need to be regularised and therefore, stringent regulations for regularising edutech platforms are required in order to protect the rights and interests of students. Here, Competition law plays an important role to curb the misuse of the dominant position by a particular company and since our study is focused on byju’s which is an edutech giant, the need to look upon the existing laws is more important. 

Since this industry of edutech is growing at a faster pace, there are high chances of violating competition norms and here is where competition law comes into picture. Therefore, the Competition Commission of India (CCI) ensures that certain M&A transactions in India require the approval to prevent practices having adverse effects on competition.  

With the rise in M&A, there is an impact on competition among the parties of the education sector. Therefore, to keep the market stable and competitive, CCI needs to step in. A merger would allow controlling the market’s biggest Educational institutes and thus, creating their dominance in the market. Apart from this, agreements like group sharing information will damage consumers and therefore, these agreements fall under the Ambit of Horizontal anti competitive agreements under competition act.  

There are many educational platforms who jointly establish their admission procedures. These joint ventures pose a threat of antitrust suspicions like for example, an NGO called Injustice, a public interest initiative of the centre for civil society, filed information under section 19 clause 1(a) of competition Act, 2002 against CLAT and its convenors. Injustice alleged that 14 Law schools that jointly held annual CLAT admission test to National Law universities were able to increase their examination fees from Rs. 3000 to 

Rs. 4000 and hike its pre admission advance deposit from Rs. 50000 to Rs. 1 lakh at their own convenience.  

One more important aspect is mergers which can also be controlled by the competition commission of India. CCI has the power to permit or even disallow the measures which can have adverse effects on the educational sectors. Byju’s being one of the most dominant enterprises in the edu-tech world, there are high chances of violating the competition norms by the company. 

Apart from Competition law, there are specified E-Commerce laws through Consumer Protection Act. Edu tech institutions fall under e-commerce entities and therefore, it is subject to the rules laid down by consumer protection act. The edu-tech entities have to comply with the requirements such as the disclosure of addresses, contact details of customer care, a grievance officer, a grievance redressal mechanism to be established, payment methods, refunds, advertising standards, etc. 

 Announcement of National Education Policy (NEP) by the ministry of human resource development in the financial year 2020 to 2021 offered policy impetus to the edu-tech sector as NEP recognises the role of Technology in making education more effective. An autonomous body called National educational technology forum which will act as a platform for free exchange of ideas on the use of technology to enhance learning, planning and administration. It also creates a room for teachers to teach them imparting education online, training for online assessment techniques, designing their teaching aids, etc. NEP also encourages the introduction of coding in school curriculum. 

The impending personal data protection bill, 2019 mandates the institution of an age verification process and mechanism for seeking parental consent for collection of minor’s personal data. In case of noncompliance, there are monetary policies levied on the entity. If the edu-tech also caters to students based abroad, then the data protection laws of such jurisdiction will also apply to them. 

Moreover, provisions of sexual harassment of women at workplace (protection, prohibition and redressal) act, 2013 and protection of children from sexual offences act, 2012 are to be strictly implemented even on online platforms. Prevention of cyberbullying, monitoring content for material which is unsuitable for minors, ensuring protection from cyber attacks, screening of teachers, content creators, etc. have become the responsibilities of these edu-tech companies. 

 Tax laws are also applicable to them,  where edu-tech services are offered by a resident of a legal entity, the global income of such an entity will be subject to tax in India.  

It must be noted that failing to adhere to all the norms will attract liability to edu-tech companies.

Conclusion 

Covid 19 Pandemic made all of us unstable, it impacted on various sectors like the economic, social, educational industry as well. In this situation, schools and colleges are shut down because of the threat of a pandemic and therefore, students have to rely on online education.  During a pandemic, there are more than 1.2 billion children in 186  countries affected by shutting down of school

In this period, E- tech industry plays a very important role. The concept of online learning is found more comfortable and suitable for the students. This online education through electric gadgets like smartphones, laptops, computers etc enhance technological development and also gives students various methods to learn new things easily. Students can easily learn various things from home, they need not travel anywhere, this online platform helps them to learn at their own pace and style, there is no limitation of time-bound students they can learn easily whenever they have sufficient time.  

During Pandemic, Byju’s online Course has been subscribing to 13 million students. Productive videos on learning, various interesting methods, cooperative teachers, group discussion etc activities provided by Byju’s increased its success. The current mergers and acquisitions have led to a sudden increase in the etech industry and secured the part of a large market. By adapting the M&A strategy, Byju’s makes a lot of profit and gains a market advantage. 

The increasing dominance of e-tech companies creates an impact on the market. In this strategy, the outside company can dominate the market and therefore domestic companies are not able to control their dominance and it hampers the growth of the domestic companies. 

In the powerful competition of outside companies, it is very difficult for domestic companies to survive. Competition is increasing because of the entry of new players into the market. By adapting the strategy of mergers and acquisitions competitors create a dominant position in the market. 

In this pandemic, our education sector shifted more towards the E-tech industry and this led to the shifting of remote learning from concept-based learning. E-tech learning offers various certificate course awards to the students which make them accomplishing in learning new things.  But the question here is whether after the Pandemic is over and physical classes get a Kick Start, then would this progress of edu-tech remain stagnant? Many would believe it so because conventional teaching methods are more popular in India and are deep rooted in our culture.

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