Moodle’s Dispute with LTG and its Growing Suite of Former Moodle Partners

Two weeks ago the long-simmering dispute between Moodle HQ and Learning Technologies Group (LTG), owner of three former Moodle Partners, reached its end point. The short description is that Moodle HQ has terminated the Moodle Partner contracts of eCreators and eThink, two companies acquired by LTG over the past year, and has also decided that eThink can no longer sell Moodle Workplace. Beyond the open source implications, this disagreement is important to understand in terms of its effect on the LMS market.

Moodle Basics

For this story, it’s important to understand the basics of Moodle, the world’s most widely used LMS. Moodle is an open source LMS, distributed with a GNU General Public License (GPL), that was created by Martin Dougiamas two decades ago. Moodle is used in both academic and workplace training markets. Michael Feldstein described the basics of the financial model in 2015:

Although Moodle is open source, all substantial development of Moodle core (as opposed to optional plugins) flows through Martin’s privately owned company, Moodle Pty (more commonly referred to in the Moodle community as “Moodle HQ” or just “HQ”). [snip]

Moodle Partners sell support, services, and proprietary add-ons around the core open source platform. They then tithe about 10% of their Moodle-related gross revenues to Moodle Pty, which uses the money to hire developers, under Martin’s direction, to work on the next versions of Moodle.

There have been additional funding models augmenting this financial model, but those are the basics. To read more details, read this history at Moodle or consider this 2015 interview with Dougiamas or Michael’s further reflections on the topic. The GPL license enables anyone to download Moodle for free, modify it, and even redistribute it. The certified Moodle Partner program is based on the Moodle trademark – whether companies can use the name and logo and certification marks. That trademark usage and restrictions are “to protect the very business model that allows us to continue developing our Moodle^™ software platform for you”.

Launched two years ago, Moodle Workplace is aimed at corporate training and has a different license model as described by Dougiamas in a 2019 interview.

We are restricting distribution [of Moodle Workplace] to Moodle Partners for now so that we can give more value back to our Moodle Partners who invested time and money into it.

What is the dispute about?

The current topic is about the Moodle Partner status for the three companies acquired by LTG over the past year: Open LMS, eCreators, and eThink. The key events are summarized below.

• In 2018, Moodle and Blackboard ended the Moodle Partner contract after a failed set of negotiations, thus forcing Moodlerooms to be rebranded as Open LMS.
• One year ago, Blackboard sold Open LMS to LTG , a publicly-traded company out of the UK, for roughly $32 million, partially to allow the new company to execute on the consolidation strategy that Phill Miller and the Open LMS leadership team had long advocated. Blackboard had acquired RemoteLearner UK and Nivel Siete and combined with Moodlerooms, but the company was not willing to pursue too many additional acquisitions.
• In September, LTG acquired eCreators for $4.5 million (plus performance incentives), which was billed as “Australia’s largest provider of Moodle” and had recently been named Moodle’s Global Partner of the Year for 2019. By October, Moodle ended the Moodle Partner status for eCreators.
• In December, LTG acquired eThink for $20 million (plus performance incentives). eThink had recently been named Moodle’s North American Partner of the Year for 2019 and had 47 Moodle Workplace clients at the time. Within weeks, Moodle ended eThink’s Moodle Partner status with this explanation:

The Learning Technologies Group (LTG) announcement of the acquisition of eThink Education represents LTG’s intention to move customers into the Open LMS platform, which is not truly Open at all. Their extensions to Moodle are not downloadable, and not available from other service providers. Once on their platform, it is harder for institutions or organisations to move to a different provider, or to their own servers. This goes directly against Moodle’s values of openness. Consequently, as of 18 December 2020, eThink Education is no longer a Moodle Certified Partner or otherwise associated with or recommended by us at Moodle.

• In February, Moodle HQ released a statement explaining that LTG and eThink would no longer be able to distribute and sell services around Moodle Workplace.

“We ended these two Partnerships with a heavy heart, because we disagreed with LTG’s overall strategy. Acquiring service companies (and their customers) and moving them into a closed system is against the values and direction that we think are best for the education technology industry,” says Martin Dougiamas, Moodle CEO and Founder.

In order to provide continuity to eThink clients and alleviate concerns, Moodle issued a short-term license to cover existing Moodle Workplace sites on eThink servers. This short-term agreement will cease on 28 February 2021 which means that eThink customers on Moodle Workplace will be given until 28 August 2021 to migrate to a Moodle Certified Premium Partner or an alternative software platform.

Note: I have not read the contract documents and have no opinion of the legalities. It should be noted that LTG is not disputing Moodle’s decisions, so to a degree that is a moot point. The real focus should be on strategy and what this means for the market and for open source in EdTech.

What about LTG’s plan to open source most of its additional code?

LTG CEO Jonathan Satchell released his own statement that same day.

As we create the new evolution of Open LMS since it’s departure from Blackboard and integration with eCreators and eThink, client retention rates have risen. However, with the acquisition of each, we received negative messages from Moodle™ HQ who publicly criticized LTG’s strategy of building a team of Moodle™ experts that can support open-source users on a truly global scale. In the case of Open LMS, they were critical of our mission and questioned if we were truly open source, and in the case of both eCreators and eThink, Moodle™ HQ opted to cancel partnership agreements with these two former Moodle™ Partners of the Year, one of them being the largest Moodle™ Partner in the world by a large margin.

We would have gladly remained partners had HQ allowed for it because we believe in the power of a central nexus of development in open source projects. Despite entering into a short-term agreement whilst we both committed to negotiate a long-term solution in good faith, Moodle™ HQ decided not to proceed, without giving a specific reason.

One day later Open LMS’s Managing Director Phill Miller announced LTG’s decision to open source much of its code.

Today marks the next stage of our evolution at Open LMS, and we are excited to announce we are taking our commitment to open-source software even further.  Specifically, we are committing today that, by the end of the year, we will distribute via GPLv3 our core Moodle™ modules and enhancements with three very specific and limited exceptions: 

* Client-Specific Customizations: Code that we have built specifically for a particular client, which they have requested we not distribute.  Often clients want customizations to Moodle™ to support their proprietary business processes.  We can’t and won’t betray that trust.  

* SaaS Cloud Architecture and Management Components: While these are not technically Moodle™ code, we have built components that allow us to host more than 2,000 Moodle™ sites globally and at scale.  This is a core part of our business, and we are the best in the world at it. It’s the foundation of our business, which will fund all of this other work that we are giving to the community. 

* Data Integration Code: We have built integrations with a number of back office systems, like Human Resource Information Systems (HRIS) or Student Information Systems (SIS), which are tightly tied to our architecture and are a core part of our service offerings to clients. 

I asked Dougiamas by email if this decision by LTG changes anything. His response:

Our actions have obviously been a factor in causing this, which I count as a good thing for everyone.   Please note, though, that their stated direction is to sell the integration of the full suite of LTG products – and none of those other things are open or planned to be.  Clients will still have the same lock-in to LTG as before (as desired by LTG).    https://www.youtube.com/watch?v=mBFShI8OYe4

Not even all the “Open LMS” SaaS product will be actually open either.   I don’t know exact figures, so I’m estimating, but the OpenLMS service is probably 90% Moodle, with perhaps 10% other stuff, and they’re going to make only perhaps half of that other stuff available under GPL, so 5%.   It’s not a big deal and honestly, the least they could do.

In an interview with Satchell and Miller, they described how much they respected Dougiamas and Moodle, but that there was increasing tension between the two groups. LTG has no plans to argue against the Moodle decisions, and Satchell acknowledged that their lack of communication with Moodle HQ before the various acquisitions – partially due to constraints of being a publicly-traded company – did not help the situation.

Does this impact the LMS market?

In a word, yes. While I expect both LTG and Moodle HQ to continue their respective business strategies, the ongoing tension between Moodle and many of their certified partners certainly limits the company income and ability to hire developers.

While Moodle is the most widely adopted academic LMS in the world, there are really two fairly distinct sets of schools in the community. One set relies on the free aspect of Moodle and tends to use self-hosting or services from fairly small, local-only hosting companies often leading to out-of-date versions with limited support. Over time, that set can be found more often in the developing world, outside of North America and Northern Europe or other regions that can afford alternative providers.

Moodle not only is adopted in these regions, to a large extent it helped create an eLearning option for these regions. But today, digital education often needs more, especially with the pandemic and elevation of the importance of virtual learning environments. This situation often leads to a demand for scalable, reliable hosting of up-to-date software versions and customizations or configurations to improve the user experience.

The other set of schools has found a way to invest in mission-critical solutions. This is where Moodle Partners often fit in, but as we’ve seen, many of the larger partners are leaving (or getting pushed out) of the official community. Later in Satchell’s statement, he described just this challenge, with a description that there is a mixed solution of open and proprietary products that LTG offers.

It is our view that Moodle™ HQ is prioritizing its business model over its customers, its partners, and its mission. And for that reason, and because they literally offer us no choice, we are going to move forward without their partnership, remaining true to our goal of creating a global leader in open source learning and talent solutions alongside LTG’s comprehensive array of proprietary solutions.  We are immensely proud of our ability to serve almost any customer’s needs, regardless of complexity or software type.

For any schools of the former set that need to upgrade their eLearning infrastructure, they face four main choices:

• Find a Moodle Partner, which tend to be smaller companies with limited resources;
• Find a larger company that can host and support Moodle, which often are former Moodle Partners and now owned by LTG;
• Invest significant resources in the school’s infrastructure and support, which works most often with larger schools (the best known of which is probably the Open University UK); or
• Leave Moodle and move to another LMS.

Moodle has released Moodle Cloud, which offers free cloud-based Moodle hosting, but that is for smaller implementations.

Commercial LMS vendors – whether owned by LTG or the proprietary vendors (e.g., Canvas, Blackboard, D2L, Aula) – would all like to expand their global footprint but mostly lack products with the price points needed to make a big dent in the self-hosted Moodle market.

In general, much of the potential growth of the academic LMS market will be based on solving this problem. And in that regard, this long-simmering dispute matters.