I think it's good that Sandel's lectures are available free online (see also the resources here). It's not good, though, if professors are turned into teaching assistants by administrators or politicians who demand that they teach Sandel's course instead of their own, or show his lectures instead of teaching their own classes. (I don't mean that it's bad to have students watch one on a day when you're not available to teach, or have students watch several specially selected segments if they seem helpful.)
What's less clear is the role of edX in all this. It's this that the people at SJSU seem most concerned about, but why it is happening is a mystery to me. Sandel just says that:
This year, we [who?] made a version of the course available on the edX platform. I know very little about the arrangements edX made with San Jose State University...The edX version of the course is free. So what's the problem? Obviously the members of the Department of Philosophy at SJSU fear, probably rightly, that their jobs might be taken away from them or changed into something much less than they are now. And the fear is not selfish: they are concerned about the future of higher education. If Sandel is directly profiting from a deal with edX then I think they are right to aim their objections at him. But it's not clear to me whether he is or not. And if he is simply making recordings of his lectures, along with reading lists, discussion questions, etc., available to the world for free then I don't see that he is doing anything wrong at all. In fact I think he deserves much praise and gratitude.
On the other hand it is all a bit suspicious. Why have an edX version of the course at all if it's much the same as the already available free one? Why does Sandel say "we made a version of the course available on the edX platform" rather than, say, "I pointed out to all and sundry that the material was online and free"? It all seems rather fishy. But until I know more I don't feel able to judge the rights and wrongs of Sandel's actions.