Chegg 2014 Annual Report Download - page 61

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compromised or otherwise malfunctions, we could be subject to claims, and publishers may be unwilling to include their
content in our service. If consumers are able to circumvent the digital rights management technology that we use, they may
acquire unauthorized copies of the textbooks that they would otherwise rent from us, which could decrease our textbook rental
volume and adversely affect our results of operations.
If Internet search engines’ methodologies are modified or our search result page rankings decline for other reasons, student
engagement with our website could decline.
We depend in part on various Internet search engines, such as Google, Bing and Yahoo!, to direct a significant amount
of traffic to our website. Similarly, we depend on providers of mobile application “store fronts” to allow students to locate and
download Chegg mobile applications that enable our service. Our ability to maintain the number of students directed to our
website is not entirely within our control. Our competitors’ SEO efforts may result in their websites receiving a higher search
result page ranking than ours, or Internet search engines could revise their methodologies in an attempt to improve their search
results, which could adversely affect the placement of our search result page ranking. If search engine companies modify their
search algorithms in ways that are detrimental to our search result page ranking or in ways that make it harder for students to
find our website, or if our competitors’ SEO efforts are more successful than ours, overall growth could slow, student
engagement could decrease, and fewer students may use our platform. These modifications may be prompted by search engine
companies entering the online networking market or aligning with competitors. Our website has experienced fluctuations in
search result rankings in the past, and we anticipate similar fluctuations in the future. Any reduction in the number of students
directed to our website could harm our business and operating results.
Our core value of putting students first may conflict with the short-term interests of our business.
We believe that adhering to our core value of putting students first is essential to our success and in the best interests of
our company and the long-term interests of our stockholders. In the past, we have forgone, and in the future we may forgo,
short-term revenue opportunities that we do not believe are in the best interests of students, even if our decision negatively
impacts our operating results in the short term. For example, we offer free services without advertising to students that require
investment by us, such as our Internships service, in order to promote a more comprehensive solution. As part of our College
Admissions, and Scholarship Services marketing efforts, we identify select partner organizations who offer complementary
content and services that support students in exploring colleges. We enable these partner organizations to use our college match
service through their websites to enable students to request information about colleges of interest. We also developed the Chegg
for Good program to connect students and employees with partners to engage them in causes related to education and the
environment. We work with the nonprofit conservation organization American Forest to plant trees around the world and our
funding has enabled the planting of more than six million trees to date and we formed the Chegg Foundation, a California
nonprofit public benefit corporation, to engage in charitable and education-related activities, which we funded with one percent
of the net proceeds from our IPO in November 2013. Our philosophy of putting the student first may cause us to make
decisions that could negatively impact our relationships with publishers, colleges and brands, whose interests may not always
be aligned with ours or those of our students. Our decisions may not result in the long-term benefits that we expect, in which
case our level of student satisfaction and engagement, business and operating results could be harmed.
If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be
adversely affected.
Laws or regulations may be enacted which restrict or prohibit use of emails or similar marketing activities that we
currently rely on. For example:
• the CAN-SPAM Act of 2003 and similar laws adopted by a number of states regulate unsolicited commercial
emails, create criminal penalties for emails containing fraudulent headers and control other abusive online
marketing practices;
• the FTC has guidelines that impose responsibilities on companies with respect to communications with
consumers and impose fines and liability for failure to comply with rules with respect to advertising or marketing
practices they may deem misleading or deceptive; and
• the TCPA restricts telemarketing and the use of automated telephone equipment. The TCPA limits the use of
automatic dialing systems, artificial or prerecorded voice messages and SMS text messages. It also applies to
unsolicited text messages advertising the commercial availability of goods or services. Additionally, a number of
states have enacted statutes that address telemarketing. For example, some states, such as California, Illinois and
New York, have created do-not-call lists. Other states, such as Oregon and Washington, have enacted “no rebuttal
statutes” that require the telemarketer to end the call when the consumer indicates that he or she is not interested
in the product being sold. Restrictions on telephone marketing, including calls and text messages, are enforced