Chegg 2015 Annual Report Download - page 64

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high demand, particularly in the San Francisco Bay Area where our executive offices are located, and we may incur significant
costs to attract them. If we are unable to attract or retain the personnel we need to succeed, our business may suffer.
Government regulation of education and student information is evolving, and unfavorable developments could have an
adverse effect on our operating results.
We are subject to regulations and laws specific to the education sector because we offer our products and services to
students and collect data from students. Data privacy and security with respect to the collection of personally identifiable
information from students continues to be a focus of worldwide legislation and regulation. This includes significant regulation
in the European Union and legislation and compliance requirements in various jurisdictions around the world. Within the
United States, several states have enacted legislation that goes beyond any federal requirements relating to the collection and
use of personally identifiable information and other data from students. Examples include statutes adopted by the State of
California and most other States that require online services to report certain breaches of the security of personal data and a
California statute that requires companies to provide choice to California customers about whether their personal data is
disclosed to direct marketers or to report to California customers when their personal data has been disclosed to direct
marketers. In this regard, there are a large number of legislative proposals before the U.S. Congress and various state legislative
bodies regarding privacy issues related to our business. It is not possible to predict whether or when such legislation may be
adopted, and certain proposals, if adopted, could harm our business through a decrease in student registrations and revenues.
These decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements
before students can utilize our services. We post our privacy policies and practices concerning the use and disclosure of student
data on our website. However, any failure by us to comply with our posted privacy policies, FTC requirements or other privacy-
related laws and regulations could result in proceedings by governmental or regulatory bodies or by private litigants that could
potentially harm our business, results of operations and financial condition.
Our business may also be subject to laws specific to students, such as the Family Educational Rights and Privacy Act,
the Delaware Higher Education Privacy Act and a California statute which restricts the access by postsecondary educational
institutions of prospective students’ social media account information. Compliance levels include disclosures, consents, transfer
restrictions, notice and access provisions for which we may in the future need to build further infrastructure to further support.
We cannot guarantee that we have been or will be fully compliant in every jurisdiction, as it is not entirely clear how existing
laws and regulations governing educational institutions affect our business. Moreover, as the education industry continues to
evolve, increasing regulation by federal, state and foreign agencies becomes more likely. Recently, California adopted the
Student Online Personal Information Protection Act which prohibits operators of online services used for K-12 school purposes
from using or sharing student personal information. This act does not apply to general audience Internet websites but it is not
clear how this Act will be interpreted and the breadth of services that will be restricted by it. Other states may adopt similar
statutes. The adoption of any laws or regulations that adversely affect the popularity or growth in the use of the Internet
particularly for educational services, including laws limiting the content that we can offer, and the audiences that we can offer
that content to, may decrease demand for our service offerings and increase our cost of doing business. Future regulations, or
changes in laws and regulations or their existing interpretations or applications, could also hinder our operational flexibility,
raise compliance costs and result in additional historical or future liabilities for us, resulting in adverse impacts on our business
and our operating results.
While we expect and plan for new laws, regulations and standards to be adopted over time that will be directly
applicable to the Internet and to our student-focused activities, any existing or new legislation applicable to our business could
expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations and
potential penalties or fees for non-compliance, and could negatively impact the growth in the use of the Internet for educational
purposes and for our services in particular. We may also run the risk of retroactive application of new laws to our business
practices that could result in liability or losses. Due to the global nature of the Internet, it is possible that the governments of
other states and foreign countries might attempt to change previous regulatory schemes or choose to regulate transmissions or
prosecute us for violations of their laws. We might unintentionally violate such laws, such laws may be modified and new laws
may be enacted in the future. Any such developments could harm our business, operating results and financial condition. We
may be subject to legal liability for our offerings.
We collect, process, store and use personal information and data, which subjects us to governmental regulation and other
legal obligations related to privacy and our actual or perceived failure to comply with such obligations could harm our
business.
In the ordinary course of business, and in particular in connection with merchandising our service to students, we
collect, process, store and use personal information and data supplied by students. We may enable students to share their
personal information with each other and with third parties and to communicate and share information into and across our