- Chegg (CHGG -6.2%) shares continue to slide on news that former partner Pearson (PSO -3.1%) is suing the company for selling answer sets to Pearson textbooks through its website.
- “By using and copying Pearson’s original creative content to make answer sets based on that content, Chegg infringes Pearson’s exclusive rights as a copyright holder, including the rights of reproduction, preparation of derivative works, and distribution,” wrote Pearson, arguing that Chegg makes the majority of its revenue from selling answer sets.
- Chegg says that less than 10% of new subscribers use answer sets and only a fraction use Pearson content. Pearson is seeking an injunction ordering Chegg to stop its alleged copyright infringement along with unspecified damages.
- Chegg is growing quickly, reporting revenue growth of 30% Y/Y and boosting guidance in its Q2 earnings call.