US-based Code.org sues Byju's-owned WhiteHat Jr over payment dues

In May 2021, Code.org announced the signing of a licensing agreement with WhiteHat Jr, which at that time was providing tutoring services to over 175,000 students worldwide

Code.org, a US-based non-profit organisation focusing on computer science education for school children, has reportedly sued Byju’s-owned WhiteHat Jr over payment dues and violation of the licence contract. Code.org has filed the lawsuit in a California district court, San Francisco, alleging that WhiteHat Jr breached a licensing contract by failing to pay fees while continuing to use Code.org’s platform.

In May 2021, Code.org announced the signing of a licensing agreement with WhiteHat Jr.

Code.org stated that its computer science (CS) curriculum and platform will always remain free for educators and organisations. This agreement allowed WhiteHat Jr to integrate Code.org’s content and tools into their online tutoring service.

Code.org has alleged that WhiteHat Jr agreed to pay $4 million over four years to licence Code.org’s coding education platform. However, in the lawsuit, Code.org alleged that WhiteHat Jr did not honour the payment schedule while continuing to leverage its coding courseware.

TechCrunch first reported the development.

In 2020, WhiteHat Jr founder Karan Bajaj sold his 18-month-old start-up to Byju’s founder and Chief Executive Officer Byju Raveendran for $300 million in an all-cash deal, conducted over the video conferencing platform Zoom. Bajaj continued to lead and scale the business in India and the US.

However, WhiteHat Jr has faced various controversies, including misleading advertising, layoffs, high customer acquisition costs, and the exit of its founder. In August 2021, Bajaj decided to move on, and at that time, the team had grown to over 17,000 employees and teachers in multiple countries around the world, from India, Australia, and the UK to the US and Latin America. Later, Ananya Tripathi, an MD at KKR Capstone and formerly a Chief Strategy Officer at Myntra, was appointed as WhiteHat Jr CEO. Tripathi quit in August this year.

Last year, Byju’s laid off about 600 employees at its group companies – WhiteHat Jr and Toppr, stating it was a move to drive cost efficiency. Early this year, there were reports that the edtech giant was shutting down its platform WhiteHat Jr, which teaches coding, math, and music to kids. However, the company stated that it was only optimising the platform for organic and efficient growth.

Byju’s parent, Think & Learn, faced consolidated losses of about Rs 8,245 crore in FY22, according to financials presented to the shareholders recently, according to sources. WhiteHat Jr, which had to be written off, has been a significant contributor to the losses, according to sources.

Byju’s posted losses of Rs 4,588 crore in FY21, 19 times more than the preceding year. WhiteHat Jr reportedly contributed 26.73 per cent to the total loss. Byju’s Raveendran had referred to WhiteHat Jr as an "under-performer" compared to other acquired companies, with future growth likely to involve high cash burn.

WhiteHat Jr also got tangled in a legal battle. In May 2021, WhiteHat Jr withdrew the Rs 20-crore defamation suit it had filed against software engineer Pradeep Poonia. The lawsuit was filed in November 2020 at the Delhi High Court. WhiteHat Jr, through its founder Karan Bajaj, had moved the High Court, alleging that Poonia was making defamatory and baseless comments against the coding platform.

The defamation suit was filed against Poonia's statements against Wolf Gupta, an imaginary character used by WhiteHat Jr in its marketing campaign. The advertisements showed Wolf Gupta landing a job with tech company Google after learning coding from WhiteHat Jr. The firm later removed Wolf Gupta from its advertisements.

The lawsuit by Code.org comes at a time when Byju’s is currently facing a multitude of challenges, including securing fresh capital, delays in financial reporting, and legal disputes with lenders.

The Board of Control for Cricket in India (BCCI) recently claimed that Byju’s has defaulted a payment of Rs 158 crore. It has approached the National Company Law Tribunal (NCLT) at Bengaluru to initiate corporate insolvency proceedings against the beleaguered edtech company.

Byju’s is also embroiled in a dispute with lenders in the US over a missed interest payment on a $1.2 billion TLB.