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Google Inc.
Google phone number: (650) 623-4000
Address for Google:
1600
Amphitheatre Parkway
Mountain View, CA 94043
www.google.com
Sales
$962
million
Business Description
Google is a global technology leader focused on improving the ways people
connect with information. Our innovations in web search and advertising have
made our web site a top Internet destination and our brand one of the most
recognized in the world. We maintain the world’s largest online index of web
sites and other content, and we make this information freely available to
anyone with an Internet connection. Our automated search technology helps
people obtain nearly instant access to relevant information from our vast
online index.
We generate revenue by delivering relevant, cost-effective online
advertising. Businesses use our AdWords program to promote their products
and services with targeted advertising. In addition, the thousands of
third-party web sites that comprise our Google Network use our Google
AdSense program to deliver relevant ads that generate revenue and enhance
the user experience.
Our Mission
Our mission is to organize the world’s information and make it universally
accessible and useful. We believe that the most effective, and ultimately
the most profitable, way to accomplish our mission is to put the needs of
our users first. We have found that offering a high-quality user experience
leads to increased traffic and strong word-of-mouth promotion. Our
dedication to putting users first is reflected in three key commitments we
have made to our users:
• We will do our best to provide the Top and useful search results
possible, independent of financial incentives. Our search results will be
objective and we will not accept payment for inclusion or ranking in them.
• We will do our best to provide the Top and useful advertising.
If any element on a result page is influenced by payment to us, we will make
it clear to our users. Advertisements should not be an annoying
interruption.
• We will never stop working to improve our user experience, our search
technology and other important areas of information organization.
We believe that our user focus is the foundation of our success to date. We
also believe that this focus is critical for the creation of long-term
value. We do not intend to compromise our user focus for short-term economic
gain.
How We Provide Value to Users, Advertisers and Web Sites
Our Users
We serve our users by developing products that enable people to more quickly
and easily find, create and organize information. We place a premium on
products that matter to many people and have the potential to improve their
lives, especially in areas in which our expertise enables us to excel.
Search is one such area. People use search frequently and the results are
often of great importance to them. For example, people search for
information on medical conditions, purchase decisions, technical questions,
long-lost friends and other topics about which they care a great deal.
Delivering quality search results requires significant computing power,
advanced software and complex processes—areas in which we have expertise and
a high level of focus.
Communication is another such area. People increasingly rely on the Internet
to communicate with each other. Gmail, our new email service (still in test
mode), offers a gigabyte of free storage for each user, along with email
search capabilities and relevant advertising. Delivering an improved user
experience in Gmail has similar computing and software requirements as our
search service.
Relevant and Useful Information. Our technologies sort through a vast and
growing amount of information to deliver relevant and useful search results
in response to user queries. This is an area of continual development for
us. When we started the company five years ago, our web index contained
approximately 30 million documents. We now index more than 4 billion web
pages, or more than 100 times as much information. We are also constantly
developing new functionality. Recent enhancements include personalization,
which lets users specify interests to help our technology generate
customized search results; and local search, which lets users look for web
pages and businesses based on a certain geographic location. We also provide
convenient links to specialized information, such as definitions, maps and
travel information.
Objectivity. We believe it is very important that the results users get from
Google are produced with only their interests in mind. We do not accept
money for search result ranking or inclusion. We do accept fees for
advertising, but it does not influence how we generate our search results.
The advertising is clearly marked and separated. This is similar to a
newspaper, where the articles are independent of the advertising. Some of
our competitors charge web sites for inclusion in their indices or for more
frequent updating of pages. Inclusion and frequent updating in our index are
open to all sites free of charge. We apply these principles to each of our
products and services. We believe it is important for users to have access
to the best available information and research, not just the information
that someone pays for them to see.
Global Access. We strive to provide Google to everyone in the world. Users
from around the world visit our destination sites at Google.com and our 95
other international domains, such as Google.de, Google.fr, Google.co.uk,
Google.co.jp and Google.ca. The Google interface is available in more than
90 languages. Through Google News, we offer an automated collection of
frequently updated news stories tailored to 10 international audiences. We
also offer automatic translation of content between various languages. We
provide localized versions of Google in many developing countries. Although
we do not currently recover our costs in these countries, we believe
providing our products and services is an important social good and a
valuable long-term business investment.
Ease of Use. We have always believed that the most useful and powerful
search technology hides its complexity from users and provides them with a
simple, intuitive way to get the information they want. We have devoted
significant efforts to create a streamlined and easy-to-use interface based
on a clean search box set prominently on a page free of commercial clutter.
We have also created many features that enhance the user experience. Our
products present these features when we believe they will be most useful,
rather than promoting them unnecessarily. For example, Google WebSearch
offers maps when a search appears to be for a geographic location.
Pertinent, Useful Commercial Information. The search for information online
often involves an interest in commercial information—researching a purchase,
comparing products and services or actively shopping. We help people find
commercial information through our search services and by presenting ads
that are relevant to the information people seek. To ensure we display only
the Top commercial information, our technology automatically
rewards ads that users prefer and removes ads that users do not find
helpful. For example, among our search services, we offer Froogle, a search
engine for finding products for sale online.
Our Advertisers
As more people spend additional time and money online, advertisers are
increasingly turning to the Internet to market their products and services
to consumers. For these advertisers, we offer Google AdWords, an
auction-based advertising program that enables them to deliver relevant ads
targeted to search results or web content. Our AdWords program provides
advertisers with a cost-effective way to deliver ads to customers across
Google sites and through the Google Network. The advertisers using AdWords
range from small businesses targeting local customers to many of the world’s
largest global enterprises.
The AdWords program offers advertisers the following benefits:
Effective Return on Investment. Many advertising dollars are wasted because
they are spent delivering messages that are ignored or that reach too broad
an audience. With Google AdWords, businesses can achieve greater
cost-effectiveness with their marketing budgets for two reasons—AdWords
shows ads only to people seeking information related to what the advertisers
are selling, and advertisers pay us only when a user clicks on one of their
ads. Because we offer a simple ad format, advertisers can avoid incurring
significant design, copywriting or other production costs associated with
creating ads. As a result, even small advertisers find AdWords
cost-effective for connecting with potential customers. In addition,
advertisers can easily create many different ads, increasing the likelihood
that an ad is exactly suited to a user’s search. Users can find
advertisements for exactly what they are seeking, and advertisers can find
users who want exactly what they are offering. When the interests of users
and advertisers align, both are well served.
Access to the Google Network. We serve AdWords ads to the thousands of
third-party web sites that make up the Google Network. As a result,
advertisers that use our AdWords program can target users on our sites and
on search and content sites across the web. This gives advertisers increased
exposure to people who are likely to be interested in their offerings. The
Google Network significantly enhances our ability to attract interested
users.
Precise Campaign Control. Google AdWords gives advertisers hands-on control
over most elements of their ad campaigns. Advertisers can specify the
relevant search or content topics for each of their ads. Advertisers can
also manage expenditures by setting a maximum daily budget and determining
how much they are willing to pay whenever a user clicks on an ad. Our online
tracking tools and reports give advertisers timely updates on how well their
campaigns are performing and enable them to make changes or refinements
quickly. Advertisers can also target their campaigns by neighborhood, city,
country, region or language.
Global Support. We provide customer service to our advertiser base through
our global support organization as well as through field sales offices in 11
countries. AdWords is available on a self-service basis with email support.
Advertisers with more extensive needs and budgets can request strategic
support services, which include an account team of experienced professionals
to help them set up, manage and optimize their campaigns.
Web Sites
Nearly every web site in the world is indexed and made searchable by Google.
Our users do searches and are directed to relevant web sites. Google
provides a significant amount of traffic to web sites with which we have no
business relationship. Many web sites are able to generate revenue from that
traffic, but others have difficulty doing so. We are enthusiastic about
helping sites make money and thereby facilitating the creation of better
content to search. If there is better content on the web, people are likely
to do more searches, and we expect that will be good for our business and
for users. To address this opportunity, we created Google AdSense. Our
Google AdSense program enables the web sites—large and small—that make up
the Google Network to deliver AdWords ads that are relevant to the search
results or content on their pages. We share most of the revenue generated
from ads shown by a member of the Google Network with that member—creating
an additional revenue stream for them. Web sites can also license our Google
WebSearch product to offer the Google search experience to their users. The
key benefits we offer to web sites in the Google Network include:
Access to Advertisers. Many small web site companies do not have the time or
resources to develop effective programs for generating revenue from online
advertising. Even larger sites, with dedicated sales teams, may find it
difficult to generate revenue from pages with specialized content. We
believe that Google AdSense enables Google Network members to generate
revenue from their sites more effectively and efficiently. Google AdSense
promotes effective revenue generation by providing Google Network members
immediate access to Google’s base of advertisers and their broad collection
of ads. As soon as a web site joins the Google Network, our technology
automatically begins delivering ads for posting on the member’s web site.
The automated nature of our advertising programs promotes efficient revenue
generation. Our online registration systems enable web sites to easily join
the Google Network and our ad serving technology allows automated delivery
of ads for posting on the member’s site. The Google Network member
determines the placement of the ads on its web site and controls and directs
the nature of ad content.
Improved User Satisfaction. In their quest for revenue, many Internet
companies have cluttered their web sites with intrusive or untargeted
advertising that may distract or confuse users and may undermine users’
ability to find the information they want. Some web sites have adopted
practices we consider to be abusive, including pop-up ads or ads that take
over web pages. We believe these tactics can cause dissatisfaction with
Internet advertising and reduce use of the Internet overall. Our AdSense
program extends our commitment to improving the overall web experience for
users by enabling web sites to display AdWords ads in a fashion that we
believe people find useful rather than disruptive.
Products and Services
Our product development philosophy is centered on rapid and continuous
innovation, with frequent releases of test products that we seek to improve
with every iteration. We often make products available early in their
development stages by posting them on Google Labs, at test locations online
or directly on Google.com. If our users find a product useful, we promote it
to “beta” status for additional testing. Our beta testing periods often last
a year or more. Once we are satisfied that a product is of high quality and
utility, we remove the beta label and make it a core Google product. Our
current principal products and services are described below.
Google.com
We are focused on building products and services that benefit our users and
enable them to find relevant information quickly and easily. We offer, free
of charge, all of the following services at Google.com and many of them at
our international sites.
Google WebSearch. In addition to providing easy access to more than 4
billion web pages, we have integrated special features into Google WebSearch
to help people find exactly what they are looking for on the web. The
Google.com search experience also includes:
• Advanced Search Functionality—enables users to construct more complex
queries, for example by using Boolean logic or restricting results to
languages, countries or web sites.
• Spell Checker—suggests alternate search terms when a search appears to
contain misspellings or typing errors.
• Web Page Translation—automatically translates web pages published in
French, German, Italian, Portuguese and Spanish into English, or vice versa.
• Stock Quotes—provides links to stock and mutual fund information.
• Street Maps—provides links to street maps and directions.
• Calculator—solves math problems involving basic arithmetic, complicated
math or physical constants and converts between units of measure.
• Definitions—provides definitions for words or phrases based on content we
have indexed.
• PhoneBook—provides U.S. street addresses and phone numbers for U.S.
businesses and residences.
• Search by Number—enables people to conduct quick searches by entering
FedEx, UPS and USPS package tracking numbers, vehicle ID numbers, product
codes, telephone area codes, patent numbers, FAA airplane registration
numbers and FCC equipment ID numbers.
• Travel Information—enables people to check the status of U.S. airline
flights and see delays and weather conditions at U.S. airports.
• Cached Links—provides snapshots of web pages taken when the pages were
indexed, enabling web users to view web pages that are no longer available.
Google Image Search. Google Image Search is our searchable index of 880
million images found across the web. To extend the usefulness of Google
Image Search, we offer advanced features, such as searching by image size,
format and coloration and restricting searches to specific web sites or
domains.
Google News. Google News gathers information from nearly 10,000 news sources
worldwide and presents news stories in a searchable format within minutes of
their publication on the web. The leading stories are presented as headlines
on the Google News home page. These headlines are selected for display
entirely by a computer algorithm, without regard to political viewpoint or
ideology. Google News uses an automated process to pull together related
headlines, which enables people to see many different viewpoints on the same
story. Because topics are updated continuously throughout the day, people
generally see new stories each time they check Google News. We currently
provide our Google News service tailored to 10 international audiences.
Google Toolbar. The Google Toolbar makes our search technology constantly
and easily available as people browse the web. The Google Toolbar is
available as a free, fast download and can improve people’s web experience
through several innovative features, including:
• Pop-up Blocker—blocks pop-up advertising while people use the web.
• PageRank Indicator—displays Google’s ranking of any page on the web.
• AutoFill—completes web forms with information saved securely on a user’s
own computer.
• Highlight—highlights search terms where they appear on a web page, with
each term marked in a different color.
• Word Find—finds search terms wherever they appear on a web page.
Froogle. Froogle enables people to easily find products for sale online. By
focusing entirely on product search, Froogle applies the power of our search
technology to a very specific task—locating stores that sell the items users
seek and pointing them directly to the web sites where they can shop.
Froogle users can sort results by price, specify a desired price range and
view product photos. Froogle accepts data feeds directly from merchants to
ensure that product information is up-to-date and accurate. Most online
merchants are also automatically included in Froogle’s index of shopping
sites. Because we do not charge merchants for inclusion in Froogle, our
users can browse product categories or conduct product searches with
confidence that the results we provide are relevant and unbiased. As with
many of our products, Froogle displays relevant advertising separately from
search results.
Google Groups. Google Groups enables easy participation in Internet
discussion groups by providing users with tools to search, read and browse
these groups and to post messages of their own. Google Groups contains the
entire archive of Usenet Internet discussion groups dating back to 1981—more
than 845 million posted messages. The discussions in these groups cover a
broad range of discourse and provide a comprehensive look at evolving
viewpoints, debate and advice on many subjects.
Google Wireless. Google Wireless offers people the ability to search and
view both the “mobile web,” consisting of 5 million pages created
specifically for wireless devices, and the entire Google index of more than
4 billion web pages. Google Wireless works on devices that support WAP, WAP
2.0, i-mode or j-sky mobile Internet protocols. Google Wireless is available
through many wireless and mobile phone services worldwide.
Google Web Directory. Google Web Directory enables people to browse and
search through web sites that have been organized into categories. Our
directory combines Google’s search technology with the categorization
developed by the Open Directory Project and is available in 73 languages.
Google Local. Google Local enables users to find relevant local information
based on zip codes, cities or specific addresses. Google Local results
include neighborhood business listings, addresses, phone numbers, maps and
directions.
Google Answers. Google Answers provides people with help finding information
and answering questions. Users set a fee they are willing to pay and submit
questions to the Google Answers service. One of more than 500 carefully
screened freelance researchers responds, usually within 24 hours. Google
Answers researchers are experienced web searchers with strong communication
skills who often have expertise in various fields. An extensive collection
of past responses is available to our users free of charge.
Google Catalogs. With Google Catalogs, we provide access to the full content
of more than 6,600 mail-order catalogs, many of which were previously
unavailable online.
Google Print. Google Print brings information online that had previously not
been available to web searchers. Under this program, we have been
experimenting with a number of publishers to host their content and rank
their publications in our search results using the same technology we use to
evaluate web sites. On Google Print pages, we provide links to book sellers
that may offer the full versions of these publications for sale, and we show
content-targeted ads that are served through the Google AdSense program.
Google Labs. Google Labs is our playground for our engineers and for
adventurous Google users. On Google Labs, we post product prototypes and
solicit feedback on how the technology could be used or improved. Current
Google Labs examples include:
• Google Personalized Search—provides customized search results based on an
individual user’s interests.
• Google Deskbar—enables people to search with Google from the taskbar of
their computer without launching a web browser.
• Voice Search—enables people to dial a phone number, tell our system what
they are looking for and hear Google search results read to them by a
computer.
• Froogle Wireless—gives people the ability to search for product
information from their mobile phones and other wireless devices.
Blogger. Blogger is a leading web-based publishing tool that gives people
the ability to publish to the web instantly using weblogs, or “blogs.” Blogs
are web pages usually made up of short, informal, frequently updated posts
that are arranged chronologically. Blogs can facilitate communications among
small groups or to a worldwide audience in a way that is simpler and easier
to follow than traditional email or discussion forums.
Picasa. We recently acquired Picasa, Inc., a digital photo management
company. Picasa enables users to manage and share digital photographs and
helps support our mission of making information universally accessible and
useful.
Limited Availability Services. Some of our product offerings are in their
initial test phases and are currently available to limited audiences.
Examples include Gmail, our free email service, and Orkut, an
invitation-based online meeting place where people can socialize, make new
acquaintances and find others who share their interests.
Google AdWords
Google AdWords is our global advertising program, which enables advertisers
to present ads to people at the precise moment those people are looking for
information related to what the advertiser has to offer. Advertisers use our
automated tools, often with little or no assistance from us, to create
text-based ads, bid on the keywords that will trigger the display of their
ads and set daily spending budgets. AdWords features an automated, low-cost
online signup process that enables advertisers to implement ad campaigns
that can become live in 15 minutes or less. The total sign-up cost for
becoming an AdWords advertiser is only $5.00.
Ads are ranked for display in AdWords based on a combination of the maximum
cost per click (CPC) set by the advertiser and click-through rates and other
factors used to determine the relevance of the ads. This favors the ads that
are Top to users, improving the experience for both the person
looking for information and the advertiser looking for interested customers.
AdWords has many features that make it easy to set up and manage ad
campaigns for maximum efficiency and effectiveness:
• Campaign management. Advertisers can target multiple ads to a given
keyword and easily track individual ad performance to see which ads are the
most effective. The campaign management tools built into AdWords enable
advertisers to quickly shift their budgets to ads that deliver the best
results.
• Keyword targeting. Businesses can deliver targeted ads based on specific
search terms (keywords) entered by users or found in the content on a web
page. We also offer tools that suggest synonyms and useful phrases to use as
keywords or ad text. These suggestions can improve ad click-through rates
and the likelihood of a user becoming a customer of the advertiser.
• Traffic estimator. This tool estimates the number of searches and
potential costs related to advertising on a particular keyword or set of
keywords. These estimates can help advertisers optimize their campaigns.
• Budgeted delivery. Advertisers can set daily budgets for their campaigns
and control the timing for delivery of their ads.
• Performance reports. We provide continuous, timely reporting of the
effectiveness of each ad campaign.
• Multiple payment options. We accept credit and debit cards and, for
selected advertisers, we offer several options for credit terms and monthly
invoicing. We accept payments in 48 currencies.
• AdWords discounter. This feature gives advertisers the freedom to increase
their maximum CPCs because it automatically adjusts pricing so that they
never pay more than one cent over the next highest bid. The AdWords
discounter is described in detail below under the heading
“Technology—Advertising Technology—Google AdWords Action System.”
For larger advertisers, we offer additional services that help to maximize
returns on their Internet marketing investments and improve their ability to
run large, dynamic campaigns. These include:
• Creative maximization. Our AdWords specialists help advertisers select
relevant keywords and create more effective ads. This can improve
advertisers’ ability to target customers and to increase the click-through
rates and conversion rates for their ads.
• Vertical market experts. Specialists with experience in particular
industries offer guidance on how to most effectively target potential
customers.
• Bulk posting. We assist businesses in launching and managing large ad
campaigns with hundreds or even thousands of targeted keywords.
• Dedicated client service representatives. These staff members continuously
look for ways to better structure their clients’ campaigns and to address
the challenges large advertisers face.
Google AdSense
Our Google AdSense program enables the web sites in our Google Network to
serve targeted ads from our AdWords advertisers. Targeting can be based on
search results or on web content. We share most of the revenue generated
from ads shown by a member of the Google Network with that member. Most of
the web sites that make up the Google Network sign up with us online, under
agreements with no required term. We also engage in direct selling efforts
to convince web sites with significant traffic to join the Google Network,
under agreements that vary in duration. For our network members, we offer:
Google AdSense for search. For Internet companies with potentially large
search audiences, we offer Google AdSense for search. Web sites use AdSense
for search to generate additional revenue by serving relevant AdWords ads
targeted to search results. Because we also offer to license our web search
technology along with Google AdSense for search, companies without their own
search service can offer Google WebSearch to improve the usefulness of their
web sites for their users while increasing their revenue.
Google AdSense for content. Google AdSense for content enables web sites to
generate revenue from advertising by serving relevant AdWords ads targeted
to web content. Our automated technology analyzes the meaning of web content
and serves relevant advertising, usually in a fraction of a second. We
believe that some of the best content on the web comes from web sites aiming
to reach small but highly targeted audiences. AdSense for content can help
these web sites offset some of their publishing costs. We believe this may
help them continue to publish by tapping into the value of their content.
There is no charge for web sites to participate in our AdSense for content
program. Using our automated sign-up process, web sites can quickly display
AdWords ads on their sites. We share the majority of the revenues generated
from click-throughs on these ads with the Google Network members that
display the ads. For web sites with more than 20 million page views per
month, we provide customization services.
Google Search Appliance
We provide our search technology for use within enterprises through the
Google Search Appliance (GSA). The GSA is a complete software and hardware
solution that companies can easily implement to extend Google’s search
performance to their internal or external information. The GSA can often be
installed and launched in as little as one day. It leverages our search
technology to identify the Top pages on intranet and public web
sites, making it easy for people to find the information they need. The GSA
offers several useful features, including automated spell-checking, cached
pages, dynamic snippets, indented results and automatic conversion of
Microsoft Office and PDF files to HTML. The GSA is available in three
models: the GB-1001, for departments and mid-sized companies; the GB-5005,
for dedicated, high-priority search services such as customer-facing web
sites and company-wide intranet applications; and the GB-8008, for
centralized deployments supporting global business units. List prices for
our GSA models start at $32,000 for the GB-1001, $230,000 for the GB-5005
and $525,000 for the GB-8008.
Technology
We began as a technology company and have evolved into a software,
technology, Internet, advertising and media company all rolled into one. We
take technology innovation very seriously. We compete aggressively for
talent, and our people drive our innovation, technology development and
operations. We strive to hire the best computer scientists and engineers to
help us solve very significant challenges across systems design, artificial
intelligence, machine learning, data mining, networking, software
engineering, testing, distributed systems, cluster design and other areas.
We work hard to provide an environment where these talented people can have
fulfilling jobs and produce technological innovations that have a positive
effect on the world through daily use by millions of people. We employ
technology whenever possible to increase the efficiency of our business and
to improve the experience we offer our users.
We provide our web search and targeted advertising technology using a large
network of commodity computers running custom software developed in-house.
Some elements of our technology include:
Web Search Technology
Our web search technology uses a combination of techniques to determine the
importance of a web page independent of a particular search query and to
determine the relevance of that page to a particular search query. We do not
explain how we do ranking in great detail because some people try to
manipulate our search results for their own gain, rather than in an attempt
to provide high-quality information to users.
PageRank and Ranking Technology. One element of our technology for ranking
web pages is called PageRank. While we developed much of our ranking
technology after the company was formed, PageRank was developed at Stanford
University with the involvement of our founders, and was therefore published
as research. Most of our current ranking technology is protected as
trade-secret. PageRank is a query-independent technique for determining the
importance of web pages by looking at the link structure of the web.
PageRank treats a link from web page A to web page B as a “vote” by page A
in favor of page B. The PageRank of a page is the sum of the PageRank of the
pages that link to it. The PageRank of a web page also depends on the
importance (or PageRank) of the other web pages casting the votes. Votes
cast by important web pages with high PageRank weigh more heavily and are
more influential in deciding the PageRank of pages on the web.
Text-Matching Techniques. Our technology employs text-matching techniques
that compare search queries with the content of web pages to help determine
relevance. Our text-based scoring techniques do far more than count the
number of times a search term appears on a web page. For example, our
technology determines the proximity of individual search terms to each other
on a given web page, and prioritizes results that have the search terms near
each other. Many other aspects of a page’s content are factored into the
equation, as is the content of pages that link to the page in question. By
combining query independent measures such as PageRank with our text-matching
techniques, we are able to deliver search results that are relevant to what
people are trying to find.
Advertising Technology
Our advertising program serves millions of relevant, targeted ads each day
based on search terms people enter or content they view on the web. The key
elements of our advertising technology include:
Google AdWords Auction System. We use the Google AdWords auction system to
enable advertisers to automatically deliver relevant, targeted advertising.
Every search query we process involves the automated execution of an
auction, resulting in our advertising system often processing hundreds of
millions of auctions per day. To determine whether an ad is relevant to a
particular query, this system weighs an advertiser’s willingness to pay for
prominence in the ad listings (the CPC) and interest from users in the ad as
measured by the click-through rate and other factors. If an ad does not
attract user clicks, it moves to a less prominent position on the page, even
if the advertiser offers to pay a high amount. This prevents advertisers
with irrelevant ads from “squatting” in top positions to gain exposure.
Conversely, more relevant, well-targeted ads that are clicked on frequently
move up in ranking, with no need for advertisers to increase their bids.
Because we are paid only when users click on ads, the AdWords ranking system
aligns our interests equally with those of our advertisers and our users.
The more relevant and useful the ad, the better for our users, for our
advertisers and for us.
The AdWords auction system also incorporates our AdWords discounter, which
automatically lowers the amount advertisers actually pay to the minimum
needed to maintain their ad position. Consider a situation where there are
three advertisers—Pat, Betty and Joe—each bidding on the same keyword for
ads that will be displayed on Google.com. These advertisers have ads with
equal click-through rates and bid $1.00 per click, $0.60 per click and $0.50
per click, respectively. With our AdWords discounter, Pat would occupy the
first ad position and pay only $0.61 per click, Betty would occupy the
second ad position and pay only $0.51 per click, and Joe would occupy the
third ad position and pay the minimum bid of $0.05 per click. The AdWords
discounter saves money for advertisers by minimizing the price they pay per
click, while relieving them of the need to constantly monitor and adjust
their CPCs. Advertisers can experience greater discounts through the
application of our smart pricing technology introduced in April 2004. This
technology can reduce the price of clicks for ads served across the Google
Network based on the expected value of the click to the advertiser.
AdSense Contextual Advertising Technology. Our AdSense technology employs
techniques that consider factors such as keyword analysis, word frequency,
font size and the overall link structure of the web to analyze the content
of individual web pages and to match ads to them almost instantaneously.
With this ad targeting technology, we can automatically serve contextually
relevant ads. To do this, Google Network members embed a small amount of
custom HTML code on web pages that generates a request to Google’s AdSense
service whenever a user views the web page. Upon receiving a request, our
software examines the content of web pages and performs a matching process
that identifies advertisements that we believe are relevant to the content
of the specific web page. The relevant ads are then returned to the web
pages in response to the request. We employ similar techniques for matching
advertisements to other forms of textual content, such as email messages and
Google Groups postings. For example, our technology can serve ads offering
tickets to fans of a specific sports team on a news story about that team.
Large-Scale Systems Technology
Our business relies on our software and hardware infrastructure, which
provides substantial computing resources at low cost. We currently use a
combination of off-the-shelf and custom software running on clusters of
commodity computers. Our considerable investment in developing this
infrastructure has produced several key benefits. It simplifies the storage
and processing of large amounts of data, eases the deployment and operation
of large-scale global products and services and automates much of the
administration of large-scale clusters of computers.
Although most of this infrastructure is not directly visible to our users,
we believe it is important for providing a high-quality user experience. It
enables significant improvements in the relevance of our search and
advertising results by allowing us to apply superior search and retrieval
algorithms that are computationally intensive. We believe the infrastructure
also shortens our product development cycle and allows us to pursue
innovation more cost effectively.
We constantly evaluate new hardware alternatives and software techniques to
help further reduce our computational costs. This allows us to improve our
existing products and services and to more easily develop, deploy and
operate new global products and services.
Sales and Support
We have put significant effort into developing our sales and support
infrastructure. We maintain 21 sales offices in 11 countries, and we deploy
specialized sales teams across 18 vertical markets. We bring businesses into
our advertising network through both online and direct sales channels. In
all cases, we use technology and automation wherever possible to improve the
experience for our advertisers and to grow our business cost-effectively.
The vast majority of our advertisers use our automated online AdWords
program to establish accounts, create ads, target users and launch and
manage their advertising campaigns. Our direct advertising sales team
focuses on attracting and supporting companies around the world with
sizeable advertising budgets. Our AdSense program follows a similar model.
Most of the web sites in the Google Network sign up for AdSense using an
automated online process. Our direct sales force focuses on building AdSense
relationships with leading Internet companies. Our global support
organization concentrates on helping our advertisers and Google Network
members get the most out of their relationships with us.
Marketing
We have always believed that building a trusted, highly-recognized brand
begins with providing high-quality products and services that make a notable
difference in people’s lives. Our user base has grown primarily by
word-of-mouth, which can work very well for products that inspire a high
level of user loyalty because users are likely to share their positive
experiences with their friends and families. Our early marketing efforts
focused on feeding this word-of-mouth momentum and used public relations
efforts to accelerate it. Through these efforts and people’s increased usage
of Google worldwide, we have been able to build our brand with relatively
low marketing costs as a percentage of our revenues. Today, we use the
quality of our own products and services as our most effective marketing
tool, and word-of-mouth momentum continues to drive consumer awareness and
user loyalty worldwide. We do not promote products before they are
successful for our users, preferring to test them until they achieve broad
acceptance. We also engage in targeted marketing efforts, such as those we
deliver to our advertising clients, designed to inform potential
advertisers, Google Network members and enterprises of the benefits they can
achieve through Google. In addition, we sponsor industry conferences and
have promoted the distribution of the Google Toolbar to Internet users in
order to make our search services easier to access.
Competition
We face formidable competition in every aspect of our business, and
particularly from other companies that seek to connect people with
information on the web and provide them with relevant advertising.
Currently, we consider our primary competitors to be Microsoft and Yahoo.
We also face competition from other web search providers, including
companies that are not yet known to us. We compete with Internet advertising
companies, particularly in the areas of pay-for-performance and
keyword-targeted Internet advertising. We may compete with companies that
sell products and services online because these companies, like us, are
trying to attract users to their web sites to search for information about
products and services. In addition to Internet companies, we face
competition from companies that offer traditional media advertising
opportunities.
We compete to attract and retain relationships with users, advertisers and
web sites. The bases on which we compete differ among the groups.
• Users. We compete to attract and retain users of our search and
communication products and services. Most of the products and services we
offer to users are free, so we do not compete on price. Instead, we compete
in this area on the basis of the relevance and usefulness of our search
results and the features, availability and ease of use of our products and
services.
• Advertisers. We compete to attract and retain advertisers. We compete in
this area principally on the basis of the return on investment realized by
advertisers using our AdWords program. We also compete based on the quality
of customer service, features and ease of use of AdWords.
• Web sites. We compete to attract and retain web sites as members of our
Google Network based on the size and quality of our advertiser base, our
ability to help our Google Network members generate revenues from
advertising on their web sites and the terms of agreements with our Google
Network members.
We believe that we compete favorably on the factors described above.
However, our industry is evolving rapidly and is becoming increasingly
competitive. Larger, more established companies than us are increasingly
focusing on search businesses that directly compete with us.
Intellectual Property
We rely on a combination of patent, trademark, copyright and trade secret
laws in the U.S. and other jurisdictions as well as confidentiality
procedures and contractual provisions to protect our proprietary technology
and our brand. We also enter into confidentiality and invention assignment
agreements with our employees and consultants and confidentiality agreements
with other third parties, and we rigorously control access to proprietary
technology.
Google is a registered trademark in the U.S. and several other countries.
Our unregistered trademarks include: AdSense, AdWords, Blogger, Froogle,
Gmail, I’m Feeling Lucky and PageRank.
The first version of the PageRank technology was created while Larry and
Sergey attended Stanford University, which owns a patent to PageRank. The
PageRank patent expires in 2017. We hold a perpetual license to this patent.
In October 2003, we extended our exclusivity period to this patent through
2011, at which point our license is non-exclusive.
Circumstances outside our control could pose a threat to our intellectual
property rights. For example, effective intellectual property protection may
not be available in every country in which our products and services are
distributed. Also, the efforts we have taken to protect our proprietary
rights may not be sufficient or effective. Any significant impairment of our
intellectual property rights could harm our business or our ability to
compete. Also, protecting our intellectual property rights is costly and
time consuming. Any increase in the unauthorized use of our intellectual
property could make it more expensive to do business and harm our operating
results.
Companies in the Internet, technology and media industries own large numbers
of patents, copyrights and trademarks and frequently enter into litigation
based on allegations of infringement or other violations of intellectual
property rights. As we face increasing competition, the possibility of
intellectual property claims against us grows. Our technologies may not be
able to withstand any third-party claims or rights against their use.
Government Regulation
We are subject to a number of foreign and domestic laws that affect
companies conducting business on the Internet. In addition, because of the
increasing popularity of the Internet and the growth of online services,
laws relating to user privacy, freedom of expression, content, advertising,
information security and intellectual property rights are being debated and
considered for adoption by many countries throughout the world.
In the U.S., laws relating to the liability of providers of online services
for activities of their users are currently being tested by a number of
claims, which include actions for defamation, libel, invasion of privacy and
other data protection claims, tort, unlawful activity, copyright or
trademark infringement, or other theories based on the nature and content of
the materials searched and the ads posted or the content generated by users.
In addition, several other federal laws could have an impact on our
business. For example, the Digital Millennium Copyright Act has provisions
that limit, but do not eliminate, our liability for listing or linking to
third-party web sites that include materials that infringe copyrights or
other rights, so long as we comply with the statutory requirements of this
act. The Children’s Online Protection Act and the Children’s Online Privacy
Protection Act restrict the distribution of materials considered harmful to
children and impose additional restrictions on the ability of online
services to collect information from minors. In addition, the Protection of
Children from Sexual Predators Act of 1998 requires online service providers
to report evidence of violations of federal child pornography laws under
certain circumstances.
In addition, the application of existing laws regulating or requiring
licenses for certain businesses of our advertisers, including, for example,
distribution of pharmaceuticals, adult content, financial services, alcohol
or firearms, can be unclear. Existing or new legislation could expose us to
substantial liability and restrict our ability to deliver services to our
users.
At least two states have recently introduced proposed legislation that could
interfere with or prohibit our Gmail free advertising-supported web mail
service, which was recently announced as a test service. The legislation, as
originally proposed in California and Massachusetts, would make it more
difficult for us to operate or would prohibit the aspects of the service
that process the contents of users’ e-mail messages for the purpose of
identifying and displaying ads relevant to that content. While the
California legislation has been modified since being introduced so that it
does not inhibit the operation of the Gmail service, the legislation has not
been finally adopted. If this legislation is adopted as originally proposed,
or other similar legislation is adopted, it could prevent us from
implementing the Gmail service in the affected states. The company worked
with legislators in the state in which the proposed legislation was amended
to craft legislation that is narrowly tailored to privacy concerns. Google
intends to address privacy related concerns and future proposed legislation
by educating the public and legislators about the Google products and
services, and by working closely with legislators to craft laws that are not
overly broad.
We are also subject to international laws associated with data protection in
Europe and elsewhere and the interpretation and application of data
protection laws is still uncertain and in flux. In addition, because our
services are accessible worldwide, foreign jurisdictions may claim that we
are required to comply with their laws.
We take great pride in our company culture and embrace it as one of our
fundamental strengths. We remain steadfast in our commitment to constantly
improve the technology we offer to our users and advertisers and to web
sites in the Google Network. We have assembled what we believe is a highly
talented group of employees. Our culture encourages the iteration of ideas
to address complex technical challenges. In addition, we embrace individual
thinking and creativity. As an example, we encourage our engineers to devote
20% of their time to work on independent projects. Many of our significant
new products have come from these independent projects, including Google
News, AdSense for content and Orkut.
Despite our rapid growth, we constantly seek to maintain a small-company
feel that promotes interaction and the exchange of ideas among employees. We
try to minimize corporate hierarchy to facilitate meaningful communication
among employees at all levels and across departments, and we have developed
software to help us in this effort. We believe that considering multiple
viewpoints is critical to developing effective solutions, and we attempt to
build consensus in making decisions. While teamwork is one of our core
values, we also significantly reward individual accomplishments that
contribute to our overall success. As we grow, we expect to continue to
provide compensation structures that are more similar to those offered by
start-ups than established companies. We will focus on very significant
rewards for individuals and teams that build amazing things that provide
significant value to us and our users.
At June 30, 2004, we had 2,292 employees, consisting of 705 in research and
development, 1,141 in sales and marketing and 446 in general and
administrative. All of Google’s employees, except temporary employees and
contractors, are also equityholders, with significant collective employee
ownership. As a result, many employees are highly motivated to make the
company more successful.
Legal Proceedings
On August 9, 2004, we and Yahoo entered into a settlement agreement
resolving two disputes that had been pending between us. The first dispute
concerned a lawsuit filed by Yahoo’s wholly-owned subsidiary, Overture
Services, Inc., against us in April 2002 asserting that certain services
infringed Overture’s U.S. Patent No. 6,269,361. In our court filings, we
denied that we infringed the patent and alleged that the patent was invalid
and unenforceable.
The second dispute concerned a warrant held by Yahoo to purchase 3,719,056
shares of our stock in connection with a June 2000 services agreement.
Pursuant to a conversion provision in the warrant, in June 2003 we issued
1,229,944 shares to Yahoo. Yahoo contended it was entitled to a greater
number of shares, while we contended that we had fully complied with the
terms of the warrant.
As part of the settlement, Overture will dismiss its patent lawsuit against
us and has granted us a fully-paid, perpetual license to the patent that was
the subject of the lawsuit and several related patent applications held by
Overture. The parties also mutually released any claims against each other
concerning the warrant dispute. In connection with the settlement of these
two disputes, we issued to Yahoo 2,700,000 shares of Class A common stock.
Companies have also filed trademark infringement and related claims against
us over the display of ads in response to user queries that include
trademark terms. The outcomes of these lawsuits have differed from
jurisdiction to jurisdiction. A court in France has held us liable for
allowing advertisers to select certain trademarked terms as keywords. We
have appealed this decision. We were also subject to two lawsuits in Germany
on similar matters where one court preliminarily reached a similar
conclusion as the court in France while another court held that we are not
liable for the actions of our advertisers prior to notification of trademark
rights. We are litigating similar issues in other cases in the U.S., France,
Germany and Italy. Adverse results in these lawsuits may result in, or even
compel, a change in this practice which could result in a loss of revenue
for us, which could harm our business.
From time to time, we may also become a party to other litigation and
subject to claims incident to the ordinary course of business. For example,
because our products and services link to or host material in which others
allege to own copyrights, from time to time third parties have asserted
copyright infringement or related claims against us. Although the results of
litigation and claims cannot be predicted with certainty, we believe that
the final outcome of the matters discussed above will not have a material
adverse effect on our business. Regardless of the outcome, litigation can
have an adverse impact on us because of defense costs, diversion of
management resources and other factors.
Facilities
We lease approximately 506,000 square feet of space in our headquarters in
Mountain View, California under a lease that expires in 2012. We also lease
additional research and development, sales and support offices in Amsterdam,
Atlanta, Bangalore, Boston, Chicago, Dallas, Denver, Detroit, Dublin,
Hamburg, Hyderabad, London, Los Angeles, Madrid, Milan, Mountain View, New
York, Paris, Santa Monica, Seattle, Sydney, Tokyo, Toronto and Zurich. We
operate data centers in the United States and the European Union pursuant to
various lease agreements and co-location arrangements.
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