Financing and initial public offering
The first iteration of Google production servers was built with inexpensive hardware.[33]
The first funding for Google was an August 1998 contribution of US$100,000 from Andy Bechtolsheim, co-founder of Sun Microsystems, given before Google was even incorporated.[34] Early in 1999, while still graduate students, Brin and Page decided that the search engine they had developed was taking up too much of their time from academic pursuits. They went to Excite CEO George Bell and offered to sell it to him for $1 million. He rejected the offer, and later threw Vinod Khosla, one of Excite's venture capitalists, out of his office after he had negotiated Brin and Page down to $750,000. On June 7, 1999, a $25 million round of funding was announced,[35] with major investors including the venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.[34]
Google's initial public offering (IPO) took place five years later on August 19, 2004. The company offered 19,605,052 shares at a price of $85 per share.[36][37] Shares were sold in a unique online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal.[38][39] The sale of $1.67 billion gave Google a market capitalization of more than $23 billion.[40] The vast majority of the 271 million shares remained under the control of Google, and many Google employees became instant paper millionaires. Yahoo!, a competitor of Google, also benefited because it owned 8.4 million shares of Google before the IPO took place.[41]
Some people speculated that Google's IPO would inevitably lead to changes in company culture. Reasons ranged from shareholder pressure for employee benefit reductions to the fact that many company executives would become instant paper millionaires.[42] As a reply to this concern, co-founders Sergey Brin and Larry Page promised in a report to potential investors that the IPO would not change the company's culture.[43] In 2005, however, articles in The New York Times and other sources began suggesting that Google had lost its anti-corporate, no evil philosophy.[44][45][46] In an effort to maintain the company's unique culture, Google designated a Chief Culture Officer, who also serves as the Director of Human Resources. The purpose of the Chief Culture Officer is to develop and maintain the culture and work on ways to keep true to the core values that the company was founded on: a flat organization with a collaborative environment.[47] Google has also faced allegations of sexism and ageism from former employees.[48][49]
The stock's performance after the IPO went well, with shares hitting $700 for the first time on October 31, 2007,[50] primarily because of strong sales and earnings in the online advertising market.[51] The surge in stock price was fueled mainly by individual investors, as opposed to large institutional investors and mutual funds.[51] The company is now listed on the NASDAQ stock exchange under the ticker symbol GOOG and under the Frankfurt Stock Exchange under the ticker symbol GGQ1.
Growth
In March 1999, the company moved its offices to Palo Alto, California, home to several other noted Silicon Valley technology startups.[52] The next year, against Page and Brin's initial opposition toward an advertising-funded search engine,[53] Google began selling advertisements associated with search keywords.[24] In order to maintain an uncluttered page design and increase speed, advertisements were solely text-based. Keywords were sold based on a combination of price bids and clickthroughs, with bidding starting at five cents per click.[24] This model of selling keyword advertising was first pioneered by Goto.com, an Idealab spin off created by Bill Gross.[54][55] When the company changed names to Overture Services, it sued Google over alleged infringements of the company's pay-per-click and bidding patents. Overture Services would later be bought by Yahoo! and renamed Yahoo! Search Marketing. The case was then settled out of court, with Google agreeing to issue shares of common stock to Yahoo! in exchange for a perpetual license.[56]
During this time, Google was granted a patent describing their PageRank mechanism.[57] The patent was officially assigned to Stanford University and lists Lawrence Page as the inventor. In 2003, after outgrowing two other locations, the company leased their current office complex from Silicon Graphics at 1600 Amphitheatre Parkway in Mountain View, California.[58] The complex has since come to be known as the Googleplex, a play on the word googolplex, the number one followed by a googol zeroes. Three years later, Google would buy the property from SGI for $319 million.[59] By that time, the name "Google" had found its way into everyday language, causing the verb "google" to be added to the Merriam Webster Collegiate Dictionary and the Oxford English Dictionary, denoted as "to use the Google search engine to obtain information on the Internet."[60][61]
Acquisitions and partnerships
See also: List of acquisitions by Google
Since 2001, Google has acquired many companies, mainly focusing on small venture capital companies. In 2004, Google acquired Keyhole, Inc..[62] The start-up company developed a product called Earth Viewer that gave a 3-D view of the Earth. Google renamed the service to Google Earth in 2005. Two years later, Google bought the online video site YouTube for $1.65 billion in stock.[63] On April 13, 2007, Google reached an agreement to acquire DoubleClick for $3.1 billion, giving Google valuable relationships that DoubleClick had with Web publishers and advertising agencies.[64] Later that same year, Google purchased GrandCentral for $50 million.[65] The site would later be changed over to Google Voice. On August 5, 2009, Google bought out its first public company, purchasing video software maker On2 Technologies for $106.5 million.[66] Google also acquired Aardvark, a social network search engine, for $50 million. Google commented in their internal blog, "we're looking forward to collaborating to see where we can take it".[67] And, in April 2010, Google announced it had acquired a hardware startup, Agnilux.[68]
In addition to the numerous companies Google has purchased, the company has partnered with other organizations for everything from research to advertising. In 2005, Google partnered with NASA Ames Research Center to build 1,000,000 square feet (93,000 m2) of offices.[69] The offices would be used for research projects involving large-scale data management, nanotechnology, distributed computing, and the entrepreneurial space industry. Later that year, Google entered into a partnership with Sun Microsystems in October 2005 to help share and distribute each other's technologies.[70] The company also partnered with AOL of Time Warner,[71] to enhance each other's video search services. Google's 2005 partnerships also included financing the new .mobi top-level domain for mobile devices, along with other companies including Microsoft, Nokia, and Ericsson.[72] Google would later launch "Adsense for Mobile", taking advantage of the emerging mobile advertising market.[73] Increasing their advertising reach even further, Google and Fox Interactive Media of News Corp. entered into a $900 million agreement to provide search and advertising on popular social networking site MySpace.[74]
In October 2006, Google announced that it had acquired the video-sharing site YouTube for US$1.65 billion in Google stock, and the deal was finalized on November 13, 2006.[75] Google does not provide detailed figures for YouTube's running costs, and YouTube's revenues in 2007 were noted as "not material" in a regulatory filing.[76] In June 2008, a Forbes magazine article projected the 2008 YouTube revenue at US$200 million, noting progress in advertising sales.[77] In 2007, Google began sponsoring NORAD Tracks Santa, a service that pretends to follow Santa Claus' progress on Christmas Eve,[78] using Google Earth to "track Santa" in 3-D for the first time,[79] and displacing former sponsor AOL. Google-owned YouTube gave NORAD Tracks Santa its own channel.[80]
In 2008, Google developed a partnership with GeoEye to launch a satellite providing Google with high-resolution (0.41 m monochrome, 1.65 m color) imagery for Google Earth. The satellite was launched from Vandenberg Air Force Base on September 6, 2008.[81] Google also announced in 2008 that it was hosting an archive of Life Magazine's photographs as part of its latest partnership. Some of the images in the archive were never published in the magazine.[82] The photos were watermarked and originally had copyright notices posted on all photos, regardless of public domain status.[83]
In 2010, Google Energy made its first investment in a renewable-energy project, putting up $38.8 million into two wind farms in North Dakota. The company announced the two locations will generate 169.5 megawatts of power, or enough to supply 55,000 homes. The farms, which were developed by NextEra Energy Resources, will reduce fossil fuel use in the region and return profits. NextEra Energy Resources sold Google a twenty percent stake in the project in order to get funding for project development.[84] Also in 2010, Google purchased Global IP Solutions, a Norway based company that provides web-based teleconferencing and other related services. This acquisition will enable Google to add telephone-style services to its list of products.[85] On May 27, 2010, Google announced it had also closed the acquisition of the mobile ad network, AdMob. This purchase occurred days after the Federal Trade Commission closed its investigation into the purchase.[86] Google acquired the company for an undisclosed amount.[87]
Products and services
See also: List of Google products
Advertising
Ninety-nine percent of Google's revenue is derived from its advertising programs.[88] For the 2006 fiscal year, the company reported $10.492 billion in total advertising revenues and only $112 million in licensing and other revenues.[89] Google has implemented various innovations in the online advertising market that helped propel them to one of the biggest advertisers in the market. Using technology from the company DoubleClick, Google can determine user interests and target advertisements appropriately so they are relevant to the context they are in and the user that is viewing them.[90][91] Google Analytics allows website owners to track where and how people use their website, allowing for in-depth research into getting users to go where you want them to go.[92] Google advertisements can be placed on third-party websites in a two-part program. Google's AdWords allows advertisers to display their advertisements in the Google content network, through either a cost-per-click or cost-per-view scheme. The sister service, Google AdSense, allows website owners to display these advertisements on their website, and earn money every time ads are clicked.[93]
One of the disadvantages and criticisms of this program is Google's inability to combat click fraud, when a person or automated "clicks" on advertisements without being interested in the product, just to earn money for the website owner. Industry reports in 2006 claim that approximately 14 to 20 percent of clicks were in fact fraudulent or invalid.[94] Furthermore, there has been controversy over Google's "search within a search", where a secondary search box enables the user to find what they are looking for within a particular website. It was soon reported that when performing a search within a search for a specific company, advertisements from competing and rival companies often showed up along with those results, drawing users away from the site they were originally searching.[95] Another complaint against Google's advertising is their censorship of advertisers, though many cases of are because of compliance with the Digital Millennium Copyright Act. For example, in February 2003, Google stopped showing the advertisements of Oceana, a non-profit organization protesting a major cruise ship operation's sewage treatment practices. Google cited its editorial policy at the time, stating "Google does not accept advertising if the ad or site advocates against other individuals, groups, or organizations."[96] The policy was later changed.[97] In June 2008, Google reached an advertising agreement with Yahoo!, which would have allowed Yahoo! to feature Google advertisements on their web pages. The alliance between the two companies was never completely realized due to antitrust concerns by the U.S. Department of Justice. As a result, Google pulled out of the deal in November 2008.[98][99]
Search engine
In 2010, Google updated its homepage with a new shadow-less logo.[100]
The Google web search engine is the company's most popular service. According to market research published by comScore in November 2009, Google is the dominant search engine in the United States market, with a market share of 65.6%.[101] Google indexes trillions of web pages, so that users can search for the information they desire, through the use of keywords and operators. In 2003, The New York Times complained about Google's indexing, claiming that Google's caching of content on their site infringed on their copyright for the content.[102] In this case, the United States District Court of Nevada ruled in favor of Google in Field v. Google and Parker v. Google.[103][104] Google Watch has also criticized Google's PageRank algorithms, saying that they discriminate against new websites and favor established sites,[105] and has made allegations about connections between Google and the NSA and the CIA.[106] Despite criticism, the basic search engine has spread to specific services as well, including an image search engine, the Google News search site, Google Maps, and more. In early 2006, the company launched Google Video, which allowed users to upload, search, and watch videos from the Internet.[107] In 2009, however, uploads to Google Video were discontinued so that Google could focus more on the search aspect of the service.[108] The company even developed Google Desktop, a desktop search application used to search for files local to one's computer.
One of the more controversial search services Google hosts is Google Books. The company began scanning books and uploading limited previews, and full books where allowed, into their new book search engine. The Authors Guild, a group that represents 8,000 U.S. authors, filed a class action suit in a Manhattan federal court against Google in 2005 over this new service. Google replied that it is in compliance with all existing and historical applications of copyright laws regarding books.[109] Google eventually reached a revised settlement in 2009 to limit its scans to books from the U.S., the U.K., Australia and Canada.[110] Furthermore, the Paris Civil Court ruled against Google in late 2009, asking them to remove the works of La Martinière (Éditions du Seuil) from their database.[111] In competition with Amazon.com, Google plans to sell digital versions of new books.[112] Similarly, in response to newcomer Bing, on July 21, 2010, Google updated their image search to display a streaming sequence of thumbnails that enlarge when pointed at. Though web searches still appear in a batch per page format, on July 23, 2010, dictionary definitions for certain English words began appearing above the linked results for web searches.[113]
Productivity tools
In addition to its standard web search services, Google has released over the years a number of online productivity tools. Gmail, a free webmail service provided by Google, was launched as an invitation-only beta program on April 1, 2004,[114] and became available to the general public on February 7, 2007.[115] The service was upgraded from beta status on July 7, 2009,[116] at which time it had 146 million users monthly.[117] The service would be the first online email service with one gigabyte of storage, and the first to keep emails from the same conversation together in one thread, similar to an Internet forum.[114] The service currently offers over 7400 MB of free storage with additional storage ranging from 20 GB to 16 TB available for US$0.25 per 1 GB per year.[118] Furthermore, software developers know Gmail for its pioneering use of AJAX, a programming technique that allows web pages to be interactive without refreshing the browser.[119] One criticism of Gmail has been the potential for data disclosure, a risk associated with many online web applications. Steve Ballmer (Microsoft's CEO),[120] Liz Figueroa,[121] Mark Rasch,[122] and the editors of Google Watch[123] believe the processing of email message content goes beyond proper use, but Google claims that mail sent to or from Gmail is never read by a human being beyond the account holder, and is only used to improve relevance of advertisements.[124]
Google Docs, another part of Google's productivity suite, allows users to create, edit, and collaborate on documents in an online environment, not dissimilar to Microsoft Word. The service was originally called Writely, but was obtained by Google on March 9, 2006, where it was released as an invitation-only preview.[125] On June 6 after the acquisition, Google created an experimental spreadsheet editing program,[126] which would be combined with Google Docs on October 10.[127] A program to edit presentations would complete the set on September 17, 2007,[128] before all three services were taken out of beta along with Gmail on July 7, 2009.[116] Google Calendar, a calendar program closely integrated with Gmail,[129] was also taken out of beta that day after its beta release on April 12, 2006.[130]
Enterprise products
Google's search appliance at the 2008 RSA Conference
Google entered the enterprise market in February 2002 with the launch of its Google Search Appliance, targeted toward providing search technology for larger organizations.[24] Google launched the Mini three years later, which was targeted at smaller organizations. Late in 2006, Google began to sell Custom Search Business Edition, providing customers with an advertising-free window into Google.com's index. The service was renamed Google Site Search in 2008.[131]
Another one of Google's enterprise products is Google Apps Premier Edition. The service, and its accompanying Google Apps Education Edition and Standard Edition, allow companies, schools, and other organizations to bring Google's online applications, such as Gmail and Google Documents, into their own domain. The Premier Edition specifically includes extras over the Standard Edition such as more disk space, API access, and premium support, and it costs $50 per user per year. A large implementation of Google Apps with 38,000 users is at Lakehead University in Thunder Bay, Ontario, Canada. In the same year Google Apps was launched, Google acquired Postini[132] and proceeded to integrate the company's security technologies into Google Apps[133] under the name Google Postini Services.[134]
Other products
Google Translate is a server-side machine translation service, which can translate between 35 different languages. Browser extensions allow for easy access to Google Translate from the browser. The software uses corpus linguistics techniques, where the program "learns" from professionally translated documents, specifically United Nations and European Parliament proceedings.[135] Furthermore, a "suggest a better translation" feature accompanies the translated text, allowing users to indicate where the current translation is incorrect or otherwise inferior to another translation.
Google launched its Google News service in 2002. The site proclaimed that the company had created a "highly unusual" site that "offers a news service compiled solely by computer algorithms without human intervention. Google employs no editors, managing editors, or executive editors."[136] The site hosted less licensed news content than Yahoo! News, and instead presented topically selected links to news and opinion pieces along with reproductions of their headlines, story leads, and photographs.[137] The photographs are typically reduced to thumbnail size and placed next to headlines from other news sources on the same topic in order to minimize copyright infringement claims. Nevertheless, Agence France Presse sued Google for copyright infringement in federal court in the District of Columbia, a case which Google settled for an undisclosed amount in a pact that included a license of the full text of AFP articles for use on Google News.[138]
In 2006, Google made a bid to offer free wireless broadband access throughout the city of San Francisco in conjunction with Internet service provider Earthlink. Large telecommunications companies such as Comcast and Verizon opposed such efforts, claiming it was "unfair competition" and that cities would be violating their commitments to offer local monopolies to these companies. In his testimony before Congress on Net Neutrality in 2006, Google's Chief Internet Evangelist Vint Cerf blamed such tactics on the fact that nearly half of all consumers lack meaningful choice in broadband providers.[139] Google currently offers free wi-fi access in its hometown of Mountain View, California.[140]
One year later, reports surfaced that Google was planning the release of its own mobile phone, possibly a competitor to Apple's iPhone.[141][142][143] The project, called Android, turned out not to be a phone but an operating system for mobile devices, which Google acquired and then released as an open-source project under the Apache 2.0 license.[144] Google provides a software development kit for developers so applications can be created to be run on Android-based phone. In September 2008, T-Mobile released the G1, the first Android-based phone.[145] More than a year later on January 5, 2010, Google released an Android phone under its own company name called the Nexus One.[146]
Other projects Google has worked on include a new collaborative communication service, a web browser, and even a mobile operating system. The first of these was first announced on May 27, 2009. Google Wave was described as a product that helps users communicate and collaborate on the web. The service is Google's "email redesigned", with realtime editing, the ability to embed audio, video, and other media, and extensions that further enhance the communication experience. Google Wave was previously in a developer's preview, where interested users had to be invited to test the service, but was released to the general public on May 19, 2010, at Google's I/O keynote. On September 1, 2008, Google pre-announced the upcoming availability of Google Chrome, an open-source web browser,[147] which was then released on September 2, 2008. The next year, on 7 July 2009, Google announced Google Chrome OS, an open-source Linux-based operating system that includes only a web browser and is designed to log users into their Google account.[148][149]
Google has partnered with the United States Patent and Trademark Office to enable free access to information about patents and trademarks. The beta website is Google Patents.
Corporate affairs and culture
Google CEO Eric E. Schmidt with Sergey Brin and Larry Page (left to right)
Google is known for having an informal corporate culture. On Fortune Magazine's list of best companies to work for, Google ranked first in 2007 and 2008[19][150] and fourth in 2009 and 2010.[151][152] Google's corporate philosophy embodies such casual principles as "you can make money without doing evil," "you can be serious without a suit," and "work should be challenging and the challenge should be fun."[153]
Employees
Google's stock performance following its IPO has enabled many early employees to be competitively compensated.[154] After the company's IPO, founders Sergey Brin and Larry Page and CEO Eric Schmidt requested that their base salary be cut to $1. Subsequent offers by the company to increase their salaries have been turned down, primarily because their primary compensation continues to come from returns stock in Google. Prior to 2004, Schmidt was making $250,000 per year, and Page and Brin each earned a salary of $150,000.[155]
In 2007 and through early 2008, Google has seen the departure of several top executives. In October 2007, former chief financial officer of YouTube Gideon Yu joined Facebook[156] along with Benjamin Ling, a high-ranking engineer.[157] In March 2008, Sheryl Sandburg, then vice-president of global online sales and operations, began her position as chief operating officer of Facebook[158] while Ash ElDifrawi, formerly head of brand advertising, left to become chief marketing officer of Netshops, an online retail company that was renamed Hayneedle in 2009.[159]
As a motivation technique, Google uses a policy often called Innovation Time Off, where Google engineers are encouraged to spend twenty percent of their work time on projects that interest them. Some of Google's newer services, such as Gmail, Google News, Orkut, and AdSense originated from these independent endeavors.[160] In a talk at Stanford University, Marissa Mayer, Google's Vice President of Search Products and User Experience, showed that half of all new product launches at the time had originated from the Innovation Time Off.[161]
Googleplex
The Googleplex, Google's original and largest corporate campus
Main article: Googleplex
Google's headquarters in Mountain View, California is referred to as "the Googleplex", a play of words on the number googolplex and the headquarters itself being a complex of buildings. The lobby is decorated with a piano, lava lamps, old server clusters, and a projection of search queries on the wall. The hallways are full of exercise balls and bicycles. Each employee has access to the corporate recreation center. Recreational amenities are scattered throughout the campus and include a workout room with weights and rowing machines, locker rooms, washers and dryers, a massage room, assorted video games, foosball, a baby grand piano, a pool table, and ping pong. In addition to the rec room, there are snack rooms stocked with various foods and drinks.[162] In 2006, Google moved into 311,000 square feet (28,900 m2) of office space in New York City, at 111 Eighth Ave. in Manhattan.[163] The office was specially designed and built for Google, and it now houses its largest advertising sales team, which has been instrumental in securing large partnerships.[163] In 2003, they added an engineering staff in New York City, which has been responsible for more than 100 engineering projects, including Google Maps, Google Spreadsheets, and others. It is estimated that the building costs Google $10 million per year to rent and is similar in design and functionality to its Mountain View headquarters, including foosball, air hockey, and ping-pong tables, as well as a video game area. In November 2006, Google opened offices on Carnegie Mellon's campus in Pittsburgh.[164] By late 2006, Google also established a new headquarters for its AdWords division in Ann Arbor, Michigan.[165] Furthermore, Google has offices all around the world, and in the United States, including Atlanta, Austin, Boulder, San Francisco, Seattle, and Washington DC.
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