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Reviews for Google-2009-Annual-Report
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2009annualreport Founders’ Letter Sergey and I got over our fear of failure and finally founded Google in 1998. If we had known then what Google would become in 2009, we would have been totally flabbergasted. The scale and scope of our services, and the opportunities they offer users, are phenomenal, and we are very lucky to be a part of this business. Rather than try to run through an exhaustive list of everything we have done this year, I’m going to focus on a couple of issues—access to information and a new model of computing— that are of particular interest to me, and on which I have unique perspective. I was lucky enough to grow up with computers, and so from an early age I learned that there’s always more potential at hand with technology, especially as I struggled to read programs off kludgey cassette tapes. While I’m astounded at the pace and progress we have made on many areas of the Internet and computing, I am also amazed how slow progress has been in other equally promising areas. Often what is required to make progress in technology is focus. For example, there is a hundred times more activity in clean energy today than there was just a few years ago simply because more people are now focused on this issue. What really motivates me is this dichotomy of slow progress in some areas and fast progress in others. This is a tremendous social and business opportunity. Who would have thought in 1998 that anyone could get for free a high- resolution picture of their house from above, and even from the street? That is Google Earth, Maps, and Street View. Was it a foregone conclusion that we would have these kind of products now? No, it was not. This progress happened because focused teams of people made those ideas a reality. We could just as easily have hit 2010 and not have had these services available on the Internet at all. Finding important technological areas where progress is currently slow, but could be made fast, is what Google is all about. I’m excited about our opportunities to make a big difference in people’s lives through technology. We can build these great new products into great new businesses too. Google Translate is a recent example. You can now translate pretty well and instantly between any of 54 languages—that is about 2550 language pairs—and search the web and read results in languages you don’t speak! We even have Google Translate for your Android phone—so you speak in English and it translates into German out loud! This is all using software for speech recognition and translation that we have developed at Google. Users around the world have noticed the speed and quality of our translations, which is why Google Translate is growing like wildfire. We’re putting this technology into YouTube too, so you can watch videos even if you don’t speak the same language, or have difficulty hearing—automatically. Imagine anyone in the world being able to watch and understand any video no matter the language. YouTube is an extraordinary platform, and for me is like another kind of tube that I use every day, toothpaste. Apparently I am not alone: we have over 1,000,000,000 daily views on YouTube. YouTube has new features like full high-definition content at 1080p and tools to help you share videos with your friends. Over the last year, YouTube has also been making a lot more money for us and our partners, with content partner ad revenue more than tripling in 2009. Recently we announced a new project to build 1 gigabit per second fiber-to-the-home broadband networks for one or more U.S. cities and towns between 50,000 and 500,000 people. This access is about 100x faster than most people have today. We asked communities to come back with ideas, and one mayor had an unusual response: “I, William W. Bunten, mayor of the city of Topeka, Kansas, urge the citizens of Topeka to recognize and support the continuing efforts to bring Google’s ‘Fiber for Communities’ experiment to our city, and do hereby proclaim that for the month of March 2010, the city of Topeka will be known as Google, Kansas.” From such quirky tributes and detailed applications, we have seen a lot of interest in Google Fiber. Our goal with this project is to show what’s possible by driving technological development of home Internet connections at a faster rate. If we succeed, it will benefit users everywhere, as well as our own services, which can debut amazing new capabilities using higher speed connections. Access to Information Search and Ads Roughly 70% of our resources are allocated to core search and advertising, and we have been doing a tremendous amount of work on both. Creating the perfect search engine remains our ultimate goal, but we’re still a long way from doing that, which is why we are not resting on our laurels. I have really enjoyed our new “show options” link that appears at the top of the results. If you click this you get a whole bunch of options, including time, geography, prices, images from the pages, more or less shopping, and even thumbnails of the pages. This has really improved my searches when I’m looking for something a little harder to find. We have made our snippets “richer” in all sorts of ways. We also improved personalized search, helping you get results more tailored to you, and have done a lot of work on getting real-time results to you in seconds. A lot of our focus goes towards improving core relevance—making sure you get exactly what you want when you type a query. Typically we are running hundreds of experiments at a time to improve relevance. And we made additional improvements around comprehensiveness, making sure we search everything in the world. Search ads are our main source of revenue and of course an important focus. We view our search ads as information for users, just like search results. With Universal Search, we now provide results in many different formats, such as videos, maps and news, and we needed to do the same for advertisements. For example, you can now see product ads with prices and pictures of the items, similar to the shopping search results you can get in organic search. It is interesting to note these retail ads can be cost-per-acquisition, which means the advertiser pays only if someone buys something. This is wonderful for the advertiser, who doesn’t have to take any risk at all. Advertisers can easily put in all their inventory without worry, rather than just a subset of the most important items. We also get to build great new prediction systems that do the hard work of estimating what bid yields the best results for advertisers, based on the cost-per-acquisition goal they set. There are new ad formats specifically for local businesses, comparison ads for financial products, and sitelinks for navigational queries. I’m really excited about the benefits new ad formats can have both for our advertisers and our users. We also have done some significant work to reduce what we call “scammy” advertising to make ads safer and more relevant for users. In addition, we made many improvements to our core advertising systems behind the scenes. There is a lot of technology used to make the advertising work and estimate clickthroughs of ads and so on. Improvements to these systems have very measurable and meaningful effects on advertiser and user happiness. On display ads, we have really benefited from a successful integration with DoubleClick. We launched new analytics and media planning in DART for Advertisers (DFA), and have made big strides in the Google Content Network—the extensive collection of partner sites on which we run ads from our network. In 2009, we sold display advertising on that network, which includes YouTube, to 94 of the Ad Age top 100 advertisers. I’m also very excited about interest-based advertising, which helps deliver ads tailored to people’s interests. Users can adjust their preferences to generate more relevant ads, or opt out altogether (which very few people choose to do). A tool called Display Ad Builder helps you build display ads in seconds so that even the smallest advertisers can use display. Through our acquisition of Teracent you can automatically create thousands of potential permutations of display ads and automatically optimize each ad that is displayed. The DoubleClick Ad Exchange helps make the display industry more open, transparent, fair, and effective for everyone from ad networks to agency holding companies to large publishers. Over 50 U.S. ad networks have already signed up for the new Ad Exchange. There are a ton of improvements we are focused on making in all of these areas, and I am excited about our very substantial progress to date. Google Analytics Sergey and I like to use as many of our products as possible, and we have both signed up for AdWords so we can get closer to the real experience customers face every day. Whenever we spend money on advertising, we like to know if we are actually getting our money’s worth. Turns out other people want to know as well! Google Analytics lets you measure in great detail the return on your investment, and everything else going on in your website too. You can directly and automatically use this information to improve your advertising. Getting many more advertising customers to take advantage of this system is a priority. The data Analytics provides, and the analysis it makes possible, is quite a contrast to traditional advertising where it can be very hard to know exactly how well any particular ad worked. This is because the Internet enables much more measurement, and we are trying to accelerate that trend. Geo Unfortunately no one I know has figured out how to be in multiple places at the same time, so location is important to everyone. As I mentioned earlier, I’m amazed at the geographic products our teams have built. You can get a pretty accurate 3D view of nearly anywhere in the world. Amazing. In the last year we have released our own comprehensive source maps of streets and addresses for Mexico and the U.S.—and users have been working on building and correcting over 60 countries. Street View has exploded around the world with more than twice the countries covered and has unbelievable, higher resolution images in many places. Our Street View images of Whistler at the Olympics had nearly as many views as there are Canadians! We also made many improvements to how we handle local businesses. I love that you can now search for something in Google Maps and then see all the little dots on the map, no matter how many there are, or how much you move the map around. With all the progress we’ve made with geo products, I can now be found in my one-time location of Happy, Texas! On a much more serious and sad note, after the tragic earthquakes in Haiti and Chile we were able to gather updated high resolution imagery very quickly to help the relief efforts in both countries. In Google Earth, you can view images of places over time by enabling “historical imagery”. I did this for Haiti and found it brought home the devastation of the earthquake because I would see exactly which buildings had been damaged. It was almost as if I was there. Google Books I was amazed to see on Google Books a fully accessible archive of some priceless magazines, including Popular Science—going back 137 years! It has all the ads and everything, though they didn’t seem to have many ads back in the April 1872 edition. It is truly a dream fulfilled for me that we now have 12 million books scanned and available for searching at books.google.com. That is already bigger than almost any university library, and we’re not done yet. We negotiated a settlement agreement with publishers and authors to sell the full text of many of these books, so they can earn money from their work, much of which is out of print. It’s currently awaiting court approval, in the wake of much controversy and much support. At the basic level, there is tremendous knowledge available in books and libraries that hasn’t made it onto the Internet. We now have relationships with over 30,000 publishers—an enormous number of partners. Together, we’re working toward a system where everyone has increased access to these valuable texts. I am very excited about the possibilities to help expand human knowledge, create new revenue streams for content creators, and improve the quality of search for every Google user. ANewKind of Computing Google Chrome, Google Chrome OS, and Android are all very exciting to me. What we are aiming to do is to redefine the nature of commercial computing by making it modern, simple, and open source. Sergey and I (and Google) grew up with Linux and we have all benefited greatly from that open model. We believe that it is a great way to run a healthy and vibrant high tech ecosystem. In fact it is how the Internet came to be. All of these products are open source because we believe that is the best way to improve the ecosystem. An open model not only inspires innovation among developers, but also helps generally improve the quality of the software through peer review and public scrutiny of the code. And both are good for users. Google has released over 12 million lines of code across over 350 open source projects, and we host over 220,000 open source projects on the Google Code site. We have had tremendous response from the developer community with more and more developers participating in our ecosystem— an important business goal for us. Google Chrome I think Google Chrome is a beautiful, fast, and simple browser. I just read a review where it handily beat all others in speed and won the overall award. It is an amazing product, and usage is growing quickly, with over 40 million active users despite the fact that the product is just eighteen months old. We have worked hard to improve the security model so you can browse with less worry of your computer being compromised. We have all sorts of technological magic to make the web into a much more robust platform, so you can run powerful software as easy as viewing a web page. Chrome is so small and fast to install you can get it on your computer faster than you can make your morning coffee. Make your life better and install it now at google.com/chrome. I love Chrome! Google Chrome OS One day several years ago in one of our meetings everyone had a laptop out and was working (this is unfortunately typical behavior, and I feel partially responsible because I demanded power for laptops in all our conference tables). By doing a survey of the room I noticed that only a few people were running anything besides a web browser on their laptop. This seemed rather surprising as you have this big complex OS but it was only running one program, the browser. We decided it would be a good idea to rethink what you are running on your computer from the inside out. If we spend our lives in the browser, and the cloud, why not have the whole computer organized around that? It turns out if you think this way, you can really change a lot about computers. They get simpler, easier, and faster. Google Chrome OS boots from a cold machine in seconds you can count on one hand. This is great and is about the same time it takes most laptops to wake from a suspend (a much more complicated battery-consuming and error-prone process). I should note that Chrome OS is not out yet, and in mentioning it we have violated our own policy of not talking about things before we launch. We knew we wanted to develop Chrome OS in concert with the open source community and of course that had to be in the open. Therefore we had to pre-announce Chrome OS. One reason we don’t like to pre-announce is that we don’t like to pretend we know how long things take to become great products. So we don’t really know exactly when you’ll get a super-shiny polished Chrome OS netbook in your hands. I’m still planning on being young when it happens. Android It is amazing to me that everyone doesn’t yet have a smartphone running Android. Doesn’t everyone want an open, Internet-enabled computer in their pocket that is as good as a laptop from a couple of years ago? The reality is that the costs are still a bit high for everyone to switch today, especially with carrier costs and contracts, but that is changing really quickly. My Google Nexus One phone has no trouble playing music through Bluetooth over my car stereo, interrupting to read street names and display a map from Google Maps. I should note that driving directions that prompt you, just like a real navigation system, are free on the new Android phones. Get your car dock ready and you will have an amazing experience with updated traffic and even a photo from Street View of your destination. I can’t even count all the partners we have in our Open Handset Alliance (sounds like Star Wars, doesn’t it?)—turns out there are now 65. We have over 20,000 applications in our market, my favorite is an app called FaceIt that displays a Dracula face you can put in front of your mouth that moves when you talk. Android is another product only in its baby stage, and yet we have already seen significant uptake. These types of projects take a lot of foresight to develop. We acquired Android in 2005, so it spent quite a while in gestation before launching. We also have over 60 carriers in 49 countries and 19 languages. Android has changed my life and I can’t wait for what it does next. Summary Our employees, or Googlers, as we call ourselves, now number about 20,000. This seems like a big number. But given the importance of the web, we think there are not yet enough people working in earnest on the many exciting opportunities in technology. Our challenge as we expand is to keep everyone organized and motivated. This keeps Sergey, Eric, and me quite busy, and I’m sure it will keep us and the rest of the team engaged for a long time to come. Google has grown very quickly in the last eleven years. While we’ve undoubtedly had a lot of good luck, we have also worked really hard on search and advertising for more than a decade. That focus has paid off, both for our users and our business. Google is now a much larger company, and with size comes scrutiny and a certain amount of skepticism. We get that. But we also know that while new technology is often disruptive, it can help solve many of the problems we face in the world. We’re excited about the possibilities before us at Google and plan to work hard to make those possibilities real. Larry Page Sergey Brin Co-Founder; President, Products Co-Founder; President, Technology UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-50726 Google Inc. (Exact name of registrant as specified in its charter) Delaware 77-0493581 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1600 Amphitheatre Parkway Mountain View, CA 94043 (Address of principal executive offices) (Zip Code) (650) 253-0000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b)ofthe Act: Title of Each Class Name of Exchange on Which Registered Class A Common Stock, $0.001 par value The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Securities registered pursuant to Section 12(g)ofthe Act: Title of Each Class Class B Common Stock, $0.001 par value Options to purchase Class A Common Stock Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)hasbeen subject to such filing requirements forthe past90 Yes È No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12months (orforsuch shorter period that the registrant was required to submit and postYes È No ‘). Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III ofthis Form10-K orany amendment to this Form10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Largeaccelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Indicate by check markwhether the registrant is ashell company (asdefined in Rule 12b-2ofthe ExchaYes ‘ No È At June 30, 2009, the aggregate market value of shares held by non-affiliates of the registrant (based upon the closing sale price of such shareson The NasdaqGlobal Select Market on June 30, 2009) was $97,782,305,918. At January 29, 2010, there were 243,872,592 shares of the registrant’s Class A common stock outstanding and 74,106,699 shares of the registrant’s Class B common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement for the 2010 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 daysofthe registrant’s fiscal year ended December 31,2009. Form 10-K For the Fiscal Year Ended December 31, 2009 TABLE OF CONTENTS Page PART I Item1. Business ...................................................1......................... Item1A. Risk Factors ...............................................19......................... Item1B. Unresolved Staff Comments ..........................................31................ Item2. Properties ................................................31.......................... Item3. Legal Proceedings .............................................31...................... Item4. Submission of Matterstoa Voteof Security Holders ................................31..... PART II Item5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ............................................32........................ Item6. SelectedFinancial Data ...........................................35................... Item7. Management’s Discussionand Analysis of Financial Condition and Results of Operations ....... 36 Item7A. Quantitative and Qualitative DisclosuresAboutMarketRisk ............................56... Item8. Financial Statements and Supplementary Data .................................58......... Item9. Changes in and DisagreementsWith AccountantsonAccountingand Financial Disclosure ..... 96 Item9A. Controlsand Procedures ...........................................96.................. Item9B. OtherInformation ..............................................96..................... PART III Item10. Directors,ExecutiveOfficers and CorporateGovernance ...............................97.. Item11. ExecutiveCompensation ............................................98................. Item12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .................................................99............................ Item13. Certain Relationships and Related Transactions, and DirectorIndependence .................. 99 Item14. Principal AccountingFeesand Services .....................................99........... PART IV Item15. Exhibits, Financial Statement Schedules ................................................. 100 i PART I ITEM 1. BUSINESS Overview 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 property and our brand one of the most recognized in the world. We maintain a large index of web sites and other online content, which we make freely available via our search engine to anyone with an internet connection. Our automated search technology helps peopleobtain nearly instant accesstorelevant information fromourvast online index. We generate revenue primarily by delivering relevant, cost-effective online advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the third-party web sites that comprise the Google Network use our AdSense program to deliver relevant ads that generate revenueand enhancetheuserexperience. We were incorporated in California in September 1998 and reincorporated in Delaware in August 2003. Our headquarters are located at 1600 Amphitheatre Parkway, Mountain View, California 94043, and our telephone numberis (650) 253-0000. 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-mouthpromotion.Ourdedicationtoputting usersfirst is reflectedin threekeycommitments: • We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective, and we do not accept payment for search result ranking orinclusion. • We will do our best to provide the most relevant and useful advertising. Advertisements should not be an annoying interruption. If any element on a search result page is influenced by payment to us, we will make it cleartoourusers. • We will never stop working to improve our user experience, our search technology, and other important areasof 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 economicgain. How We Provide Value to Our Users We serve our users by developing products that quickly and easily find, create, organize, and share information. We place a premium on products that matter to many people and have the potential to improve their lives. Some of thekeybenefits weoffer include: Comprehensiveness and Relevance. Our search 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 in 1998, our web index contained approximately 30 million 1 documents. We now index billions of web pages and strive to provide the most comprehensive search experience possible. Our team continually improves our relevance algorithms to objectively determine the best answers to our users’ queries and to place these answers at the top of our search results. We are also constantly developing new functionality and enhancing ourofferings toallow ouruserstomorequickly and easily find 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 payment for search result ranking or inclusion. We do accept fees for advertising, but the advertising is clearly marked and separated and does not influence how we generate our search results. Inclusion and frequent updating in our index are open to all sites free of charge. We believe it is important for users to have access to the best available information, not just the information that someone pays forthemtosee. Global Access. We strive to provide our services to everyone in the world, and the Google interface is available in 112 languages. Through Google News, weoffer an automatedcollectionof frequently updatednewsstoriesin 30 languages covering sources from almost 60 countries. We also offer automatic translation of content between various languages and providelocalized versions of Google in many developing countries. Ease of Use. We have always believed that the most useful and powerful search technology hides its complexity from users and gives them a simple, intuitive way to get the information they want. We have devoted significant efforts to creating a streamlined and easy-to-use interface based on a clean search box set prominently on a page free of commercial clutter. We introduce new navigational or informational features when we believe they will bemostuseful toourusers,and only after extensive usability testing and experimentation. Pertinent, Useful Commercial Information. The search for information 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 advertising products. We also present advertisements that are relevant to the information people seek. Our technology automatically rewards ads that userspreferand removesads that they donotfind helpful. Multiple Access Platforms. The mobile phone is the primary way that many people around the world access the internet. We have continued to invest in improving mobile search and have introduced applications that allow userstoaccesssearch,email, maps, directions,and satellite imagery throughtheirmobile devices. Improving the Web. We want to make the web experience as good as possible for users around the world. This includes providing platforms for developers to build, deploy, and run increasingly rich applications. For users, we are investing in areas to improve their experience in using web-based applications, including making browsers morestable and powerful. Products and Services for our Users Our product development philosophy involves rapid and continuous innovation, with frequent releases of early-stage products that we then iterate and improve. 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. 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 main productsand servicesaredescribedbelow. 2 Google.com—Search and Personalization We are focused on building products and services on our web sites that benefit our users and let them find relevant information quickly and easily. These productsand servicesinclude: Google Web Search. In addition to providing easy access to billions of web pages, we have integrated special features into Google Web Search to help people find exactly what they are looking for on the web. The Google.com searchexperiencealso includes items like: • SearchOptionsPanel—helpsusersslice and dicetheirresultsacrossdimensions like time and genre. • Rich Snippets—gives users convenient summary information about their search results at a glance, such as thenumberof starsin a review, orthescheduledtimes forevents. • Music Search—allows userstofind and play music by song, album, artist, orlyrics. • Real-Time Search—blends a live stream of up-to-the-minute content from microblogs and frequently updatedsourcesright onthesearchresultspage. • Google Suggest—shows related query suggestions as users type searches in 153 domains and 52 languages. • Search Personalization—gives users more relevant results based on their previous signed-on search history or,alternatively, basedonanonymous cookiesstoredontheiraccessdeviceif they aresigned-out. • Advanced Search Functionality—enables users to construct more complex queries, for example by using Booleanlogic orrestrictingresultstolanguages, countries,orwebsites. • Web Page Translation—supports 51 languages and automatically translates between any two of these languages, with a total of 2,550language translation pairs. • Integrated Tools—such as a spell checker, a calculator, a dictionary, and currency and measurement converters. • Cached Links—provides snapshots of web pages taken when the pages were indexed, letting users view webpages that arenolongeravailable. • Movie, Music and Weather Information—enables users to quickly and easily find movie reviews and show times, information aboutartists, songs and albums, and weatherconditionsand forecasts. • News, Finance, Maps, Image, Video, Book, Blogs and Groups Information—Users are often best served by different types of results. When relevant, we also search display results from other Google products including Google News, Google Finance, Google Maps, Google Images, Google Videos, Google Books, Google Blog Search,Google ProductSearch,and Google Groups. Google Images. Google Images is our searchable index of images found across the web. To extend the usefulness of searching for images, we offer additional features, such as searching by image size, format, coloration,and image type, suchas photos,clipart, faces, and line drawings. Google Books. Google Books lets users search the full text of a library-sized collection of books to discover books of interest and to learn where to buy or borrow them. Through this program, publishers can host their content and showtheirpublications in oursearchresults. We also workclosely with participating libraries todigitize all or part of their collections to create a full-text searchable online card catalog. Google Books links bring users to pages containing bibliographic information and several sentences of the search term in context, sample book pages, or full text, depending on author and publisher permissions and book copyright status. To date, we have scanned and indexed over 12 million books for search. Last summer we publicly announced our plans to sell our publisher partner’s electronic books, or ebooks, in an open platform direct to consumers and through retail and device partners. We plan to launch this ebook platform in 2010. We are working on obtaining court approval for a settlement agreement reached with the Authors Guild and the Association of American Publishers over lawsuits in 3 the U.S. over Google Books. If the court approves this settlement, millions more in-copyright books will be accessible to our users. Many books will be available for purchase even if they are out of print, expanding the marketforauthorsand publisherstoearnmoney fromtheirworks. Google Scholar. Google Scholar provides a simple way to do a broad search for relevant scholarly literature including peer-reviewed papers, theses, books, abstracts, and articles. Content in Google Scholar is taken from academicpublishers, professional societies, preprintrepositories,universities, and otherscholarly organizations. Google Finance. Google Finance provides a simple user interface to navigate and visualize complex financial information in an intuitive manner, including linking together different data sources, such as news events overlayed onstockprice. Google News. Google News gathers information from thousands of 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 user-customizable Google News home page. These headlines are selected for display entirely by a computeralgorithm, without regardtopolitical viewpoint orideology. Google Videos. Google Videos is our searchable index of videos found across the web. To extend the usefulness of searching for videos, we offer additional features such as searching by video format, quality, length, and more. Google Blog Search. Google Blog Search enables users to search the blogging universe more effectively and find out users’ opinions on a wide variety of subjects. The Google Blog Search index includes every blog that publishes a site feed. Blogs are web pages usually made up of short, informal, and frequently updated posts that arearrangedchronologically. iGoogle and Personalized Search. iGoogle connects users to the information that is most useful and important to them in an easy-to-use and customizable format. Users add gadgets and themes created by Google and developers to create a powerful and personalized homepage and arrange the content the way they want. iGoogle and Personalized Search also include social features, which gives our users better content and search results based on their social graph as well as what they have searched for in the past, making it easier to quickly find the information that is more relevant to them. Users can also view and manage their history of past searchesand theresultsthey have clickedon, and createbookmarkswith labels and notes. Google Product Search. Google Product Search helps users find and compare products from merchants and directs users to where they can buy these products. Users can search for product information that is submitted electronically by sellers orautomatically identified by Google software. Google Merchant Center. Google Merchant Center lets merchants submit product listings that they want to share on Google web sites. Merchants can describe and assign attributes to the information they submit and Google usesthis descriptivecontenttobettertargetsearchresultstowhat usersarelooking for. Google Custom Search. Google Custom Search allows communities of users familiar with particular topics to build customized search engines. These customized search engines allow the communities to help improve the quality of search results by labeling and annotating relevant web pages or by creating specialized, subscribed links foruserstoget moredetailed information abouta particulartopic. Google Trends. Google Trends provides users with the ability to track the popularity of keyword searches over time on Google. Users can simply type in any search or compare multiple keyword searches, including people, places, ornewsevents toobservetherelative searchinterestovertime fromall overtheworld. Google Music Search. Google Music Search provides a fast and easy “click-to-play” music discovery service for users searching for music. By entering an artist, album, or song search into Google, users can click the play buttononthesearchresultspagetopreviewthesong instantly in themusic player providedby ourmusic partners. 4 Google Webmaster Tools. Google Webmaster Tools enables webmasters to understand their sites’ performance in Google’s search results. Rich data and diagnostics provide insight into top search queries, site performance, and potential problems such as crawl errors and malware. In turn, higher-quality web sites improve Google’s ability tocrawland indextheweband providemorerelevant results. Applications Information created by a single user becomes much more valuable when shared and combined with information from other people or places. Therefore our strategy for products we develop in this space is simple: develop tools for our users to create, share, and communicate any information generated by the user, thus making the information more useful and manageable. Examples of products we have developed with this strategy in mind include: Google Docs. Google Docs allows our users to create, view, edit, and share documents, spreadsheets, and presentations from anywhere using a browser. Consumers and business users value the ability to use Google server storage and backup as the foundation of this product as it allows them to access their personal and shared content from any internet-connected device and reduces their dependence on a single physical computer or laptop storage system. Collaborative editing, uploading any file type, controlled sharing, data collection using custom forms, and open export of data in a variety of open formats are among the expanded features which differentiate Google Docs. Google Calendar. Google Calendar is a free online shareable calendar service that allows users to keep track of the important events, appointments, and special occasions in their lives and share this information with anyone they choose. Gmail. Gmail is Google’s free webmail service that comes with built-in Google search technology to allow searching of emails and over seven gigabytes of storage, allowing users to keep their important messages, files, and pictures.We servesmall textads that arerelevant tothemessages in Gmail. Google Groups. Google Groups is a free service that helps groups of people connect to information and people that have interest in them. Users can discuss topics with each other by creating mailing lists and discussion forums. Google Reader. Google Reader is a free service that lets users subscribe to feeds and receive updates from multiple web sites in a single interface. Google Reader also allows users to share content with others,and functions with many types of media and reading-styles. orkut. orkut enables users to search and connect to other users through networks of trusted friends. Users cancreatea profile and a personalmailbox, postphotos,and join ormanage online communities. Blogger. Bloggeris a web-basedpublishing tool that lets peoplepublish tothewebinstantly using blogs. Google Sites. Google Sites allows users to easily create, update, and publish content online without technical expertise, with control over who can see and update the site. Google Sites supports a variety of information such as videos, calendars,presentations,spreadsheets,discussions, and texts. YouTube. YouTube is an online community that lets users worldwide upload, share, watch, rate, and comment on videos, from user generated to niche professional to premium videos. In addition, YouTube offers a range of video and interactive formats foradvertiserstoreachtheirintendedaudience. 5 Client Google Toolbar. Google Toolbar is a free application that adds a Google search box to web browsers (Internet Explorer and Firefox) and improves the user experience through features such as a pop-up blocker, that blocks pop-up advertising, translate, which enables users to automatically translate web pages in 40 languages, Sidewiki, which allows users to add high quality content to a sidebar next to a web page, an autofill feature that completes web forms with information saved on a user’s computer, and customizable buttons that let users search their favorite websites and stay updatedontheirfavorite feeds. Google Chrome. Google Chrome is an open-source browser for Windows, Mac, and Linux that combines a minimal design with technologiestomakethewebfaster, safer, and easiertonavigate. Google ChromeOS. Google ChromeOS is an opensourceoperatingsystem foruserswhospendmostof their time on the web. Google Chrome OS is built around the core tenets of speed, simplicity, and security. Google is working with several original equipment manufacturers to bring computers running Google Chrome OS to users in 2010. Google Pack. Google Pack is a free collection of safe and useful software programs from Google and other companies that improve the user experience online and on the desktop. It includes programs that help users browsethewebfaster and removespywareand viruses. Picasa. Picasa is a free service that allows users to view, manage, and share their photos. Picasa enables users to import, organize, and edit their photos, and upload them to Picasa Web Albums where the photos can be sharedwith othersontheinternet. Google Desktop. Google Desktop lets people perform a full-text search on the contents of their own computer, including email, files, instant messenger chats, and web browserhistory. Users can view web pages they have visited even whenthey arenotonline. Google GEO—Maps, Earth and Local Google Local Search. Google Local Search powers local queries on Google.com, Google Maps, Google Earth, and mobile. Google Local Search provides a comprehensive search experience by combining business listings with the best sources of ratings, reviews, photos, and other information on the web. Google also offers the Local Business Center as a way for businesses to “claim” their business on Google, verify their data, and provide additional information suchas website, hoursof operation,photos,videos, and real-timeupdates. Google Maps. Google Maps helps users explore the world from their desktop or phone using global mapping data, satellite imagery, and Google Street View imagery. Google provides its own map data for the U.S. and certain other countries, including more than 181 countries and territories where users author and improve Google Maps using Google Map Maker. Google Maps includes Smart Maps, which labels the most prominent places, businesses, and attractions directly onto the map, and Google Transit, which provides up-to-date information on local transit options in more than 200 cities around the world. We display relevant targeted ads for searches done through Google Maps. Panoramio. Panoramio enables users to upload photos and locate them on the earth using Google Maps. These photosarethenincorporatedinto Maps, Earth, LocalSearch,and PlacePages. Google Earth. Google Earth offers an immersive, three-dimensional (3D)way to explore our mapping data and imagery. Google Earth includes detailed maps of the earth’s ocean floors and Sky, an astronomical imagery library with images of over100 million starsand 200 million galaxies. 6 Google SketchUp, Google 3D Warehouse and Google Building Maker. Google SketchUp is a free tool that enables users to model buildings in 3D. Using Google 3D Warehouse, SketchUp can be used as a tool for populating Google Earth with 3D building models. We sell the Pro version of this tool. which includes additional features, to professional designers. Building Maker allows users to easily create 3D models directly in a web browser. Android and Google Mobile Android. Android is a free, open-source mobile software platform that allows developers to create applications for mobile devices and for handset manufacturers to install. Android is being developed with the Open Handset Alliance, a business alliance of 65 technology and mobile companies, with the goal of providing consumers a less expensive and more powerful mobile experience. Today, there are 26 Android devices supported by 60 carriers in 49 countries and 19 languages. We also recently launched the Nexus One, an Android handset sold by Google directly toconsumers. Google Mobile. Google Mobile extends our products and services by providing mobile-specific features, including voice input and location-basedtechnology, tomobile phoneusers.Specific areasof focusinclude: Mobile Search.Ourmobile-specificsearchtechnologiesinclude: • Search by Voice—using their phone’s speaker and microphone, users can speak their queries to Google in English, Mandarin, orJapanese. • Search by Sight—using their phone’s digital camera to take pictures, users can search for objects using images instead of words. • Search by Location—using their phone’s GPS, users can instantly find the closest and most popular placesnearbydirectly fromtheGoogle Mobile homepage—withouttyping a single character. Mobile Applications. Google Mobile optimizes the majority of Google’s applications for mobile phones in both browserand downloadable form.Two of ourmostpopularmobile applications include Gmail and Maps. Mobile Ads. We offer mobile ad products spanning our advertiser and publisher-focused efforts, Google AdWords,and Google AdSense. Specific mobile ad optimizations include: • Smartphone Targeting—advertisers can now check a single box inside of AdWords to target their advertising campaigns at mobile phoneslike Androiddevicesand theiPhone. • AdSense for Mobile Apps—mobile developers and publishers can now integrate targeted advertising directly into theirAndroidoriPhoneapplications. Google Checkout Google Checkout is a service we offer our users, merchants, and advertisers to make online shopping and payments more streamlined and secure. For users, Google Checkout provides a friendly interface to make payments without disclosing their credit card numbers or other sensitive financial information, and to maintain a centralized record of all their purchases. For merchants, Google Checkout provides a payment mechanism that has industry-leading fraud prevention,andincreasedconversionand transactioncompletionrates. Google Labs Google Labs is our test bed for our engineers and 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 Fast Flip, a Google News feature that delivers fast overviews of headline pages of top newspapers in rich visual format, and Google Image Swirl, a new experimental feature that organizes images into visually and semantically relatedgroupsand presentsthemin an exploratoryinterface. 7 The Technology Behind Search and Our User Products and Services Our web search technology uses a combination of techniques to determine the importance of a web page independentof a particularsearchqueryand todeterminetherelevanceof that page toa particularsearchquery. Ranking Technology. One element of our technology for ranking web pages is called PageRank. While we developed much of our ranking technology after Google was formed, PageRank was developed at Stanford University with the involvement of our founders and was therefore published as research. 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 PageRankof a page is the sum 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 moreheavily and aremoreinfluential in deciding thePageRankof pages ontheweb. 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-matchingtechniques,weareable todeliver searchresultsthat arerelevant towhat usersaretrying tofind. Infrastructure. We provide our products and services using our own 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 benefits. This infrastructure 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 productdevelopmentcycleand lets us pursueinnovation morecosteffectively. How We Provide Value to Our Advertisers and Content Owners Google AdWords For advertisers seeking to market their products and services to consumers and business users over the internet, we offer Google AdWords, an auction-based advertising program that lets advertisers deliver relevant ads targeted to search queries or web content across Google sites and through the web sites of our Google Network, which is the network of third parties that use our advertising programs to deliver relevant ads with their search results and content. The Google Network is also increasingly encompassing different forms of media as well, including content providers who use our advertising programs to deliver ads in online video, television and radio broadcasts.AdWordsis accessibletoadvertisersin 41different interfacelanguages. 8 Advertisers in our AdWords program create text-based or display ads, bid on the keywords that will trigger the display of their ads and set daily spending budgets. AdWords features an automated online signup process that lets advertisers quickly implement ad campaigns on Google properties and the web sites of our Google Network members. Ads are ranked for display in AdWords based on a combination of the maximum cost-per-click pricing 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 most relevant to users, improving the experience both for the person looking for information and for the advertiser who is generating relevant ads. The AdWords program offers advertisers the following additional benefits: Return on Investment. Many advertising dollars are spent delivering messages in an untargeted fashion, and payment for these advertisements is not tied to performance. AdWords shows ads only to users seeking information related to what the advertisers are selling, and advertisers choose how much they want to pay when a user clicks on their ad. Because we offer a simple ad format, advertisers can also avoid incurring significant costs associated with creating ads. As a result, even small advertisers find AdWords cost-effective for connecting with potential customers. In addition, advertisers can create many different ads, increasing the likelihood that an ad is suited to a user’s search. Users can find advertisements for what they are seeking, and advertiserscanfind userswhowant what they areoffering. Branding. In addition to our cost-per-click pricing model, we also allow advertisers to pay on a cost-per-impression basis on the Google Network. We also offer Placement Targeting, a service that lets advertisers target specific web sites with text and display ads, so that they can more effectively reach specific sets of customers. In addition to targeting sites by content, advertisers can choose placements on sites based on user demographic attributes. To protect user privacy, we use only third-party opt-in panel data to map the demographics of sites in our networks. Placement Targeting is an auction-based system where placement targetedads competewith keyword-targetedads in thesame auction. Access to the Google Search and Content Network. We serve AdWords ads on Google properties, our syndicated search partners’ web sites, and the millions of third-party web sites that make up the Google Network. As a result, we can offer extensive search and content inventory on which advertisers can advertise. Apart from keyword-based ads targeted to search queries and Placement Targeting, we also offer advertisers an effective contextual advertising option—Content Targeting—that displays their ads on relevant content pages across our network of partner sites and products. As a result, AdWords advertisers can target users on Google properties and on search and content sites across the web. This gives advertisers increased exposure to users who are likely to be interested in their offerings. The Google Network significantly enhances ourability toattractinterestedadvertisers. 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 or views an ad. Other features that make it easy to set up and manage ad campaigns include: • Campaign Management. Advertiserscantargetmultiple ads toa given keywordand easily trackindividual ad performancetoseewhich ads arethemosteffective. • Conversion Tracking. Conversion tracking is a free tool integrated into AdWords reports that measures the conversions of an advertiser’s campaigns, enabling a better understanding of the overall return on investment generatedfortheadvertiserby theAdWordsprogram. • Traffic Estimator. This tool estimates the number of searches and potential costs related to advertising ona particularkeywordorsetof keywords. • Quality-Based Bidding. Advertisers’ keywords are assigned dynamic first page bids based on their Quality Score—the higher the Quality Score, the lower the first page bid. This rewards advertisers with relevant keywordsand ads. 9 • Budgeted Delivery. Advertisers can set daily budgets for their campaigns and control the timing for delivery of theirads. • AdWords Discounter. This feature gives advertisers the freedom to increase their maximum cost-per-click because it automatically adjusts pricing so that they never pay more than the minimum amount requiredtoexceedtherankof thenextrankedad. We offer larger advertisers additional services that help maximize returns on their internet marketing investments and improve their ability to run large, dynamic campaigns. These include dedicated client service representativesas well as: • Creative Maximization. Our AdWords specialists help advertisers select relevant keywords and create moreeffective ads. • Vertical Market Experts. Specialists with experience in particular industries offer guidance on how to targetpotential customers. • Bulk Posting. We help businesses launch and manage large ad campaigns with hundreds or even thousandsof targetedkeywords. • The AdWords API and Commercial Developer Program. For large advertisers as well as third parties, Google’s freeAdWordsAPIservicelets developersengineercomputerprogramsthat interactdirectly with the AdWords system. With such applications, advertisers and third parties can more efficiently and creatively manage their large AdWords accounts and campaigns. The AdWords Commercial Developer Program also enables our third-party developer ecosystem to continue designing and delivering innovative business applications basedontheAdWordsplatform and distribution channel. Global Support. We provide customer service to our advertiser base through our global support organization. AdWords is available on a self-service basis with email and real-time chat support. At certain spending levels and through certain signup channels, phone support is also available. Advertisers with more extensive needs and advertising budgets can request strategic support services, which include an account team, to help them set up and manage their campaigns. Depending on geography, we accept bank and wire transfers, direct debit, and local debit cards carrying the Visa and MasterCard logos. We also accept payment through international credit cards. For selected advertisers, we offer several options for credit terms and monthly invoicing. We accept payments in over40currencies. Google AdSense We are enthusiastic about helping content owners monetize their content, which facilitates the creation of better content to search. If there is better content on the web, users are likely to do more searches, and we expect that will be good for our business and for users. Our Google AdSense program enables web sites that are part of the Google Network to deliver AdWords ads that are relevant to the search results or content on their pages. In addition to AdWords, we also surface non-search AdSense inventory (the Content Network) on the DoubleClick Ad Exchange, allowing certified third party display ad networks to compete with AdWords ads for AdSense inventory. We share most of the revenue generated from ads shown by a Google Network member with that member.The keybenefits weoffer toGoogle Networkmembersinclude: • Access to Advertisers.Many small web site companies and content producers do not have the time or resources to develop effective programs for generating revenue fro
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