Google Final Doc

8/14/2019 Google Final Doc

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Background and History of Search

Web search, in comparison to its short life span, has an enormous presence in the lives of people who spend time online. Initial web search e

Alta Vista, Excite, Inktomi, LookSmart, Lycos, Alltheweb - are now largely unkown. A few engines were consolidated and then eventually acq

larger companies (Yahoo, for example, purchased Overture who had earlier purchased Alltheweb). Search Engine History provides a detailed ove

initial search companies - predating the Web itself.

A key downfall for many search engines arose as they sought to move beyond search into more general information provision such as s

services. The result: portals. Portals resulted in a dilution of the quality of search and often provided confusing and complex interfaces. The in

service like Yahoo, for example, was to keep individuals on site as long as possible. In contrast, Google kept the search interface clean and emp

"pushing people" to resources they might find to be of value.

Evolution of Google


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1997

The search for a buyer

Larry and Sergey continued working to perfect their technology through the first half of 1997. Following a path that would become a key tene

Google way, they bought a terabyte of disks at bargain prices and built their own computer housings in Larry's dorm room, which became Goog

data center. . Meanwhile Sergey set up a business office, and the two began calling on potential partners who might want to license a search tec

better than any then available.

Among those they called on was friend and Yahoo! founder David Filo. Filo agreed that their technology was solid, but encouraged Larry and Sgrow the service themselves by starting a search engine company. "When it's fully developed and scalable," he told them, "let's talk again." Others w

interested in Google, as it was now known. One portal CEO told them, "As long as we're 80 percent as good as our competitors, that's good enou

users don't really care about search."

Touched by an angel

Unable to interest the major portal players of the day, Larry and Sergey decided to make a go of it on their own. All they needed was a little cash t

out of the dorm and to pay off the credit cards they had maxed out buying a terabyte of memory. So they wrote up a business plan. Andy Becht

one of the founders of Sun Microsystems, was used to taking the long view. One look at their demo and he knew Google had potential a lot of pIt was made out to Google Inc. and was for $100,000."

Already Google.com, still in beta, was answering 10,000 search queries each day. The press began to take notice of the upstart website with the

search results, and articles extolling Google appeared in USA TODAY and Le Monde. That December, PC Magazine named Google one of its Top

Sites and Search Engines for 1998. Google was moving up in the world.

Advertising that people wantto see

In February of 2002, AdWords, our self-service advertising system, received a major overhaul, including a cost-per-click (CPC) pricing model th

search advertising as cost-effective for small businesses as for large ones. Our approach to advertising has always followed the same principle that w
http://en.wikipedia.org/wiki/Andy_Bechtolsheimhttp://adwords.google.com/select/?hl=enhttp://en.wikipedia.org/wiki/Andy_Bechtolsheimhttp://adwords.google.com/select/?hl=en


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well for search: Focus on the user and all else will follow. For ads, this means using keywords to target ad delivery and ranking ads for relevan

user's query. As a result, ads only reach the people who actually want to see them - an approach that benefits users as well as advertisers.

All the news that's fit to click

Google News launched in beta in September of 2002, offering access to 4,500 leading news sources from around the world. Headlines and ph

automatically selected and arranged by a computer program which updates the page continuously. The free service lets users scan, search, and brow

links from each headline to the original story.

And speaking of the world at large, our Keyhole acquisition last fall led us to create Google Earth, which was unveiled in late June. This technology

users to fly through space, zooming into specific locations they choose, and seeing the real world in sharp focus. It turns out that when we talk ab

world's information," we mean geography too.

Although August is traditionally a time to slow down, we didn't seem to. We released two significant products during the month: Google Talk, a fre

actually speak to people anytime, anywhere via your computer, featuring crystal-clear voice technology, plus an instant message service; and

generation ofGoogle Desktop, now offering at-a-glance access to your files, email, news, photos, weather, RSS feeds, stocks and other personali

content.

Google Chat connected people through Gmail and Talk, becoming the first service to integrate email and instant messaging within a web brow

updated version ofGoogle Desktop made it easier for people to find and share information on their own computers. 2006

In March,Google Finance debuted to improve upon the information that many investors, stock-watchers, and businesses rely on daily. Develope

Bangalore R&D Center as a 20%-time project, Google Finance puts stock movements into better context with related news and blog posts. 2006

More, more, more...

There's always more around Google...

Google Philosophy:
http://www.google.com/http://earth.google.com/http://www.google.com/corporate/index.htmlhttp://www.google.com/talk/http://www.google.com/talk/http://desktop.google.com/http://desktop.google.com/http://mail.google.com/mail/help/chat.htmlhttp://www.google.com/corporate/www.google.comhttp://www.google.com/corporate/www.google.comhttp://www.google.com/intl/en/press/annc/finance.htmlhttp://www.google.com/intl/en/press/annc/finance.htmlhttp://www.google.com/http://earth.google.com/http://www.google.com/corporate/index.htmlhttp://www.google.com/talk/http://desktop.google.com/http://mail.google.com/mail/help/chat.htmlhttp://www.google.com/corporate/www.google.comhttp://www.google.com/intl/en/press/annc/finance.html


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Never settle for the best

"The perfect search engine," says Google co-founder Larry Page, "would understand exactly what you mean and give back exactly what you want

the state of search technology today, that's a far-reaching vision requiring research, development and innovation to realize. Google is committed to

that trail. Though acknowledged as the world's leading search technology company, Google's goal is to provide a much higher level of service to

who seek information, whether they're at a desk in Boston, driving through Bonn, or strolling in Bangkok.

To that end, Google has persistently pursued innovation and pushed the limits of existing technology to provide a fast, accurate and easy-to-us

service that can be accessed from anywhere. To fully understand Google, it's helpful to understand all the ways in which the company has helped to how individuals, businesses and technologists view the Internet.

Ten things Google has found to be true

1. Focus on the user and all else will follow.

From its inception, Google has focused on providing the best user experience possible. While many companies claim to put their customers first,

able to resist the temptation to make small sacrifices to increase shareholder value. Google has steadfastly refused to make any change that does no

benefit to the users who come to the site:

The interface is clear and simple.

Pages load instantly.

Placement in search results is never sold to anyone.

Advertising on the site must offer relevant content and not be a distraction.

By always placing the interests of the user first, Google has built the most loyal audience on the web. And that growth has come not throug

campaigns, but through word of mouth from one satisfied user to another.

2. It's best to do one thing really, really well.

Google does search. With one of the world's largest research groups focused exclusively on solving search problems, we know what we do well,

we could do it better. Through continued iteration on difficult problems, we've been able to solve complex issues and provide continuous improvem


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service already considered the best on the web at making finding information a fast and seamless experience for millions of users. Our dedic

improving search has also allowed us to apply what we've learned to new products, including Gmail, Google Desktop, and Google Maps. As we con

build new products* while making search better, our hope is to bring the power of search to previously unexplored areas, and to help users access

even more of the ever-expanding information in their lives.

3. Fast is better than slow.

Google believes in instant gratification. You want answers and you want them right now. Who are we to argue? Google may be the only compan

world whose stated goal is to have users leave its website as quickly as possible. By fanatically obsessing on shaving every excess bit and byte fpages and increasing the efficiency of our serving environment, Google has broken its own speed records time and again. Others assumed large serv

the fastest way to handle massive amounts of data. Google found networked PCs to be faster. Where others accepted apparent speed limits imp

search algorithms, Google wrote new algorithms that proved there were no limits. And Google continues to work on making it all go even faster.

4. Democracy on the web works.

Google works because it relies on the millions of individuals posting websites to determine which other sites offer content of value. Instead of rely

group of editors or solely on the frequency with which certain terms appear, Google ranks every web page using a breakthrough techniqu

PageRank. PageRank evaluates all of the sites linking to a web page and assigns them a value, based in part on the sites linking to them. By analy

full structure of the web, Google is able to determine which sites have been "voted" the best sources of information by those most intereste

information they offer. This technique actually improves as the web gets bigger, as each new site is another point of information and another vo

counted.

5. You don't need to be at your desk to need an answer.

The world is increasingly mobile and unwilling to be constrained to a fixed location. Whether it's through their PDAs, their wireless phones or ev

automobiles, people want information to come to them. Google's innovations in this area include Google Number Search, which reduces the nu

keypad strokes required to find data from a web-enabled cellular phone and an on-the-fly translation system that converts pages written in HT

format that can be read by phone browsers. This system opens up billions of pages for viewing from devices that would otherwise not be able to


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them, including Palm PDAs and Japanese i-mode, J-Sky, and EZWeb devices. Wherever search is likely to help users obtain the information th

Google is pioneering new technologies and offering new solutions.

6. You can make money without doing evil.

Google is a business. The revenue the company generates is derived from offering its search technology to companies and from the sale ofad

displayed on Google and on other sites across the web. However, you may have never seen an ad on Google. That's because Google does not allow

displayed on our results pages unless they're relevant to the results page on which they're shown. So, only certain searches produce sponsored links a

to the right of the results. Google firmly believes that ads can provide useful information if, and only if, they are relevant to what you wish to find.

Google has also proven that advertising can be effective without being flashy. Google does not accept pop-up advertising, which interferes with you

to see the content you've requested. We've found that text ads (AdWords) that are relevant to the person reading them draw much higher clickthrou

than ads appearing randomly. Google's maximization group works with advertisers to improve clickthrough rates over the life of a campaign, beca

clickthrough rates are an indication that ads are relevant to a user's interests. Any advertiser, no matter how small or how large, can take advantag

highly targeted medium, whether through our self-service advertising program that puts ads online within minutes, or with the assistance of a

advertising representative.

Advertising on Google is always clearly identified as a "Sponsored Link." It is a core value for Google that there be no compromising of the integrit

results. We never manipulate rankings to put our partners higher in our search results. No one can buy better PageRank. Our users trust Google's ob

and no short-term gain could ever justify breaching that trust.

Thousands of advertisers use our Google AdWords program to promote their products; we believe AdWords is the largest program of its kind. In a

thousands of web site managers take advantage of ourGoogle AdSense program to deliver ads relevant to the content on their sites, improving the

to generate revenue and enhancing the experience for their users.

7. There's always more information out there.

Once Google had indexed more of the HTML pages on the Internet than any other search service, our engineers turned their attention to informa

was not as readily accessible. Sometimes it was just a matter of integrating new databases, such as adding a phone number and address looku
http://www.google.com/corporate/tech.htmlhttp://www.google.com/ads/https://adwords.google.com/select/?hl=enhttp://www.google.com/adsensehttp://www.google.com/corporate/tech.htmlhttp://www.google.com/ads/https://adwords.google.com/select/?hl=enhttp://www.google.com/adsense


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business directory. Other efforts required a bit more creativity, like adding the ability to search billions of images and a way to view pages th

originally created as PDF files. The popularity of PDF results led us to expand the list of file types searched to include documents produced in

formats such as Microsoft Word, Excel and PowerPoint. For wireless users, Google developed a unique way to translate HTML formatted files into

that could be read by mobile devices. The list is not likely to end there as Google's researchers continue looking into ways to bring all the

information to users seeking answers.

8. The need for information crosses all borders.

Though Google is headquartered in California, our mission is to facilitate access to information for the entire world, so we have offices around the gthat end we maintain dozens of Internet domains and serve more than half of our results to users living outside the United States. Google search re

be restricted to pages written in more than 35 languages according to a user's preference. We also offer a translation feature to make content ava

users regardless of their native tongue and for those who prefer not to search in English, Google's interface can be customized into more th

languages. To accelerate the addition of new languages, Google offers volunteers the opportunity to help in the translation through an autom

available on the Google.com website. This process has greatly improved both the variety and quality of service we're able to offer users in even the m

flung corners of the globe.

9. You can be serious without a suit.

Google's founders have often stated that the company is not serious about anything but search. They built a company around the idea that work s

challenging and the challenge should be fun. To that end, Google's culture is unlike any in corporate America, and it's not because of the ubiqui

lamps and large rubber balls, or the fact that the company's chef used to cook for the Grateful Dead. In the same way Google puts users first when i

to our online service, Google Inc. puts employees first when it comes to daily life in our Googleplex headquarters. There is an emphasis

achievements and pride in individual accomplishments that contribute to the company's overall success. Ideas are traded, tested and put into practice

alacrity that can be dizzying. Meetings that would take hours elsewhere are frequently little more than a conversation in line for lunch and fe

separate those who write the code from those who write the checks. This highly communicative environment fosters a productivity and camaraderi

by the realization that millions of people rely on Google results. Give the proper tools to a group of people who like to make a difference, and they w

10. Great just isn't good enough.
http://services.google.com/tcbin/tc.pyhttp://services.google.com/tcbin/tc.py


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Of greater concern, however, is the impact of how Google works - how and why search results appear as they do. Why does one resource appear onone and another on page ten? Did you know that search results are different when you search in Canada vs. searching in the US? Did you know thatcan capture your entire search history and make that searchable as well? Did you know that Google "reads" your email and inserts text ads based oncontent it finds?

The life span of a Google query normally lasts less than half a second, yet involves a number of different steps that must be completed before resultsdelivered to a person seeking information.

3.The search resultsare returned to theuser in a fraction of asecond.

1.The web server sends the query to the indexservers. The content inside the index servers issimilar to the index in the back of a book - it tellswhich pages contain the words that match thequery.

2.The query travels to thedoc servers, which actuallyretrieve the storeddocuments. Snippets aregenerated to describe eachsearch result.


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Google list of acquisitions:

Date CompanyBusiness

AreaGood/Bad

September 20, 2001 Deja's Usenet archiveGoogleGroups

GOOD

(still being used and

out of beta)

September 20, 2001 Outride, Inc.Onlineretrieval tech

GOOD

(info retrieval is keyto the search

business)

February, 2003 Pyra Labs Blogger

MIXED

(nothing has been

done with bloggersince the purchase,

but money is madeoff of all the MFA

sites)

April, 2003 Neotonic SoftwareCRM

technology

MIXED

(good if you countautomated support

a positive thing;

bad if you are tryingto actually resolve

an issue)

April, 2003Applied Semantics ($102million)

Adwords /Adsense

GOOD

(adwords andadsense made

Google the money

printer that it is)

September 30, 2003 KaltixSearchenginetechnology

GOOD

(acquiring patentsfor the core

business is almostalways good)

May 10, 2004 Ignite Logic Template

maker

BAD

(aside from use in


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Blogger, where else

does Google needtemplates?)

July 13, 2004 PicasaPhotomanagementsoftware

MIXED

(bad in that they

havent doneanything with it yet,

good in that theystill could do a lot

with it)

October 27, 2004 Keyhole, Inc. Google Earth

GOOD

(a popular productwith incomepotential)

Sept.-Dec., 2004 Where2 Google MapsGOOD

(a nice compliment

to Google Earth)

Sept.-Dec., 2004 ZipDashGoogle RideFinder

GOOD

(if it ever gets out ofbeta it has

potential)

2005 2Web Technologies Spreadsheets

GOOD

(part of

Googles officesuite)

March 28, 2005Urchin SoftwareCorporation

Web stats

GOOD(Google gets more

userdata.information is

power; a recurring

theme)

May 12, 2005 DodgeballSocialnetworking

BAD

(nothing was donewith this)

July, 2005 Reqwireless Web browser and wirelesse-mail

MIXED

(good for near term,

but long-term theonly difference

between a officecomputer and a


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phone is the

browser agent isslightly tweaked)

July 7, 2005Current CommunicationsGroup ($100million)

BroadbandInternet

GOOD

(this is really good.

Control upstreamdata [more power]

and bypass greediercable companies)

August 17, 2005 Android PDAsoftware

BAD

(doubtful that PDA

specific softwarewill matter for toomuch longer - see

Reqwireless)

November, 2005 SkiaGraphicssoftware

GOOD

(part of Google'soffice suite)

November 17, 2005Akwan InformationTechnologies

LatinAmericanInternetoperations

GOOD

(more upstream

data; tap into a

growing market)

January 17, 2006 dMarc BroadcastingRadio

Advertising

GOOD

(I think this mightbe one of their best

purchases forexpanding the ad

network)

February 14, 2006 Measure Map Blog analysis

GOOD

(more data, more

powerand it canbe useful in

determining realblogs versus splogs)

March 9, 2006 UpstartleWordprocessing

GOOD

(part of


March 14, 2006 @Last Software 3-Dmodeling

GOOD

(possible part of


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Googles office

suite)

April 9, 2006 Orion SearchGOOD

(againcoreproduct is search)

August 15, 2006 Neven VisionPhotoaggregator

GOOD

(good if it truly is

used with Picasa todo something

useful)

October 31, 2006 JotSpot Wiki creator

MIXED

(similar to Pyrapurchase, in termsof controlling the

means for people toget started online

good ifexecuted)

November, 2006 Youtube Online video

GOOD

(this is a big ad

revenue stream

about to pop)

December, 2006 EndoxonMappingsolutions

GOOD

(technologies willcompliment Earth

and Maps)

January, 2007 XunleiNetwork,file-sharing

GOOD

(control theusers e-mail,

virtual hard disk

spacethe entiredataset of being

online)

February, 2007 AdscapeVideo gameadvertising

GOOD

(another channel topush ads)

March, 2007 Trendalyzer Analysis GOOD(understanding the

data better, even ata fractional


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percentage, will

result in higherrevenue)

April, 2007 Tonic SystemsPresentationsoftware

GOOD

(another product for


April, 2007 MarratechVideoconferencing

GOOD

(continue to control

the medium forpushing

adsmight be agood fit withdMarc)

May 11, 2007 GreenBorder TechnologiesDesktopenterprisesecurity

GOOD

(securing data and

the user experienceallows for further

scaling)

Acquisition of Youtube by Google:

About YouTube:

Founded in February 2005, YouTube is a consumer media company for people to watch and share original videos worldwide through a Web exp

YouTube allows people to easily upload and share video clips on www.YouTube.comand across the Internet through websites, blogs, and e-mail. Y

currently delivers more than 100 million video views every day with 65,000 new videos uploaded daily and it has quickly become the leading de

on the Internet for video entertainment.

October 9, 2006 : $1.65 billion in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its su

brand and passionate community.

The acquisition combines one of the largest and fastest growing online video entertainment communities with Google's expertise in organizing info

and creating new models for advertising on the Internet. The combined companies will focus on providing a better, more comprehensive exper
http://www.youtube.com/http://www.youtube.com/http://www.youtube.com/


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users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their

reach a vast new audience.

"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and

universally accessible and useful," said Eric Schmidt, Chief Executive Officer of Google. "Our companies share similar values; we both alway

users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainmen

to users, content owners and advertisers."

"Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Googlebenefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to cre

opportunities for our partners," said Chad Hurley, CEO and Co-Founder of YouTube. "I'm confident that with this partnership we'll have the flexib

resources needed to pursue our goal of building the next-generation platform for serving media worldwide."

When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google's own fast-growi

business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. With Google's tec

advertiser relationships and global reach, YouTube will continue to build on its success as one of the world's most popular services for video enterta

The number of Google shares to be issued in the transaction will be determined based on the 30-day average closing price two trading days prio

completion of the acquisition. Both companies have approved the transaction, which is subject to customary closing conditions and is expected to

the fourth quarter of 2006.

Google buys double click for 3.1bn $

Combination Will Significantly Expand Opportunities for Advertisers, Agencies and Publishers and Improve Users' Online Experience

MOUNTAIN VIEW, Calif., April 13, 2007 - Google Inc. (NASDAQ: GOOG) announced today a definitive agreement to acquire DoubleClick Inc.,

leader in digital marketing technology and services, for$3.1 billion in cash from San Francisco-based private equity firm Hellman & Friedman alo


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JMI Equity and management. The acquisition will combine DoubleClicks expertise in ad management technology for media buyers and sell

Googles leading advertising platform and publisher monetization services.

The combination of Google and DoubleClick will offer superior tools for targeting, serving and analyzing online ads of all types, significantly b

customers and consumers:

For users, the combined company will deliver an improved experience on the web, by increasing the relevancy and the quality of the

see.

For online publishers, the combination provides access to new advertisers, which creates a powerful opportunity to monetize their inventoefficiently.

For agencies and advertisers, Google and DoubleClick will provide an easy and efficient way to manage both search and display ads in on

They will be able to optimize their ad spending across different online media using a common set of metrics.

It has been our vision to make Internet advertising better less intrusive, more effective, and more useful. Together with DoubleClick, Google w

the Internet more efficient for end users, advertisers, and publishers, said Sergey Brin, Googles Co-Founder and President, Technology.

DoubleClicks technology is widely adopted by leading advertisers, publishers and agencies, and the combination of the two companies will accel

adoption of Googles innovative advances in display advertising, said Eric Schmidt, Chief Executive Officer of Google.

This transaction will strengthen our advertising network by expanding our access to publisher inventory and enabling us to serve the needs of a br

of advertisers and ad agencies, said Tim Armstrong, Googles President, Advertising and Commerce, North America.

Google is the absolute perfect partner for us, said David Rosenblatt, Chief Executive Officer of DoubleClick. Combining DoubleClick's cutt

digital solutions for both media buyers and sellers with Googles scale and innovative resources will bring tremendous value to both our emplo

clients.

When we acquired DoubleClick in July 2005, we saw an opportunity to partner with a great management team to further enhance the com

capabilities and growth trajectory, said Philip Hammarskjold, Managing Director of Hellman & Friedman. This transaction affirms the su

transformation of DoubleClick, positions the firm for the future, and greatly benefits our investors.


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Both companies have approved the transaction, which is subject to customary closing conditions, and is expected to close by the end of the year.

About Google Inc.

Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanfo

students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program p

businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with

throughout the Americas, Europe and Asia. For more information, visit www.google.com.

About DoubleClick, Inc.

DoubleClick is a provider of digital marketing technology and services. The world's top marketers, publishers and agencies utilize Doub

expertise in ad serving, rich media, video, search and affiliate marketing to help them make the most of the digital medium. From its positi

nerve center of digital marketing, DoubleClick provides superior insights and insider knowledge to its customers. Headquartered in New York, a

17 offices and development hubs and 15 data centers worldwide, the company employs more than 1200 people and delivers billions o

communications every day. Learn more at www.doubleclick.com
http://www.google.com/http://www.doubleclick.com/http://www.google.com/http://www.doubleclick.com/


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Fourth Quarter 2007 Highlights

2

Revenue growth of 51% Y/Y and 14% Q/Q

Google properties revenue growth of 58% Y/Y and 14% Q/Q, driven by strength in

the holiday retail season

Network revenues increased 37% Y/Y and 12% Q/Q

Strong international performance, with $2.3 billion in Q4 international revenue

Executing on Search.Ads.Apps Strategy

Infrastructure investments in search leading to improved qualityworldwide

Giving advertisers more control and improving ROIg

Improving Apps performance and ensuring data portability

Significant strides in mobile with the launch of Android

Ongoing focus on growth and profitability


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Quarterly Revenue

Q407 Y/Y Growth = 51%

4,827

$4,500

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

Q407 Q/Q Growth = 14%

1 919

1,578

1,384

1,257 799

2,254

928

2,456

997

2,690

1,037

3,205

1,198

3,664

1,345

3,872

1,352

4,231

1,455

2,735

1,636

3,122

$1,000

$500

584630

675

8851,098 1,297

1,4321,626

1,9772,282 2,486

$0

657 737

Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07

3

Google.com Network


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Licensing and Other

millions

$in

m


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U S vs International Revenue

$4,500

$4,0003,664

3,872

4,231

4,827

$3,500

$3,000

$2,500

$2,000

$1,500 1,257

1,384

39%

1,578

39%

1,919

38%

2,254

42%

2,456

42%

2,690

44%

3,205

44%

47%

48%

48% 48%

52%52%

$1,000

$500

$0

39%

61%61%61%

62% 58% 58% 56% 56%53% 52%

Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07

4

US


22/50

Intern ational

millions

$in

m


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Traffic Acquisition Costs

$1,400

37.2% 36.1%

$1,30034.0%

$1,200 33.2%32.5%32.3%

$1,100

$1,000976

1,125 1,148

1,221

1,440 40%

35%

$900

$800

$700

$600

$500

$400

$300

$200

$100

$0

462 494

530

629

723

785

31.0% 30.7%31.0%

825 29.9% 29.1% 30.3%

30%

25%

20%

15%

10%

Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07

5

TAC TAC as % of Advertising Revenues


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nmillions

$in


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Costs and Expenses

GAAP

$Millions Q4'06 Q3'07 Q4'07

C fPercent of revenues

$1,28340%

$1,66339%

$1,95641%

Research & DevelopmentPercent of revenues

Sales & MarketingPercent of revenues

General & AdministrativePercent of revenues

Total Costs & ExpensesPercent of revenues

Non-GAAP

$Millions

Cost of RevenuesPercent of revenues

Research & DevelopmentPercent of revenues

Sales & MarketingPercent of revenues

General & AdministrativePercent of revenues

Total Costs & ExpensesPercent of revenues

$387

12%

$255

8%

$220

7%

$2,14567%

Q4'06

$1,272

40%

$305

10%

$241

7%

$193

6%

$2,01163%

$549

13%

$381

9%

$321

8%

$2,91469%

Q3'07

$1,659

39%

$418

10%

$351

8%

$288

7%

$2,71664%

$631

13%

$422

9%

$377

8%

$3,38671%

Q4'07

$1,950

40%

$470

10%

$384

8%

$337

7%

$3,14165%

6


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Note: Please refer to supporting

Table 1 for reconciliations of non-GAAP costs and

expenses to GAAP costs and expenses


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8

Free Cash Flow

$Millions

Net cash provided by

operating activities

Less purchases of property

and equipment

Free cash flow (Non-GAAP)

Q4'06

$911

)

($367)

$544

Q3'07

$1,633

)

($553)

$1,080

Q4'07

$1,693

($678)

$1,015


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Table 1 - Reconciliations of non-GAAP costs and expensesto GAAP costs and expenses

$Millions

Cost of Revenues (GAAP)

Less: Stock-based compensation

Q4'06

$ 1 283

(11)

As a % of

Revenues (1)

40%

-

Q3'07

$

$ 1 663

(4)

As a % of

Revenues (1)

39%

-

$

Q4'07

1 956

(6)

As a % of

Revenues (1)

41%

-

Cost of Revenues (non-GAAP)

Research and development (GAAP)


Research and development (non GAAP)

Sales and marketing (GAAP)


Sales and marketing (non-GAAP)

General and administrative (GAAP)


General and administrative (non-GAAP)

Total costs and expenses (GAAP)


$ 1,272

$ 387

(82)

$ 305

$ 255

(14)

$ 241

$ 220

(27)

$ 193

$ 2,145

(134)

40%

12%

-

10%

8%

-

7%

7%

-

6%

67%

-

$ 1,659

$ 549

(131)

$

$ 418

$ 381

(30)

$ 351

$

$ 321

(33)

$ 288

$ 2,914

(198)

39%

13%

-

10%

9%

-

8%

8%

-

7%

69%

-

$ 1,950

$ 631

(161)

$ 470

$ 422

(38)

$ 384

$ 377

(40)

$ 337

$ 3,386

(245)

40%

13%

-

10%

9%

-

8%

8%

-

7%

71%

-

T t l t d ( GAAP) $ 2 011 63% $

$ 2 716

64% $ 3 141 65%

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(1) Percentages based on GAAP revenues of $3,205 million in Q4 '06, $4,231 million in Q3 '07 and $4,827 million in Q4 '07


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Table 2 - Reconciliations of non-GAAP results of operationsmeasures to the nearest comparable GAAP measures

Figures in millions except per share amounts Q4'06

Operating

Margin

(1) Q3'07

Operating

Margin

(1) Q4'07

Operating

Margin

(1)

Income from operations (GAAP)

Add: Stock-based compensation

$ 1,061

134

33%$ 1,318

- 198

31%$ 1,441

245

30%

Income from operations (non GAAP) $ 1 195 37%$ 1 516 36%$ 1 686 35%

Net income (GAAP)

Add: Stock-based compensation (net of tax)

Less: Advanced Pricing Agreement and R&D credit

Net income (non-GAAP)

Net income per share - diluted (GAAP)

Net income per share - diluted (non-GAAP)

Shares used in per share calculation - diluted

$ 1,031

99

(133)

$ 997

$3.29

$3.18

313

$ 1,070

167

-

$ 1,237

$3.38

$3.91

317

$ 1,206

203

-

$ 1,409

$3.79

$4.43

318

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(1) Percentages based on GAAP revenues of $3,205 million in Q4 '06, $4,231 million in Q3 '07 and $4,827 million in Q4 '07


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COMPETITORS

Before starting with the competitors let us see the various Search Engines available.

1) www.google.com2) www.yahoo.com3) www.msn.com4) www.ask.com5) www.GO.com6) www.altavista.com7) www.askjeeves.com8) www.goto.com9) www.rediff.com10) www.webcrawler.com

Revenue Wise Comparision with the competitors.Googles growth of revenue in 2007 stood at $2.6 billion. Google had managed toincrease its revenues by 44 per cent since 2006. This figure is even more incredible whenput into the following perspective: the total online ad revenues for all 17 companies onlygrew by 9 per cent last year, with online revenues growing by only 28 percent. Even bycombining the online ad revenues of AOL, Microsoft and Yahoo together, the percentageof growth remains at 15 percent, compared to Googles whopping 44 percent.

Even the company with the 2nd highest ad revenues for 2007 falls a long way behind thesearch engine giant. News Corp only managed to pull in gains of $915 million.

Revenue Growth of Google year to year 96 %Revenue Growth of Yahoo year to year 42 %

Unique Features provided.

1) Search within Search Feature.

Online advertising is the fastest-growing segment of the ad industry. Standard offeringslike TV commercial and print ads are all trying to keep advertisers interested, but it'sonline ads that are measurable, offering complete accountability. And being the ad giantthat it is, Google (GOOG) is constantly thinking of new ways to expand its alreadysignificant search market share. The latest strategy keeps web surfers on that Googlesearch page longer--though it's not necessarily good for everybody.

While Google has traditionally allowed users to search for information and products bydirecting them to other sites, now Google allows users to search within sites includingWashingtonpost.com and bestbuy.com, while staying on its own webpage. Google profits

33
http://seekingalpha.com/symbol/googhttp://www.cnbc.com/id/23775867/site/14081545/http://www.cnbc.com/id/23775867/site/14081545/http://www.cnbc.com/id/23775867/site/14081545/http://seekingalpha.com/symbol/googhttp://www.cnbc.com/id/23775867/site/14081545/http://www.cnbc.com/id/23775867/site/14081545/


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from that extra time on its site, and it says makes searches for information and productseasier.

2) Refined Search

For searches within certain topics, you'll notice links at the top of the searchresults page that help you quickly narrow your search.

3) Format Supported

Google has expanded the number of non-HTML file types searched to 12 fileformats. In addition to PDF documents, Google now searches Microsoft Office,PostScript, Corel WordPerfect, Lotus 1-2-3, and others. The new file types will simplyappear in Google search results whenever they are relevant to the user query.

Market Share

Google

Yahoo

AskOthers

MSN

Google

Yahoo

MSN

Ask

Others

The Market Share Source : Hitwise

Google's continued stranglehold on this market is significant considering that in recentyears both Yahoo and Microsoft have invested heavily on developing and improving theirsearch engine technology and accompanying search ad networks.

Google Yahoo MSN Ask Others

Market

Share

65.26 % 20.73 % 8.46 % 3.69 % 1.86 %

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Google, of course, is growing much faster than others online because it has built a betterbusiness around direct response ads online. It's obviously outpacing traditional mediabecause those are mature businesses.But what Google has yet to capture are the billions of dollars marketers spend on brandedadvertising on television, radio, and outdoors. Its 5.7 percent of the overall ad market

shows that there's still much more milkshake to drink.

SWOT ANALYSIS ON GOOGLE

Internal STRENGTHS:

Proclaimed by many as the most efficient search engine on the Internet

Lured Earthlink, the number three Internet Service Provider in the United States, to use

Google as its default search engine.

Largest search engine in the world

Internal WEAKNESSES

Made their IPO a complicated auction process, which angered a number of investors

Produces less relevant hits than subject-specific subscription databases

External OPPORTUNITIES

Computer literacy is on the rise, especially in underdeveloped countries.

There is a trend in the United States towards telecommuting and at-home-businesses.

As the cost of technology continues to fall and the demand for information grows, the

variety of services will increase in response to market niches.

There is a lot of potential for the International Market, especially in China, which plans to

privatize many state-owned facilities.

External THREATS

There will be legal challenges from private citizens to the storage of information about

private citizens.

Database companies (Gale, Lexis-Nexis, ProQuest) are designing products and internet

search engines at rates that are more affordable to individual customers; these products

provide superior research aids; they are also teaming with newspaper companies.

There are a number of companies in competition with Google.

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IBM, General electric, Dupont share the top tier because of the outright volume of

research performed, their consistent performance in this area and their long-

lasting, continued and growing global R&D presence.

The middle tier was dominated by 3M, Toyota, Google and apple due to their

dramatic growth over past several years based primarily on the value contributed

by their R&D operations.

The bottom tier dominated by Microsoft, Genetech and Dow chemical consist of

large, well respected R&D players with entrenched global development programs

that will continue to grow their companies.

But over the last five years Google has most improved company in R&D. The

growth in Research and development is 15 %. Compare to other companies it is

much higher than expected. The growth in R&D due to their dramatic growth

over past several years based primarily on the value contributed by their R&D

operations.

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Industrial Growth

While recently writing about Google and Microsoft, Google is no pushover and cited its

impressive results as an indication of how stronger Google is getting to be. Google is

pulling in more and more searches on its own site, which are the most profitable kind of

searches there are. Some figures are quite insightful:

Average revenue per search: 12 cents. It was around a dime in late 04.

Avg. revenue per searcher: $7

Avg. revenue per sponsored click: 62 cents.

Estimated profits for Google in 08: Roughly $4 billion (Bear Stearns) (which

is about the same as their forecasted annual revenues this year, FWIW)

Revenue growth of Google year to year: 56%

Revenue growth of Yahoo: 42%

Estimated revenue growth for next year for Google (Bear): 61%

For the average of eBay, Yahoo, and Amazon: 29%

Amount spent on capex, 07(estimate): $800 million

Google nabbed 58.4 percent of search queries, followed by Yahoo in a very

distant second place with 22.9 percent and Microsoft's MSN with 9.8 percent.

Google's continued stranglehold on this market is significant considering that

in recent years both Yahoo and Microsoft have invested heavily on developing

and improving their search engine technology and accompanying search ad

networks.

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The search segment is the largest of the fast-growing U.S. online ad market,

accounting for 41 percent of revenue, or about $5.1 billion. Online advertising

spending grew 30 percent in 2007 to $12.5 billion and google took the lions

share from it.

The year-over-year growth of revenue (in 2008) on Google.com (U.S.)--

approximately $2 billion--was more than twice as much the growth of ad

revenue in all of the offline media companies in this sample combined. This is

such an amazing fact that it bears repeating: A single media property,

Google.com (US), grew by $2 billion. All the offline media properties owned

by the 13 offline media companies above, meanwhile all of them grew by

about $1 billion.

Google's advertising revenue in the United States last year totaled about $8.7

billion, up 44 percent from 2008 revenue. That's remarkable considering that

U.S. Internet advertising was only expected to grow by 13.4 percent last year

over 2006, according to estimates from TNS Media Intelligence.

To put it into perspective, Google's take of the total U.S. advertising market

was about 5.7 percent of $153.7 billion last year, according to TNS Media

projections of annual spending. TNS estimated that in 2008, Internet

advertising would make up about 7.2 percent of total ad spending--not that

much more than Google's share.

Google's continued stranglehold on the search market is significant

considering that in recent years both Yahoo and Microsoft have invested

heavily on developing and improving their search engine technology and

accompanying search ad networks.

Google's continued stranglehold on the search market is significant

considering that in recent years both Yahoo and Microsoft have investedheavily on developing and improving their search engine technology and

accompanying search ad networks.

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CORPORATE AFFAIRS AND CULTURE:

Google is known for its relaxed corporate culture. of which its playful variations on its

own corporate , logo are an indicator. In 2007 and 2008 , Fortune Magazine placed

Google at the top of its of the hundred best places to work .Googles Corporate

philosophy embodies casual principles as you can make money without doing evil ,

you can be serious without a suit , Work should be challenging and challenge should be

fun.

Google has been criticized for having salaries below industry standards so google

implemented other employee incentives in 2005 , such as the Google Founders Award , in

addition to offering higher salaries to new employees. Googles workplace amenities ,

culture , global popularity , and strong brand recognition have also attracted potential

applicants.

GOOGLEPLEX :

Googles headquarters in Mountain View , California , is referred to as the

GOOGLEPLEX in a play of words : a googolplex being 1 followed by a googol of

zeros , and the HQ being a complex 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. Recreation 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 , there are snacks rooms stocked with various foods

and drinks.

The size of goggles search system is presently undisclosed . The best estimates place the

total number of the companys servers at 450,000, spread over twenty five locations

throughout the world including major operations centers.

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About the Googleplex :

Google's world headquarters building is located in Mountain View, California, a stone's

throw from the Shoreline Regional Park wetlands. While not all Google offices around

the globe are equally well-stocked, these are some of the essential elements that define a

Google workspace:

Lobby Dcor - Piano, lava lamps, and live projection of current search queries

from around the world.

Hallway Dcor - Bicycles and large rubber exercise balls on the floors, press

clippings from around the world posted on bulletin boards everywhere. Many Googlers

standing around discussing arcane IP addressing issues and how to build a better spam

filter.

Googlers Offices - Googlers work in high density clusters remarkably reflective

of our server setup, with three or four staffers sharing spaces with couches and dogs. This

improves information flow and saves on heating bills.

Equipment - Most Googlers have high powered Linux OS workstations on their

desktops. In Google's earliest days, desks were wooden doors mounted on two sawhorses.

Some of these are still in use within the engineering group.

Recreation Facilities - Workout room with weights and rowing machine, locker

rooms, washers and dryers, massage room, assorted video games, Foosball, baby grand

piano, pool table, ping pong, roller hockey twice a week in the parking lot.

Google Caf - Healthy lunches and dinners for all staff. Stations include

"Charlies Grill," "Back to Albuquerque," "East Meets West" and "Vegheads." Outdoor

seating for sunshine daydreaming.

Snack Rooms - Bins packed with various cereals, gummy bears, M&Ms, toffee,

licorice, cashew nuts, yogurt, carrots, fresh fruit and other snacks. Dozens of different

drinks including fresh juice, soda and make-your-own cappuccino.

Coolest stop on the tour - A three-dimensional rotating image of the world on

permanent display on a large flat panel monitor in the office of the engineer who created

it. What makes it special is the toggle switch that allows you to view points of light

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representing real time searches rising from the surface of the globe toward space, color

coded by language. Toggle and you can see traffic patterns for the entire Internet. Worth a

trip to the second floor.

Nearest 24 hour doughnut shop - Krispy Kreme, Mountain View, CA

Innovation Time Off :

As an interesting motivation technique (usually called Innovation Time Off) , all google

engineers are encouraged to spend 20% of their work time (one day per week ) on

projects that interest them. Some of googles newer services , such as Gmail , Google

News, Orkut, and AdSense originated from these independent endeavors.

Easter eggs and April Fools Day jokes:

Google has a tradition of creating April fools day jokes such as Google Mentalplex ,

which allegedly featured the use of mental power to search a web.

THE GOOGLE CULTURE :

Though growing rapidly, Google still maintains a small company feel. At the Googleplex

headquarters almost everyone eats in the Google caf (known as "Charlie's Place"),

sitting at whatever table has an opening and enjoying conversations with Googlers from

all different departments. Topics range from the trivial to the technical, and whether the

discussion is about computer games or encryption or ad serving software.

Google's emphasis on innovation and commitment to cost containment means each

employee is a hands-on contributor. There's little in the way of corporate hierarchy and

everyone wears several hats. The international webmaster who creates Google's holiday

logos spent a week translating the entire site into Korean. The chief operations engineer is

also a licensed neurosurgeon. Because everyone realizes they are an equally important

part of Google's success, no one hesitates to skate over a corporate officer during roller

hockey

Google's hiring policy is aggressively non-discriminatory and favors ability over

experience. The result is a staff that reflects the global audience the search engine serves.

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Google has offices around the globe and Google engineering centers are recruiting local

talent in locations from Zurich to Bangalore Dozens of languages are spoken by Google

staffers, from Turkish to Telugu. When not at work, Googles pursue interests from cross-

country cycling to wine tasting, from flying to Frisbee. As Google expands its

development team it continues to look for those who share an obsessive commitment to

creating search perfection and having a great time doing it.

Googles Green Commitment :

This current initiative is just the next step in Googles continuing commitment to a clean

and green energy future. They have been working hard on energy efficiency and making

our business environmentally sustainable.

Last spring google announced that we would be carbon neutral for 2007 and beyond, and

theyre on track to meet this goal. Google have taken concrete steps to reduce our carbon

footprint and accelerate improvements in green technology. For example, through design

improvements and the adoption of power-saving technologies, such as evaporative

cooling, we have made great strides to bolster the efficiency of our data centers the

facilities that store the computers that enable Google to deliver accurate search results at

lightning speed. Weve also reduced the carbon footprint of our building and office

operations - for example, by replacing incandescent bulbs with higher-efficiency lighting,

and maximizing the use of natural light. And earlier this year we flipped the switch at our

Mountain View headquarters on one of the largest corporate solar panel installations in

the United States.

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Powering a clean energy revolution

At Google, were committed to helping build a clean energy future.

REC (Renewable Energy Cheaper Than Coal)

Clean and affordable energy is a growing need for our company, so were excited aboutlaunching REC strategic initiative whose mission is to develop electricity fromrenewable sources cheaper than electricity produced from coal. Initially, this project tocreate renewable energy cheaper than coal will focus on advanced solar thermal power,wind power technologies, and enhanced geothermal systems but well explore otherpotential breakthrough technologies too.

Were busy assembling our own internal research and development group and tasked withbuilding 1 gigawatt of renewable energy capacity that is cheaper than coal. (Thatsenough electricity to power a city the size of San Francisco.) Googles R&D effort willbegin with a significant effort on solar thermal technology, and will also investigateenhanced geothermal systems and other areas.

Supporting Breakthrough Technologies

In conjunction with the RE


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solar specializes in solar thermal power. Solar thermaltechnology replaces the fuel in a traditional powerplant with heat produced from solar energy, and hasgreat potential to produce utility-scale power that is

cheaper than coal.

Makani Power is developing high-altitude windenergy extraction technologies aimed at harnessing theworlds most powerful wind resources. Capturing just afraction of available high-energy wind would besufficient to supply current global electricity needs.

Google's Green Commitment

This current initiative is just the next step in Googles continuing commitment to a cleanand green energy future. We have been working hard on energy efficiency and makingour business environmentally sustainable.

Last spring we announced that we would be carbon neutral for 2007 and beyond, andwere on track to meet this goal. Weve taken concrete steps to reduce our carbonfootprint and accelerate improvements in green technology. For example, through designimprovements and the adoption of power-saving technologies, such as evaporativecooling, we have made great strides to bolster the efficiency of our data centers thefacilities that store the computers that enable Google to deliver accurate search results atlightning speed. Weve also reduced the carbon footprint of our building and officeoperations - for example, by replacing incandescent bulbs with higher-efficiency lighting,and maximizing the use of natural light. And earlier this year we flipped the switch at ourMountain View headquarters on one of the largest corporate solar panel installations inthe United States.

In addition to greening our own business, were also cooperating with members of thetech community to improve efficiency on a broader scale. In 2007, we teamed with Intel

and other industry partners to form the climate savers computing initiative, a group whichadvocates the design and adoption of less wasteful computing infrastructure. (InNovember 2007, CSCI achieved a new milestone when we signed on our very first publicsector partners, the state governments of Minnesota and Kansas.)

Reducing our Carbon Footprint to Zero

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Our business powers the platforms that drive the Internet. With hundreds of millions ofGoogle users, it takes extensive computer infrastructure to keep our tools and servicesrunning. And that takes a lot of electricity. Generating that electricity requires energy, and

as our business grows, we want to make sure we minimize our impact on the Earth'sclimate. So were taking every step we can to produce electricity using renewable energyresources that don't add to the production of greenhouse gas emissions.

As part of that responsibility, Google has committed to being carbon-neutral for 2007 andbeyond. To honor our pledge, were taking a three-step approach. First, were increasingthe energy efficiency of our own operations. Second, were actively pursuing the use andcreation of clean and renewable sources of electricity. Third, for the emissions we cantreduce directly at this time, were investing in projects that help offset carbon generated.

Improving EfficiencyEfficiency and innovation are central Google values. From our very first servers to ourlatest-generation data centers, extracting maximum performance per watt of deliveredpower has allowed the scale and scope of our services to grow exponentially. Its good forthe environment and good for business, too.

Our data centers use half as much energy as a typical industry data center to power thesame amount of computing. We have achieved this improvement over industry standardsthrough the use of increasingly efficient power supplies and evaporative coolingtechnology. Weve also started to share some of what weve learned about efficient

computing with others by forming the, joining other industry leaders to spread the wordabout reducing the amount of electricity wasted by computers and servers.

In addition to continually working to reduce the greenhouse gas emissions associatedwith running the servers at our data centers, we have taken actions to directly reduce theenvironmental impact associated with other aspects of our operations as well. As a firststep, were gradually retrofitting our global offices with high-efficiency lighting,optimizing our use of natural light, and using better building control systems. Were alsolooking to reduce and eventually eliminate the use of incandescent light bulbs in ourglobal offices and replace them with more efficient fluorescent bulbs. Were planning toexpand our use of power management software for desktop computers, as well as motion

sensors and other lighting controls that further reduce our power usage. Finally, Google isin the process of performing extensive energy audits to better understand precisely howmuch electricity we consume and in what ways so that we can optimize our systemsto demand as little energy as possible.

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Utilizing Renewable Power

Renewable energy is a critical component of a clean energy future and Google has set agoal of creating 50 megawatts of new renewable energy-generating capacity by 2012.

(Thats enough electricity to power 50,000 homes.) And with the November 2007announcement of our new renewable energy R&D group, Googles co-founder LarryPage upped the ante, saying, "Our goal is to build 1 gigawatt of renewable energycapacity that is cheaper than coal, and we are optimistic that this can be done withinyears, not decades."

Were eager to use more on-site renewable power both at home and around the world. InMountain View, CA, for example, we currently have a 1.6 megawatt (MW)solar panelinstallation that generates 30% of the peak power necessary to fuel the buildings onwhich they are located. In addition to reducing our carbon footprint, the solar panelsmake good business sense; theyll pay for themselves in 7 years. And at our Google

office in Hyderabad, India, we're planning to install solar modules that heat all the waterfor the building.

Additionally, when buying power for our datacenters, Google will use a shadow price forcarbon. This voluntary pricing of carbon will enable usto calculate a more accurate cost of power as one of thekey criteria in site selection for our data centers.The cost of carbon is not yet recognized by the U.S.market, but may soon become so throughlegislation.

Pricing carbon is an important tool to reducing the financial risk that our energyinvestments face. Moreover, when evaluating power options, using a shadow price forcarbon puts renewable energy on a more level playing field.

Investing in Carbon Offset Projects

At this time, our work to improve efficiency and generate renewable energy doesnt coverGoogles entire carbon footprint. Thats why we also fund projects around the world thatreduce greenhouse gas emissions. Specifically, we contribute to projects that use

currently-accepted methods of measuring emission reductions. That way, we canaccurately quantify the environmental benefits of a given project. We also look forprojects that provide a clear plan for monitoring and verification of results by third partiesso we can be certain that the volume of offsets we purchase is sufficient to fully addressour carbon footprint.

The offset projects in which we invest go beyond business as usual. That means welook for project activity that would not be viable without carbon financing. Through this

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requirement, we ensure that our investment makes a real difference in reducinggreenhouse gas emissions.

An example of a project that we have selected is the installation of improved animalwaste management systems in small livestock operations in Mexico and Brazil. Normally

these operations store waste runoff in open lagoons, which emit methane and nitrousoxide, both potent greenhouse gases. Our funding helps make it possible for anaerobicdigesters to be installed, which capture and flare the biogas produced whilesimultaneously improving local air quality and reducing land and water contamination.

On their own, carbon offsets are not capable of creating the kinds of fundamental changesto global energy infrastructure that will be necessary to stabilize greenhouse gasemissions over the long-term. But the projects to which we contribute do offer real andmeasurable emissions reductions that allow Google to take full responsibility for ourfootprint today.

Advancing Green Technology

In addition to reducing Googles carbon footprint, were also working to accelerateimprovements in green technology. In May 2007, with an eye toward bringing solarpower into the mainstream, we switched on 9,212 solar panels at our Mountain Viewheadquarters one of the largest corporate installations in the United States. Then, toencourage the commercialization and adoption of plug-in vehicles (and reduce CO2emissions, cut oil use, and stabilize the electric grid) Google.org launched the RechargeITinitiative in June 2007. During the same month, we also announced the formation of theClimate Savers Computing Initiative (CSCI), an industry consortium working to makethe design and use of computers more energy-efficient.

.

Advocating Public Policy

We need to accelerate the development and deployment of cost-effective energyefficiency and renewable energy technologies in order to achieve deep and rapidreductions in greenhouse gas emissions. Public policies at the state, federal and

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international level will help ensure that clean energy technologies are developed anddeployed as quickly as possible. These include:

Efficiency Standards: Efficiency makes the energy we use more productive, allowing usto do more with less. (Its also the cheapest way to reduce greenhouse gas emissions.)

Investments in efficiency are often win-win, sometimes paying for themselves in justmonths. Energy efficiency standards set minimum efficiency levels for energy use inequipment, appliances and vehicles. They help overcome obstacles to the widespreaddeployment of energy-efficient technologies, including market distortions, informationgaps, and jurisdictional issues. Adopting these standards, as well as establishingincentives, will help move more efficient technologies to market.

Renewable Portfolio Standard: A national RPS would require that US utilitiles produce aspecific percentage of electricity from renewable energy and build on similar measuresalready adopted at the state level. Expanding the market for renewable energy through anRPS along with incentives such as tax credits - would help renewable energy

technologies realize the economies of scale that will, over time, drive down their cost andmake them competitive with coal-fired generation.

Public Funding for Research & Development: Increased public funding of clean energyR&D focused on renewable energy, energy efficiency and advanced transportationtechnologies will help spur the innovation necessary to meet today's criticalenvironmental, economic and security challenges.

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