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 engines Alta Vista, Excite, Inktomi, LookSmart, Lycos, Alltheweb - are now largely unkown. A few engines were consolidated and then eventually acquired by larger companies (Yahoo, for example, purchased Overture who had earlier purchased Alltheweb). Search Engine History provides a detailed overview of 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 shopping services. The result: portals. Portals resulted in a dilution of the quality of search and often provided confusing and complex interfaces. The intent of a service like Yahoo, for example, was to keep individuals on site as long as possible. In contrast, Google kept the search interface clean and emphasized "pushing people" to resources they might find to be of value.

Evolution of Google

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 tenet of the Google way, they bought a terabyte of disks at bargain prices and built their own computer housings in Larry's dorm room, which became Google's first data center. . Meanwhile Sergey set up a business office, and the two began calling on potential partners who might want to license a search technology 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 Sergey to grow the service themselves by starting a search engine company. "When it's fully developed and scalable," he told them, "let's talk again." Others were less 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 enough. Our 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 to move 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 Bechtolsheim, 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 potential. It 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 relevant search results, and articles extolling Google appeared in USA TODAY and Le Monde. That December, PC Magazine named Google one of its Top 100 Web Sites and Search Engines for 1998. Google was moving up in the world. Advertising that people want to see In February of 2002, AdWords, our self-service advertising system, received a major overhaul, including a cost-per-click (CPC) pricing model that makes search advertising as cost-effective for small businesses as for large ones. Our approach to advertising has always followed the same principle that works so

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 relevance to the 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 photos are automatically selected and arranged by a computer program which updates the page continuously. The free service lets users scan, search, and browse, with 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 enables 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 about "the 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 free way to actually speak to people anytime, anywhere via your computer, featuring crystal-clear voice technology, plus an instant message service; and the next generation of Google Desktop, now offering at-a-glance access to your files, email, news, photos, weather, RSS feeds, stocks and other personalized web content. Google Chat connected people through Gmail and Talk, becoming the first service to integrate email and instant messaging within a web browser. An updated version of Google 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. Developed in our 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:

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." Given the state of search technology today, that's a far-reaching vision requiring research, development and innovation to realize. Google is committed to blazing 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 all those 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-use search 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 redefine 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, few are able to resist the temptation to make small sacrifices to increase shareholder value. Google has steadfastly refused to make any change that does not offer a 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 through TV ad 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, and how we could do it better. Through continued iteration on difficult problems, we've been able to solve complex issues and provide continuous improvements to a

service already considered the best on the web at making finding information a fast and seamless experience for millions of users. Our dedication to improving search has also allowed us to apply what we've learned to new products, including Gmail, Google Desktop, and Google Maps. As we continue to 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 and use 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 company in the 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 from our pages and increasing the efficiency of our serving environment, Google has broken its own speed records time and again. Others assumed large servers were the fastest way to handle massive amounts of data. Google found networked PCs to be faster. Where others accepted apparent speed limits imposed by 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 relying on a group of editors or solely on the frequency with which certain terms appear, Google ranks every web page using a breakthrough technique called 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 analyzing the full structure of the web, Google is able to determine which sites have been "voted" the best sources of information by those most interested in the information they offer. This technique actually improves as the web gets bigger, as each new site is another point of information and another vote to be 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 even their automobiles, people want information to come to them. Google's innovations in this area include Google Number Search, which reduces the number of keypad strokes required to find data from a web-enabled cellular phone and an on-the-fly translation system that converts pages written in HTML to a 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 display

them, including Palm PDAs and Japanese i-mode, J-Sky, and EZWeb devices. Wherever search is likely to help users obtain the information they seek, 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 of advertising 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 ads to be 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 above or 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 your ability 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 clickthrough rates than ads appearing randomly. Google's maximization group works with advertisers to improve clickthrough rates over the life of a campaign, because high 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 advantage of this highly targeted medium, whether through our self-service advertising program that puts ads online within minutes, or with the assistance of a Google 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 integrity of our 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 objectivity 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 addition, thousands of web site managers take advantage of our Google AdSense program to deliver ads relevant to the content on their sites, improving their ability 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 information that was not as readily accessible. Sometimes it was just a matter of integrating new databases, such as adding a phone number and address lookup and a

business directory. Other efforts required a bit more creativity, like adding the ability to search billions of images and a way to view pages that were 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 a dozen formats such as Microsoft Word, Excel and PowerPoint. For wireless users, Google developed a unique way to translate HTML formatted files into a format 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 world's 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 globe. To that end we maintain dozens of Internet domains and serve more than half of our results to users living outside the United States. Google search results can 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 available to users regardless of their native tongue and for those who prefer not to search in English, Google's interface can be customized into more than 100 languages. To accelerate the addition of new languages, Google offers volunteers the opportunity to help in the translation through an automated tool 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 most far 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 should be 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 ubiquitous lava 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 it comes to our online service, Google Inc. puts employees first when it comes to daily life in our Googleplex headquarters. There is an emphasis on team achievements and pride in individual accomplishments that contribute to the company's overall success. Ideas are traded, tested and put into practice with an alacrity that can be dizzying. Meetings that would take hours elsewhere are frequently little more than a conversation in line for lunch and few walls separate those who write the code from those who write the checks. This highly communicative environment fosters a productivity and camaraderie fueled 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 will. 10. Great just isn't good enough.

Always deliver more than expected. Google does not accept being the best as an endpoint, but a starting point. Through innovation and iteration, Google takes something that works well and improves upon it in unexpected ways. Search works well for properly spelled words, but what about typos? One engineer saw a need and created a spell checker that seems to read a user's mind. It takes too long to search from a WAP phone? Our wireless group developed Google Number Search to reduce entries from three keystrokes per letter to one. With a user base in the millions, Google is able to identify points of friction quickly and smooth them out. Google's point of distinction however, is anticipating needs not yet articulated by our global audience, then meeting them with products and services that set new standards. This constant dissatisfaction with the way things are is ultimately the driving force behind the world's best search engine.

How Google works:

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 on page one 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 that Google can capture your entire search history and make that searchable as well? Did you know that Google "reads" your email and inserts text ads based on the content 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 results can be delivered to a person seeking information.

1. The web server sends the query to the index 3. The search results
are returned to the user in a fraction of a second. servers. The content inside the index servers is similar to the index in the back of a book - it tells which pages contain the words that match the query.

2. The query travels to the
doc servers, which actually retrieve the stored documents. Snippets are generated to describe each search result.

Google list of acquisitions:
Date Company Business Area Google Groups Good/Bad

GOOD (still being used and out of beta) GOOD Online (info retrieval is key September 20, 2001 Outride, Inc. retrieval tech to the search business) MIXED (nothing has been done with blogger February, 2003 Pyra Labs Blogger since the purchase, but money is made off of all the MFA sites) MIXED (good if you count automated support CRM April, 2003 Neotonic Software a positive thing; technology bad if you are trying to actually resolve an issue) GOOD (adwords and Applied Semantics ($102 Adwords / April, 2003 adsense made million) Adsense Google the money printer that it is) GOOD Search (acquiring patents September 30, 2003 Kaltix engine for the core technology business is almost always good) May 10, 2004 Ignite Logic Template BAD maker (aside from use in September 20, 2001 Deja's Usenet archive

July 13, 2004

Picasa

October 27, 2004

Keyhole, Inc.

Sept.-Dec., 2004

Where2

Sept.-Dec., 2004

ZipDash

2005

2Web Technologies

March 28, 2005

Urchin Software Corporation

May 12, 2005 July, 2005

Dodgeball Reqwireless

Blogger, where else does Google need templates?) MIXED (bad in that they Photo haven’t done management anything with it yet, software good in that they still could do a lot with it) GOOD (a popular product Google Earth with income potential) GOOD Google Maps(a nice compliment to Google Earth) GOOD Google Ride (if it ever gets out of Finder beta it has potential) GOOD (part of Spreadsheets Google’s office suite) GOOD (Google gets more user Web stats data.information is power; a recurring theme) BAD Social (nothing was done networking with this) Web browser MIXED and wireless (good for near term, e-mail but long-term the only difference between a office computer and a

phone is the browser agent is slightly tweaked) GOOD (this is really good. Current Communications Broadband Control upstream July 7, 2005 Group ($100million) Internet data [more power] and bypass greedier cable companies) BAD (doubtful that PDA PDA specific software August 17, 2005 Android software will matter for too much longer - see Reqwireless) GOOD Graphics November, 2005 Skia (part of Google's software office suite) Latin GOOD Akwan Information American (more upstream November 17, 2005 Technologies Internet data; tap into a operations growing market) GOOD (I think this might Radio be one of their best January 17, 2006 dMarc Broadcasting Advertising purchases for expanding the ad network) GOOD (more data, more power…and it can February 14, 2006 Measure Map Blog analysis be useful in determining real blogs versus splogs) GOOD Word (part of March 9, 2006 Upstartle processing Google’s office suite) March 14, 2006 @Last Software 3-D GOOD modeling (possible part of

April 9, 2006

Orion

August 15, 2006

Neven Vision

October 31, 2006

JotSpot

November, 2006

Youtube

December, 2006

Endoxon

January, 2007

Xunlei

February, 2007 March, 2007

Adscape Trendalyzer

Google’s office suite) GOOD Search (again…core product is search) GOOD (good if it truly is Photo used with Picasa to aggregator do something useful) MIXED (similar to Pyra purchase, in terms of controlling the Wiki creator means for people to get started online – good if executed) GOOD (this is a big ad Online video revenue stream about to pop) GOOD Mapping (technologies will solutions compliment Earth and Maps) GOOD (control the user’s e-mail, Network, virtual hard disk file-sharing space…the entire dataset of being online) GOOD Video game (another channel to advertising push ads) Analysis GOOD (understanding the data better, even at a fractional

April, 2007

April, 2007

May 11, 2007

percentage, will result in higher revenue) GOOD Presentation (another product for Tonic Systems software Google’s office suite) GOOD (continue to control the medium for Video Marratech pushing conferencing ads…might be a good fit with dMarc) GOOD Desktop (securing data and GreenBorder Technologies enterprise the user experience security allows 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 experience. YouTube allows people to easily upload and share video clips on www.YouTube.com and across the Internet through websites, blogs, and e-mail. YouTube currently delivers more than 100 million video views every day with 65,000 new videos uploaded daily and it has quickly become the leading destination 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 successful

brand and passionate community. The acquisition combines one of the largest and fastest growing online video entertainment communities with Google's expertise in organizing information and creating new models for advertising on the Internet. The combined companies will focus on providing a better, more comprehensive experience for

users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their work to 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 make it universally accessible and useful," said Eric Schmidt, Chief Executive Officer of Google. "Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service 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 Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners," said Chad Hurley, CEO and Co-Founder of YouTube. "I'm confident that with this partnership we'll have the flexibility and 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-growing video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. With Google's technology, advertiser relationships and global reach, YouTube will continue to build on its success as one of the world's most popular services for video entertainment. 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 prior to the completion of the acquisition. Both companies have approved the transaction, which is subject to customary closing conditions and is expected to close in 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., a global leader in digital marketing technology and services, for $3.1 billion in cash from San Francisco-based private equity firm Hellman & Friedman along with

JMI Equity and management. The acquisition will combine DoubleClick’s expertise in ad management technology for media buyers and sellers with Google’s 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 benefiting 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 ads they see. For online publishers, the combination provides access to new advertisers, which creates a powerful opportunity to monetize their inventory more efficiently. For agencies and advertisers, Google and DoubleClick will provide an easy and efficient way to manage both search and display ads in one place. 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 will make the Internet more efficient for end users, advertisers, and publishers,” said Sergey Brin, Google’s Co-Founder and President, Technology. “DoubleClick’s technology is widely adopted by leading advertisers, publishers and agencies, and the combination of the two companies will accelerate the adoption of Google’s 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 broader set of advertisers and ad agencies,” said Tim Armstrong, Google’s 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 cutting edge digital solutions for both media buyers and sellers with Google’s scale and innovative resources will bring tremendous value to both our employees and clients.” “When we acquired DoubleClick in July 2005, we saw an opportunity to partner with a great management team to further enhance the company’s capabilities and growth trajectory,” said Philip Hammarskjold, Managing Director of Hellman & Friedman. “This transaction affirms the successful transformation of DoubleClick, positions the firm for the future, and greatly benefits our investors.”

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 Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices 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 DoubleClick's expertise in ad serving, rich media, video, search and affiliate marketing to help them make the most of the digital medium. From its position at the nerve center of digital marketing, DoubleClick provides superior insights and insider knowledge to its customers. Headquartered in New York, and with 17 offices and development hubs and 15 data centers worldwide, the company employs more than 1200 people and delivers billions of digital communications every day. Learn more at www.doubleclick.com

Fourth Quarter 2007 Highlights

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 quality  worldwide Giving advertisers more control and improving ROIg Improving Apps performance and ensuring data portability Significant strides in mobile with the launch of Android


2

Ongoing focus on growth and profitability

Quarterly Revenue
4,827
Q4’07 Y/Y Growth = 51% $4,500 Q4’07 Q/Q Growth = 14%

4,231 3,872 3,664 3,205
1,352
1,455

$4,000

1,636

$3,500

$3,000

2,690 2,456 2,254 1 919 1,578 1,384 1,257
675 799
997

1,345 1,198

$2,500

1,037
928

$2,000

$1,500

3,122
2,735

$1,000

2,282 1,977 1,432 1,626 1,098 1,297

2,486

584630

$500 657 $0
737

885

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

Licensing and Other

$ in m illions

U S vs International Revenue
4,827
$4,500

4,231 3,872 3,664 3,205
48%

$4,000

$3,500

48% 48%
47%

$3,000

2,690 2,456 2,254 1,919
44% 42% 42% 38% 39% 39% 44%

$2,500

$2,000

1,578 1,384 1,257

$1,500

52%52% 53% 52%

$1,000

39% 61%61%

62% 58%

58%

56%

56%

$500

61%

$0

Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 US
4

Intern ational

$ in m illions

Traffic Acquisition Costs
$1,400
37.2% 36.1%

1,440

40%

$1,300 $1,200 $1,100 $1,000 $900
$800 $700 $600 $500 $400 $300 $200 $100 $0 462 494

34.0% 33.2%32.5%32.3%

1,221 1,125
976
31.0% 30.7% 31.0% 29.9% 29.1% 30.3% 25% 30%

1,148

35%

785 723 629 530

825

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
TAC

TAC as % of Advertising Revenues

5

$ in millions

Costs and Expenses
GAAP $Millions
C

Q4'06
$1,283
40%

Q3'07
$1,663
39%

Q4'07
$1,956
41%

f
Percent of revenues

Research & Development
Percent of revenues

$387
12%

$549
13%

$631
13%

Sales & Marketing
Percent of revenues

$255
8%

$381
9%

$422
9%

General & Administrative
Percent of revenues

$220
7%

$321
8%

$377
8%

Total Costs & Expenses
Percent of revenues

$2,145
67%

$2,914
69%

$3,386
71%

Non-GAAP $Millions
Cost of Revenues
Percent of revenues

Q4'06
$1,272
40%

Q3'07
$1,659
39%

Q4'07
$1,950
40%

Research & Development
Percent of revenues

$305
10%

$418
10%

$470
10%

Sales & Marketing
Percent of revenues

$241
7%

$351
8%

$384
8%

General & Administrative
Percent of revenues

$193
6%

$288
7%

$337
7%

Total Costs & Expenses
Percent of revenues

$2,011
63%

$2,716
64%

$3,141
65%

6

Table 1 for reconciliations of non-GAAP costs and Note: Please refer to supporting expenses to GAAP costs and expenses

Profitability
GAAP $Millions Income from Operations Operating Margin Net Income EPS (diluted) Non-GAAP $Millions
Income from Operations

Q4'06 $1,061
33%

Q3'07 $1,318
31%

Q4'07 $1,441
30%

$1,031
$3.29

$1,070
$3.38

$1,206
$3.79

Q4'06 $1,195
37%

Q3'07 $1,516
36%

Q4'07 $1,686
35%

Operating Margin Net Income EPS (diluted)

$

$

$1,409

$3.18

$3.91
p

$4.43

Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures

7

Free Cash Flow

$Millions Net cash provided by operating activities Less purchases of property and equipment

Q4'06
$911

Q3'07
$1,633

Q4'07
$1,693

($367)

)

($553) $1,080

)

($678)

Free cash flow (Non-GAAP)

$544

$1,015

8

Table 1 ­ Reconciliations of non­GAAP costs and expenses  to GAAP costs and expenses
As a % of $Millions Cost of Revenues (GAAP) Less: Stock­based compensation
$

As a % of Q3'07 $
$

As a % of Q4'07
$

Q4'06 1 283 (11)

Revenues (1)
40% ­

Revenues (1)
39% ­

Revenues (1)
41% ­ (6)

1 956

1 663

(4)

Cost of Revenues (non-GAAP) Research and development (GAAP) Less: Stock­based compensation Research and development (non GAAP) Sales and marketing (GAAP) Less: Stock­based compensation Sales and marketing (non-GAAP) General and administrative (GAAP) Less: Stock­based compensation General and administrative (non-GAAP) Total costs and expenses (GAAP) Less: Stock­based compensation Ttl
t d (

$ $
$

1,272
387

40%

$ $ $
$

1,659
549

39%

$ $
$

1,950
631

40% 13% ­ 10%
9%

(82)

12% ­ 10% 8% ­
7% 7%

(131)
418

13% ­ 10%

(161)
470

305 255 (14) 241 220 (27)

$ $
$

$ $ $
$

381 (30) 351 ­

9%

$ $
$

422

(38)
8% 8%

­
8% 8%

384 377 (40) ­ 337

­
6%

$ $

193

$ $

321 (33) 288

­
7%

$ $

7% 71%

2,145
(134)

67% ­

2,914
(198)

69% ­

3,386 (245) 3 141

­

GAAP)

$

2 011

63%

$
$

64%

$

65%

2 716

9

(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

Table 2 ­ Reconciliations of non­GAAP results of operations  measures to the nearest comparable GAAP measures

Operating
Margin

Operating
Margin

Operating
Margin

Figures in millions except per share amounts Income from operations (GAAP) Add: Stock­based compensation 
$

Q4'06 1,061
134

(1)

Q3'07 33% $ ­ 1,318
198

(1)

Q4'07 31% $ 1,441
245

(1)

30%

Income from operations (non GAAP)

$

1 195

37% $

1 516

36% $

1 686

35%

Net income (GAAP) Add: Stock­based 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
10

$

1,031 (133)
99

$

1,070 167

$

1,206
203

­

­

$

997 $3.29 $3.18 313

$

1,237 $3.38
$3.91 317

$

1,409 $3.79
$4.43 318

(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

COMPETITORS Before starting with the competitors let us see the various Search Engines available. 1) www.google.com 2) www.yahoo.com 3) www.msn.com 4) www.ask.com 5) www.GO.com 6) www.altavista.com 7) www.askjeeves.com 8) www.goto.com 9) www.rediff.com 10) www.webcrawler.com Revenue Wise Comparision with the competitors. Google’s growth of revenue in 2007 stood at $2.6 billion. Google had managed to increase its revenues by 44 per cent since 2006. This figure is even more incredible when put into the following perspective: the total online ad revenues for all 17 companies only grew by 9 per cent last year, with online revenues growing by only 28 percent. Even by combining the online ad revenues of AOL, Microsoft and Yahoo together, the percentage of growth remains at 15 percent, compared to Google’s whopping 44 percent. Even the company with the 2nd highest ad revenues for 2007 falls a long way behind the search 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 offerings like TV commercial and print ads are all trying to keep advertisers interested, but it's online ads that are measurable, offering complete accountability. And being the ad giant that it is, Google (GOOG) is constantly thinking of new ways to expand its already significant search market share. The latest strategy keeps web surfers on that Google search page longer--though it's not necessarily good for everybody. While Google has traditionally allowed users to search for information and products by directing them to other sites, now Google allows users to search within sites including Washingtonpost.com and bestbuy.com, while staying on its own webpage. Google profits

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from that extra time on its site, and it says makes searches for information and products easier. 2) Refined Search For searches within certain topics, you'll notice links at the top of the search results page that help you quickly narrow your search. 3) Format Supported Google has expanded the number of non-HTML file types searched to 12 file formats. In addition to PDF documents, Google now searches Microsoft Office, PostScript, Corel WordPerfect, Lotus 1-2-3, and others. The new file types will simply appear in Google search results whenever they are relevant to the user query. Market Share Others

Ask MSN

Yahoo Google

Google Yahoo MSN Ask Others

The Market Share Market Share Google 65.26 %

Source : Hitwise Yahoo 20.73 % MSN 8.46 % Ask 3.69 % Others 1.86 %

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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Microsoft and Yahoo officials strain to put on a happy face whenever they are confronted with Google's dominance. Both companies are fond of saying that search engine technology is still in its infancy and that consequently an opportunity exists to unseat Google as leader. Still, when month after month trackers of search engine usage come out with their latest studies and Google remains firmly perched at the top, these predictions inevitably sound like wishful thinking and forced optimism.

USAGE Percentage of Searches among leading Search Providers.

THE USAGE

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Google, of course, is growing much faster than others online because it has built a better business around direct response ads online. It's obviously outpacing traditional media because those are mature businesses. But what Google has yet to capture are the billions of dollars marketers spend on branded advertising 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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World best R&D companies

10 Best R&D companies of the world 1. IBM 2. GENERAL ELECTRIC 3. DUPONT 4. 3M 5. TOYOTA 6. GOOGLE 7. APPLE 8. MICROSOFT 9. GENETECH 10. DOW CHEMICAL

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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 longlasting, 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. 38

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 lion’s 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 invested heavily 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 .Google’s 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. Google’s workplace amenities , culture , global popularity , and strong brand recognition have also attracted potential applicants. GOOGLEPLEX : Google’s 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 goggle’s search system is presently undisclosed . The best estimates place the total number of the company’s 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 Décor - Piano, lava lamps, and live projection of current search queries Hallway Décor - Bicycles and large rubber exercise balls on the floors, press from around the world. 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 Café - Healthy lunches and dinners for all staff. Stations include "Charlie’s 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

42

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 Fool’s 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 café (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.

43

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 crosscountry 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 Google’s 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 they’re 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. We’ve 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.

44

Powering a clean energy revolution At Google, we’re 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 we’re excited about launching REC strategic initiative whose mission is to develop electricity from renewable sources cheaper than electricity produced from coal. Initially, this project to create renewable energy cheaper than coal will focus on advanced solar thermal power, wind power technologies, and enhanced geothermal systems – but we’ll explore other potential breakthrough technologies too. We’re busy assembling our own internal research and development group and tasked with building 1 gigawatt of renewable energy capacity that is cheaper than coal. (That’s enough electricity to power a city the size of San Francisco.) Google’s R&D effort will begin with a significant effort on solar thermal technology, and will also investigate enhanced geothermal systems and other areas.

Supporting Breakthrough Technologies
In conjunction with the RE<C major research and development initiative, Google will make strategic grants and investments in organizations working to produce renewable energy at a cost below that of coal-fired power plants. Google.org is already working with two innovative corporations who are building potentially breakthrough technologies, and we look forward to collaborating with other members of the renewable energy field, including companies, R&D laboratories, and universities.

45

solar specializes in solar thermal power. Solar thermal technology replaces the fuel in a traditional power plant with heat produced from solar energy, and has great potential to produce utility-scale power that is cheaper than coal.

Makani Power is developing high-altitude wind energy extraction technologies aimed at harnessing the world’s most powerful wind resources. Capturing just a fraction of available high-energy wind would be sufficient to supply current global electricity needs.

Google's Green Commitment
This current initiative is just the next step in Google’s continuing commitment to a clean and green energy future. We have been working hard on energy efficiency and making our business environmentally sustainable. Last spring we announced that we would be carbon neutral for 2007 and beyond, and we’re on track to meet this goal. We’ve 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. We’ve 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. In addition to “greening” our own business, we’re also cooperating with members of the tech 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 which advocates the design and adoption of less wasteful computing infrastructure. (In November 2007, CSCI achieved a new milestone when we signed on our very first public sector 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 of Google users, it takes extensive computer infrastructure to keep our tools and services running. 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's climate. So we’re taking every step we can to produce electricity using renewable energy resources 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 and beyond. To honor our pledge, we’re taking a three-step approach. First, we’re increasing the energy efficiency of our own operations. Second, we’re actively pursuing the use and creation of clean and renewable sources of electricity. Third, for the emissions we can’t reduce directly at this time, we’re investing in projects that help offset carbon generated.

Improving Efficiency
Efficiency and innovation are central Google values. From our very first servers to our latest-generation data centers, extracting maximum performance per watt of delivered power has allowed the scale and scope of our services to grow exponentially. It’s good for the environment and good for business, too. Our data centers use half as much energy as a typical industry data center to power the same amount of computing. We have achieved this improvement over industry standards through the use of increasingly efficient power supplies and evaporative cooling technology. We’ve also started to share some of what we’ve learned about efficient computing with others by forming the, joining other industry leaders to spread the word about reducing the amount of electricity wasted by computers and servers. In addition to continually working to reduce the greenhouse gas emissions associated with running the servers at our data centers, we have taken actions to directly reduce the environmental impact associated with other aspects of our operations as well. As a first step, we’re gradually retrofitting our global offices with high-efficiency lighting, optimizing our use of natural light, and using better building control systems. We’re also looking to reduce – and eventually eliminate – the use of incandescent light bulbs in our global offices and replace them with more efficient fluorescent bulbs. We’re planning to expand 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 is in the process of performing extensive energy audits to better understand precisely how much electricity we consume – and in what ways – so that we can optimize our systems to 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 a goal of creating 50 megawatts of new renewable energy-generating capacity by 2012. (That’s enough electricity to power 50,000 homes.) And with the November 2007 announcement of our new renewable energy R&D group, Google’s co-founder Larry Page upped the ante, saying, "Our goal is to build 1 gigawatt of renewable energy capacity that is cheaper than coal, and we are optimistic that this can be done within years, not decades." We’re eager to use more on-site renewable power both at home and around the world. In Mountain View, CA, for example, we currently have a 1.6 megawatt (MW)solar panel installation that generates 30% of the peak power necessary to fuel the buildings on which they are located. In addition to reducing our carbon footprint, the solar panels make good business sense; they’ll pay for themselves in 7 ½ years. And at our Google office in Hyderabad, India, we're planning to install solar modules that heat all the water for the building. Additionally, when buying power for our data centers, Google will use a “shadow price” for carbon. This voluntary pricing of carbon will enable to calculate a more accurate cost of power as one of key 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 through legislation. Pricing carbon is an important tool to reducing the financial risk that our energy investments face. Moreover, when evaluating power options, using a shadow price for carbon puts renewable energy on a more level playing field.

us the

Investing in Carbon Offset Projects
At this time, our work to improve efficiency and generate renewable energy doesn’t cover Google’s entire carbon footprint. That’s why we also fund projects around the world that reduce greenhouse gas emissions. Specifically, we contribute to projects that use currently-accepted methods of measuring emission reductions. That way, we can accurately quantify the environmental benefits of a given project. We also look for projects that provide a clear plan for monitoring and verification of results by third parties so we can be certain that the volume of offsets we purchase is sufficient to fully address our carbon footprint. The offset projects in which we invest go beyond “business as usual.” That means we look for project activity that would not be viable without carbon financing. Through this

48

requirement, we ensure that our investment makes a real difference in reducing greenhouse gas emissions. An example of a project that we have selected is the installation of improved animal waste management systems in small livestock operations in Mexico and Brazil. Normally these operations store waste runoff in open lagoons, which emit methane and nitrous oxide, both potent greenhouse gases. Our funding helps make it possible for anaerobic digesters to be installed, which capture and flare the biogas produced while simultaneously improving local air quality and reducing land and water contamination. On their own, carbon offsets are not capable of creating the kinds of fundamental changes to global energy infrastructure that will be necessary to stabilize greenhouse gas emissions over the long-term. But the projects to which we contribute do offer real and measurable emissions reductions that allow Google to take full responsibility for our footprint today.

Advancing Green Technology
In addition to reducing Google’s carbon footprint, we’re also working to accelerate improvements in green technology. In May 2007, with an eye toward bringing solar power into the mainstream, we switched on 9,212 solar panels at our Mountain View headquarters – one of the largest corporate installations in the United States. Then, to encourage the commercialization and adoption of plug-in vehicles (and reduce CO2 emissions, cut oil use, and stabilize the electric grid) Google.org launched the RechargeIT initiative in June 2007. During the same month, we also announced the formation of the Climate Savers Computing Initiative (CSCI), an industry consortium working to make the design and use of computers more energy-efficient. .

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

49

international level will help ensure that clean energy technologies are developed and deployed as quickly as possible. These include: Efficiency Standards: Efficiency makes the energy we use more productive, allowing us to do more with less. (It’s also the cheapest way to reduce greenhouse gas emissions.) Investments in efficiency are often win-win, sometimes paying for themselves in just months. Energy efficiency standards set minimum efficiency levels for energy use in equipment, appliances and vehicles. They help overcome obstacles to the widespread deployment of energy-efficient technologies, including market distortions, information gaps, and jurisdictional issues. Adopting these standards, as well as establishing incentives, will help move more efficient technologies to market. Renewable Portfolio Standard: A national RPS would require that US utilitiles produce a specific percentage of electricity from renewable energy and build on similar measures already adopted at the state level. Expanding the market for renewable energy through an RPS – 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 and make them competitive with coal-fired generation. Public Funding for Research & Development: Increased public funding of clean energy R&D focused on renewable energy, energy efficiency and advanced transportation technologies will help spur the innovation necessary to meet today's critical environmental, economic and security challenges.

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