If you don't know what the term Google means, there's a leading Internet search engine you can use to find out. Taking its name from "googol" -- the mathematical term for the value represented by a one followed by 100 zeros -- Google offers targeted search results from billions of Web pages. Results are based on a proprietary algorithm; its technology for ranking Web pages is called PageRank. The firm generates revenue through ad sales. Advertisers deliver relevant ads targeted to search queries or Web content. The Google Network is a network of third-party customers that use Google's ad programs to deliver relevant ads to their own sites. Founders Sergey Brin and Larry Page each have nearly 30% voting control.
Because the technology industry demands constant innovation, Google has been nothing short of relentless in its efforts to develop or acquire new services and products in order to stay ahead of such rivals as Yahoo! and Microsoft. Since its founding as search engine, the company has branched out to provide Web portal services such as Webmail (Gmail), blogging (Blogger), photo sharing (Picasa), interactive maps (Google Maps), and Web browsing (Google Chrome). In addition, its Android operating system is a platform for mobile and tablet products; Google has also released an Android smart phone. The company sells digital content such as apps, music, and movies through Google Play Store (formerly called Android Market). Google subsidiaries include YouTube and DoubleClick.
Despite this plethora of diverse offerings, Google's lead in Internet search is still fueled by its advertising system, comprised of its AdWords and AdSense products. Customers of AdWords seek to drive traffic from Google to their sites and generate leads. Advertisers bid on keywords and have their ads appear as links on the right-hand column of Google's search results page under the sponsored links heading. Through AdSense for Search, Google powers the search capabilities of other publishers' websites and search engines product. With AdSense for Content, Google delivers ads to a publisher's website that are targeted to the content on the publisher's site, and the publisher shares in the revenue generated when readers click on the ads. AdSense customers are publishers of third-party websites that comprise the Google AdSense Network. The AdSense Network includes many small websites, but has also attracted several big players in online publishing and e-commerce, including AOL, Ask.com, and NYTimes.com.
Google has historically reported year-after-year revenue and net income growth, and 2011 was no different. For the year, the company's revenues reached $37.9 billion, and it earned a profit of $9.7 billion, compared with revenues of $29.3 billion and net income of $8.5 billion in 2010. Despite these positive results -- attributed to success in advertising -- investors were less than pleased, due to missed forecasts for the fourth quarter. During Q4, growth slowed due to an unfavorable foreign currency exchange and a weak European ecomomy, lower search ad prices and its showing fewer ads, and an impairment charge on its investment in wireless service provider Clearwire. (Google sold its Clearwire stake to Credit Suisse in 2012).
Mergers and Acquisitions
In 2013 Google agreed to pay a little more than $1 billion for mapping service Waze. The deal keeps Waze out of the hands of Google's rivals and gives the company technology that should improve its navigation systems.
The company completed its biggest acquisition to date in 2012 when it bought phone hardware maker Motorola Mobility Holdings for $12.5 billion. The deal is a major indicator that the company is shifting its strategy beyond its core Internet operations to increase its penetration in the fast-growing mobile market. The purchase is allowing it to better compete with smart phone rival Apple by bolstering the adoption of its Android mobile software. Google is managing Motorola Mobility as a separate business.
The company some $1.4 billion on 57 acquisitions during the first nine months of 2011. One of these deals was the purchase of ZAGAT, a service that rates restaurants and other local businesses based on consumer surveys and reviews. The deal, worth some $151 million, represents Google's efforts to further expand its user-generated content offerings, as well as its strategic push in the local advertising space.
Earlier in 2011, the company purchased ITA Software for about $700 million in order to enter the online travel market. In order to increase its capabilities in graphical and interactive display ads, the company acquired online-ad firm Admeld at a rumored acquisition price of around $400 million. Around that same time, Google also obtained daily deal site Dealmap in order to directly compete with Groupon, which turned down Google's $6 billion takeover offer in 2010.
In order to enter new markets and maintain a portfolio of innovative offerings, Google is continuing its strategy of new product development. The company launched its Google + social networking service in 2011 to directly compete with market leader Facebook.
This follows another key change implemented by Google. After receiving complaints that its search results contained too much content from low-quality sites, in 2011 the company made changes to its search algorithm. The changes were designed to make search results with sites featuring original content appear above sites that employ "content farming" practices. ("Content farm" is a derogatory term used to describe sites specifically designed to generate ad revenue through attracting page views without providing relevant or factual content.) The algorithm change affected nearly 12% of Google's US query results.
In order to face its international rivals head on, Google operates in more than 50 countries. International domains include Google.ba, Google.dm, Google.nr, Google.co.jp and Google.ca, and the Google interface is available in more than 100 languages. When it began doing business in China, where Baidu.com is the market leader, Google initially made a controversial agreement with the Chinese government to censor search results in that country. After feuding with the Chinese government over censorship issues, in 2010 Google began publishing a link on its government approved ".cn" domain (Google.cn) to an uncensored website based in Hong Kong (Google.com.hk).
In keeping with its "googol" theme, the company's headquarters in Mountain View, California, is referred to as "the Googleplex," a play on googolplex -- a one followed by a googol zeros.
Executive chairman Eric Schmidt has about 10% voting control.