Google is a global technology leader focused on improving the ways people connect with information. The company's innovations in web search and advertising have made its web site a top internet property and its brand one of the most recognized in the world. Google maintains a large index of web sites and other online content, which it makes freely available via its search engine to anyone with an internet connection. Its automated search technology helps people obtain nearly instant access to relevant information from its vast online index.

Google generates revenue primarily by delivering relevant, cost-effective online advertising. Businesses use its AdWords program to promote their products and services with targeted advertising. In addition, the third-party web sites that comprise the Google Network use Google's AdSense program to deliver relevant ads that generate revenue and enhance the user experience.

Google was incorporated in California in September 1998 and reincorporated in Delaware in August 2003. Its headquarters are located at 1600 Amphitheatre Parkway, Mountain View, California 94043, and telephone number is (650) 253-0000.

At December 31, 2009, we had 19,835 employees, consisting of 7,443 in research and development, 7,338 in sales and marketing, 2,941 in general and administrative and 2,113 in operations. All of Google’s employees are also equityholders, with significant collective employee ownership.

Mission

Mission is to organize the world’s information and make it universally accessible and useful. The company believes that the most effective, and ultimately the most profitable, way to accomplish its mission is to put the needs of its users first. Google has found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion. Its dedication to putting users first is reflected in three key commitments:

• Google will do its best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective, and we do not accept payment for search result ranking or inclusion.

• Google will do its best to provide the most relevant and useful advertising. Advertisements should not be an annoying interruption. If any element on a search result page is influenced by payment to us, we will make it clear to our users.

• The company will never stop working to improve its user experience, search technology, and other important areas of information organization.

Google believes that its user focus is the foundation of its success to date. It also believes that this focus is critical for the creation of long-term value. The company does not intend to compromise its user focus for short-term economic gain.

How Google Provides Value to its Users

The company serves its users by developing products that quickly and easily find, create, organize, and share information. We place a premium on products that matter to many people and have the potential to improve their lives.

Some of the key benefits offered include:

1. Comprehensiveness and Relevance.

2. Objectivity.

3. Global Access.

4. Ease of Use.

5. Pertinent, Useful Commercial Information.

6 Multiple Access Platforms.

7. Improving the Web.

Products and Services for Users

Product development philosophy involves rapid and continuous innovation, with frequent releases of early-stage products that we then iterate and improve. Google often makes products available early in their development stages by posting them on Google Labs, at test locations online, or directly on Google.com. If users find a product useful, the company promotes it to “beta” status for additional testing. Once it is satisfied that a product is of high quality and utility, they remove the beta label and make it a core Google product. Main products and services are described below.

Google.com—Search and Personalization

Google is focused on building products and services on its web sites that benefit users and let them find relevant information quickly and easily. These products and services include:

Google Web Search. In addition to providing easy access to billions of web pages, Google has integrated special features into Google Web Search to help people find exactly what they are looking for on the web. The Google.com search experience also includes items like:

• Search Options Panel—helps users slice and dice their results across dimensions like time and genre.

• Rich Snippets—gives users convenient summary information about their search results at a glance, such as the number of stars in a review, or the scheduled times for events.

• Music Search—allows users to find and play music by song, album, artist, or lyrics.

• Real-Time Search—blends a live stream of up-to-the-minute content from microblogs and frequently updated sources right on the search results page.

• Google Suggest—shows related query suggestions as users type searches in 153 domains and 52 languages.

• Search Personalization—gives users more relevant results based on their previous signed-on search history or, alternatively, based on anonymous cookies stored on their access device if they are signed-out.

• Advanced Search Functionality—enables users to construct more complex queries, for example by using Boolean logic or restricting results to languages, countries, or web sites.

• Web Page Translation—supports 51 languages and automatically translates between any two of these languages, with a total of 2,550 language translation pairs.

• Integrated Tools—such as a spell checker, a calculator, a dictionary, and currency and measurement converters.

• Cached Links—provides snapshots of web pages taken when the pages were indexed, letting users view web pages that are no longer available.

• Movie, Music and Weather Information—enables users to quickly and easily find movie reviews and show times, information about artists, songs and albums, and weather conditions and forecasts.

• News, Finance, Maps, Image, Video, Book, Blogs and Groups Information—Users are often best served by different types of results. When relevant, we also search display results from other Google products including Google News, Google Finance, Google Maps, Google Images, Google Videos, Google Books, Google Blog Search, Google Product Search, and Google Groups.

Google Images. Google Images is the company's searchable index of images found across the web. To extend the usefulness of searching for images, the company offers additional features, such as searching by image size, format, coloration, and image type, such as photos, clipart, faces, and line drawings.

Google Books. Google Books lets users search the full text of a library-sized collection of books to discover books of interest and to learn where to buy or borrow them. Through this program, publishers can host their content and show their publications in our search results. The company also works closely with participating libraries to digitize all or part of their collections to create a full-text searchable online card catalog. Google Books links bring users to pages containing bibliographic information and several sentences of the search term in context, sample book pages, or full text, depending on author and publisher permissions and book copyright status.

Google Scholar. Google Scholar provides a simple way to do a broad search for relevant scholarly literature including peer-reviewed papers, theses, books, abstracts, and articles. Content in Google Scholar is taken from academic publishers, professional societies, preprint repositories, universities, and other scholarly organizations.

Google Finance. Google Finance provides a simple user interface to navigate and visualize complex financial information in an intuitive manner, including linking together different data sources, such as news events overlayed on stock price.

Google News. Google News gathers information from thousands of news sources worldwide and presents news stories in a searchable format within minutes of their publication on the web. The leading stories are presented as headlines on the user-customizable Google News home page. These headlines are selected for display entirely by a computer algorithm, without regard to political viewpoint or ideology.

Google Videos. Google Videos is our searchable index of videos found across the web. To extend the usefulness of searching for videos, we offer additional features such as searching by video format, quality, length, and more.

Google Blog Search. Google Blog Search enables users to search the blogging universe more effectively and find out users’ opinions on a wide variety of subjects. The Google Blog Search index includes every blog that publishes a site feed. Blogs are web pages usually made up of short, informal, and frequently updated posts that are arranged chronologically.

iGoogle and Personalized Search. iGoogle connects users to the information that is most useful and important to them in an easy-to-use and customizable format. Users add gadgets and themes created by Google and developers to create a powerful and personalized homepage and arrange the content the way they want. iGoogle and Personalized Search also include social features, which gives our users better content and search results based on their social graph as well as what they have searched for in the past, making it easier to quickly find the information that is more relevant to them. Users can also view and manage their history of past searches and the results they have clicked on, and create bookmarks with labels and notes.

Google Product Search. Google Product Search helps users find and compare products from merchants and directs users to where they can buy these products. Users can search for product information that is submitted electronically by sellers or automatically identified by Google software.

Google Merchant Center. Google Merchant Center lets merchants submit product listings that they want to share on Google web sites. Merchants can describe and assign attributes to the information they submit and Google uses this descriptive content to better target search results to what users are looking for.

Google Custom Search. Google Custom Search allows communities of users familiar with particular topics to build customized search engines. These customized search engines allow the communities to help improve the quality of search results by labeling and annotating relevant web pages or by creating specialized, subscribed links for users to get more detailed information about a particular topic.

Google Trends. Google Trends provides users with the ability to track the popularity of keyword searches over time on Google. Users can simply type in any search or compare multiple keyword searches, including people, places, or news events to observe the relative search interest over time from all over the world.

Google Music Search. Google Music Search provides a fast and easy “click-to-play” music discovery service for users searching for music. By entering an artist, album, or song search into Google, users can click the play button on the search results page to preview the song instantly in the music player provided by our music partners.

Google Webmaster Tools. Google Webmaster Tools enables webmasters to understand their sites’ performance in Google’s search results. Rich data and diagnostics provide insight into top search queries, site performance, and potential problems such as crawl errors and malware. In turn, higher-quality web sites improve Google’s ability to crawl and index the web and provide more relevant results.

Applications

Information created by a single user becomes much more valuable when shared and combined with information from other people or places. Therefore Google's strategy for products it develops in this space is simple: develop tools for its users to create, share, and communicate any information generated by the user, thus making the information more useful and manageable. Examples of products developed with this strategy in mind include:

Google Docs. Google Docs allows users to create, view, edit, and share documents, spreadsheets, and presentations from anywhere using a browser. Consumers and business users value the ability to use Google server storage and backup as the foundation of this product as it allows them to access their personal and shared content from any internet-connected device and reduces their dependence on a single physical computer or laptop storage system. Collaborative editing, uploading any file type, controlled sharing, data collection using custom forms, and open export of data in a variety of open formats are among the expanded features which differentiate Google Docs.

Google Calendar. Google Calendar is a free online shareable calendar service that allows users to keep track of the important events, appointments, and special occasions in their lives and share this information with anyone they choose.

Gmail. Gmail is Google’s free webmail service that comes with built-in Google search technology to allow searching of emails and over seven gigabytes of storage, allowing users to keep their important messages, files, and pictures. We serve small text ads that are relevant to the messages in Gmail.

Google Groups. Google Groups is a free service that helps groups of people connect to information and people that have interest in them. Users can discuss topics with each other by creating mailing lists and discussion forums.

Google Reader. Google Reader is a free service that lets users subscribe to feeds and receive updates from multiple web sites in a single interface. Google Reader also allows users to share content with others, and functions with many types of media and reading-styles.

orkut. orkut enables users to search and connect to other users through networks of trusted friends. Users can create a profile and a personal mailbox, post photos, and join or manage online communities.

Blogger. Blogger is a web-based publishing tool that lets people publish to the web instantly using blogs.

Google Sites. Google Sites allows users to easily create, update, and publish content online without technical expertise, with control over who can see and update the site. Google Sites supports a variety of information such as videos, calendars, presentations, spreadsheets, discussions, and texts.

YouTube. YouTube is an online community that lets users worldwide upload, share, watch, rate, and comment on videos, from user generated to niche professional to premium videos. In addition, YouTube offers a range of video and interactive formats for advertisers to reach their intended audience.

Client

Google Toolbar. Google Toolbar is a free application that adds a Google search box to web browsers (Internet Explorer and Firefox) and improves the user experience through features such as a pop-up blocker, that blocks pop-up advertising, translate, which enables users to automatically translate web pages in 40 languages, Sidewiki, which allows users to add high quality content to a sidebar next to a web page, an autofill feature that completes web forms with information saved on a user’s computer, and customizable buttons that let users search their favorite web sites and stay updated on their favorite feeds.

Google Chrome. Google Chrome is an open-source browser for Windows, Mac, and Linux that combines a minimal design with technologies to make the web faster, safer, and easier to navigate.

Google Chrome OS. Google Chrome OS is an open source operating system for users who spend most of their time on the web. Google Chrome OS is built around the core tenets of speed, simplicity, and security. Google is working with several original equipment manufacturers to bring computers running Google Chrome OS to users in 2010.

Google Pack. Google Pack is a free collection of safe and useful software programs from Google and other companies that improve the user experience online and on the desktop. It includes programs that help users browse the web faster and remove spyware and viruses.

Picasa. Picasa is a free service that allows users to view, manage, and share their photos. Picasa enables users to import, organize, and edit their photos, and upload them to Picasa Web Albums where the photos can be shared with others on the internet.

Google Desktop. Google Desktop lets people perform a full-text search on the contents of their own computer, including email, files, instant messenger chats, and web browser history. Users can view web pages they have visited even when they are not online.

Google GEO—Maps, Earth and Local

Google Local Search. Google Local Search powers local queries on Google.com, Google Maps, Google Earth, and mobile. Google Local Search provides a comprehensive search experience by combining business listings with the best sources of ratings, reviews, photos, and other information on the web. Google also offers the Local Business Center as a way for businesses to “claim” their business on Google, verify their data, and provide additional information such as web site, hours of operation, photos, videos, and real-time updates.

Google Maps. Google Maps helps users explore the world from their desktop or phone using global mapping data, satellite imagery, and Google Street View imagery. Google provides its own map data for the U.S. and certain other countries, including more than 181 countries and territories where users author and improve Google Maps using Google Map Maker. Google Maps includes Smart Maps, which labels the most prominent places, businesses, and attractions directly onto the map, and Google Transit, which provides up-to-date information on local transit options in more than 200 cities around the world. We display relevant targeted ads for searches done through Google Maps.

Panoramio. Panoramio enables users to upload photos and locate them on the earth using Google Maps. These photos are then incorporated into Maps, Earth, Local Search, and Place Pages.

Google Earth. Google Earth offers an immersive, three-dimensional (3D) way to explore our mapping data and imagery. Google Earth includes detailed maps of the earth’s ocean floors and Sky, an astronomical imagery library with images of over 100 million stars and 200 million galaxies.

Google SketchUp, Google 3D Warehouse and Google Building Maker. Google SketchUp is a free tool that enables users to model buildings in 3D. Using Google 3D Warehouse, SketchUp can be used as a tool for populating Google Earth with 3D building models. We sell the Pro version of this tool. which includes additional features, to professional designers. Building Maker allows users to easily create 3D models directly in a web browser.

Android and Google Mobile

Android. Android is a free, open-source mobile software platform that allows developers to create applications for mobile devices and for handset manufacturers to install. Android is being developed with the Open Handset Alliance, a business alliance of 65 technology and mobile companies, with the goal of providing consumers a less expensive and more powerful mobile experience. Today, there are 26 Android devices supported by 60 carriers in 49 countries and 19 languages. We also recently launched the Nexus One, an Android handset sold by Google directly to consumers.

Google Mobile. Google Mobile extends its products and services by providing mobile-specific features, including voice input and location-based technology, to mobile phone users. Specific areas of focus include:

Mobile Search. Our mobile-specific search technologies include:

• Search by Voice—using their phone’s speaker and microphone, users can speak their queries to Google in English, Mandarin, or Japanese.

• Search by Sight—using their phone’s digital camera to take pictures, users can search for objects using images instead of words.

• Search by Location—using their phone’s GPS, users can instantly find the closest and most popular places nearby directly from the Google Mobile homepage—without typing a single character.

Mobile Applications. Google Mobile optimizes the majority of Google’s applications for mobile phones in both browser and downloadable form. Two of our most popular mobile applications include Gmail and Maps.

Mobile Ads. We offer mobile ad products spanning our advertiser and publisher-focused efforts, Google AdWords, and Google AdSense. Specific mobile ad optimizations include:

• Smartphone Targeting—advertisers can now check a single box inside of AdWords to target their advertising campaigns at mobile phones like Android devices and the iPhone.

• AdSense for Mobile Apps—mobile developers and publishers can now integrate targeted advertising directly into their Android or iPhone applications.

Google Checkout

Google Checkout is a service that Google offers its users, merchants, and advertisers to make online shopping and payments more streamlined and secure. For users, Google Checkout provides a friendly interface to make payments without disclosing their credit card numbers or other sensitive financial information, and to maintain a centralized record of all their purchases. For merchants, Google Checkout provides a payment mechanism that has industry-leading fraud prevention, and increased conversion and transaction completion rates.

Google Labs

Google Labs is the test bed for our engineers and adventurous Google users. On Google Labs, the company posts product prototypes and solicit feedback on how the technology could be used or improved. Current Google Labs examples include Fast Flip, a Google News feature that delivers fast overviews of headline pages of top newspapers in rich visual format, and Google Image Swirl, a new experimental feature that organizes images into visually and semantically related groups and presents them in an exploratory interface.

The Technology Behind Search and Our User Products and Services

Our web search technology uses a combination of techniques to determine the importance of a web page independent of a particular search query and to determine the relevance of that page to a particular search query.

Ranking Technology. One element of our technology for ranking web pages is called PageRank. While we developed much of our ranking technology after Google was formed, PageRank was developed at Stanford University with the involvement of our founders and was therefore published as research. PageRank is a query-independent technique for determining the importance of web pages by looking at the link structure of the web. PageRank treats a link from web page A to web page B as a “vote” by page A in favor of page B. The PageRank of a page is the sum of the pages that link to it. The PageRank of a web page also depends on the importance (or PageRank) of the other web pages casting the votes. Votes cast by important web pages with high PageRank weigh more heavily and are more influential in deciding the PageRank of pages on the web.

Text-Matching Techniques. Our technology employs text-matching techniques that compare search queries with the content of web pages to help determine relevance. Our text-based scoring techniques do far more than count the number of times a search term appears on a web page. For example, our technology determines the proximity of individual search terms to each other on a given web page, and prioritizes results that have the search terms near each other. Many other aspects of a page’s content are factored into the equation, as is the content of pages that link to the page in question. By combining query independent measures such as PageRank with our text-matching techniques, we are able to deliver search results that are relevant to what users are trying to find.

Infrastructure. We provide our products and services using our own software and hardware infrastructure, which provides substantial computing resources at low cost. We currently use a combination of off-the-shelf and custom software running on clusters of commodity computers. Our considerable investment in developing this infrastructure has produced several benefits. This infrastructure simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global products and services, and automates much of the administration of large-scale clusters of computers. Although most of this infrastructure is not directly visible to our users, we believe it is important for providing a high-quality user experience. It enables significant improvements in the relevance of our search and advertising results by allowing us to apply superior search and retrieval algorithms that are computationally intensive. We believe the infrastructure also shortens our product development cycle and lets us pursue innovation more cost effectively.

How Google Provides Value to Its Advertisers and Content Owners

Google AdWords

For advertisers seeking to market their products and services to consumers and business users over the internet, we offer Google AdWords, an auction-based advertising program that lets advertisers deliver relevant ads targeted to search queries or web content across Google sites and through the web sites of our Google Network, which is the network of third parties that use our advertising programs to deliver relevant ads with their search results and content. The Google Network is also increasingly encompassing different forms of media as well, including content providers who use our advertising programs to deliver ads in online video, television and radio broadcasts. AdWords is accessible to advertisers in 41 different interface languages.

Advertisers in our AdWords program create text-based or display ads, bid on the keywords that will trigger the display of their ads and set daily spending budgets. AdWords features an automated online signup process that lets advertisers quickly implement ad campaigns on Google properties and the web sites of our Google Network members. Ads are ranked for display in AdWords based on a combination of the maximum cost-per-click pricing set by the advertiser and click-through rates and other factors used to determine the relevance of the ads. This favors the ads that are most relevant to users, improving the experience both for the person looking for information and for the advertiser who is generating relevant ads. The AdWords program offers advertisers the following additional benefits:

Return on Investment. Many advertising dollars are spent delivering messages in an untargeted fashion, and payment for these advertisements is not tied to performance. AdWords shows ads only to users seeking information related to what the advertisers are selling, and advertisers choose how much they want to pay when a user clicks on their ad. Because we offer a simple ad format, advertisers can also avoid incurring significant costs associated with creating ads. As a result, even small advertisers find AdWords cost-effective for connecting with potential customers. In addition, advertisers can create many different ads, increasing the likelihood that an ad is suited to a user’s search. Users can find advertisements for what they are seeking, and advertisers can find users who want what they are offering.

Branding. In addition to our cost-per-click pricing model, we also allow advertisers to pay on a cost-per-impression basis on the Google Network. We also offer Placement Targeting, a service that lets advertisers target specific web sites with text and display ads, so that they can more effectively reach specific sets of customers. In addition to targeting sites by content, advertisers can choose placements on sites based on user demographic attributes. To protect user privacy, we use only third-party opt-in panel data to map the demographics of sites in our networks. Placement Targeting is an auction-based system where placement targeted ads compete with keyword-targeted ads in the same auction.

Access to the Google Search and Content Network. We serve AdWords ads on Google properties, our syndicated search partners’ web sites, and the millions of third-party web sites that make up the Google Network. As a result, we can offer extensive search and content inventory on which advertisers can advertise. Apart from keyword-based ads targeted to search queries and Placement Targeting, we also offer advertisers an effective contextual advertising option—Content Targeting—that displays their ads on relevant content pages across our network of partner sites and products. As a result, AdWords advertisers can target users on Google properties and on search and content sites across the web. This gives advertisers increased exposure to users who are likely to be interested in their offerings. The Google Network significantly enhances our ability to attract interested advertisers.

Campaign Control. Google AdWords gives advertisers hands-on control over most elements of their ad campaigns. Advertisers can specify the relevant search or content topics for each of their ads. Advertisers can also manage expenditures by setting a maximum daily budget and determining how much they are willing to pay whenever a user clicks or views an ad. Other features that make it easy to set up and manage ad campaigns include:

• Campaign Management. Advertisers can target multiple ads to a given keyword and easily track individual ad performance to see which ads are the most effective.

• Conversion Tracking. Conversion tracking is a free tool integrated into AdWords reports that measures the conversions of an advertiser’s campaigns, enabling a better understanding of the overall return on investment generated for the advertiser by the AdWords program.

• Traffic Estimator. This tool estimates the number of searches and potential costs related to advertising on a particular keyword or set of keywords.

• Quality-Based Bidding. Advertisers’ keywords are assigned dynamic first page bids based on their Quality Score—the higher the Quality Score, the lower the first page bid. This rewards advertisers with relevant keywords and ads.

• Budgeted Delivery. Advertisers can set daily budgets for their campaigns and control the timing for delivery of their ads.

• AdWords Discounter. This feature gives advertisers the freedom to increase their maximum cost-per-click because it automatically adjusts pricing so that they never pay more than the minimum amount required to exceed the rank of the next ranked ad.

We offer larger advertisers additional services that help maximize returns on their internet marketing investments and improve their ability to run large, dynamic campaigns. These include dedicated client service representatives as well as:

• Creative Maximization. Our AdWords specialists help advertisers select relevant keywords and create more effective ads.

• Vertical Market Experts. Specialists with experience in particular industries offer guidance on how to target potential customers.

• Bulk Posting. We help businesses launch and manage large ad campaigns with hundreds or even thousands of targeted keywords.

• The AdWords API and Commercial Developer Program. For large advertisers as well as third parties, Google’s free AdWords API service lets developers engineer computer programs that interact directly with the AdWords system. With such applications, advertisers and third parties can more efficiently and creatively manage their large AdWords accounts and campaigns. The AdWords Commercial Developer Program also enables our third-party developer ecosystem to continue designing and delivering innovative business applications based on the AdWords platform and distribution channel.

Global Support. We provide customer service to our advertiser base through our global support organization. AdWords is available on a self-service basis with email and real-time chat support. At certain spending levels and through certain signup channels, phone support is also available. Advertisers with more extensive needs and advertising budgets can request strategic support services, which include an account team, to help them set up and manage their campaigns. Depending on geography, we accept bank and wire transfers, direct debit, and local debit cards carrying the Visa and MasterCard logos. We also accept payment through international credit cards. For selected advertisers, we offer several options for credit terms and monthly invoicing. We accept payments in over 40 currencies.

Google AdSense

We are enthusiastic about helping content owners monetize their content, which facilitates the creation of better content to search. If there is better content on the web, users are likely to do more searches, and we expect that will be good for our business and for users. Our Google AdSense program enables web sites that are part of the Google Network to deliver AdWords ads that are relevant to the search results or content on their pages. In addition to AdWords, we also surface non-search AdSense inventory (the Content Network) on the DoubleClick Ad Exchange, allowing certified third party display ad networks to compete with AdWords ads for AdSense inventory. We share most of the revenue generated from ads shown by a Google Network member with that member. The key benefits we offer to Google Network members include:

• Access to Advertisers. Many small web site companies and content producers do not have the time or resources to develop effective programs for generating revenue from online advertising. Even larger sites, with dedicated sales teams, may find it difficult to generate revenue from pages with specialized content. Google AdSense promotes effective revenue generation by providing Google Network members access to Google’s base of advertisers and their broad collection of ads. Our technology automatically starts delivering ads on a web site as soon as the member joins the Google Network. Because the ads are related to what the web site’s visitors are looking for on the site, AdSense provides the Google Network member with a way to both monetize and enhance their web sites. The Google Network member determines the placement of the ads on its web site, and controls and directs the nature of ad content.

• Improved User Satisfaction. Many web sites are cluttered with intrusive or untargeted advertising that may distract or confuse users and may undermine users’ ability to find the information they want. Some web sites have adopted practices we consider to be abusive, including pop-up ads or ads that take over web pages. We believe these tactics can cause dissatisfaction with internet advertising and reduce use of the internet overall. Our AdSense program extends our commitment to improving the overall web experience by enabling web sites to display AdWords ads in a fashion that we believe users find useful rather than disruptive.

• Syndicated Search. We provide our search technology to partners of all sizes, allowing Google search service to be offered through these partners’ properties. For commercial partners, we provide an extensive range of customization options.

Our Google AdSense program includes:

Google AdSense for Search. For internet companies that want to target search audiences, we offer Google AdSense for search. To use AdSense for search, most of our AdSense for search partners add Google search functionality to their web pages in the form of customizable Google search boxes. We offer this service free to these partners. When visitors to these web sites search either the web site or the internet using these customizable search boxes, we display relevant ads (generally text ads) on the search results pages, targeted to match user search queries. These web sites can then generate additional revenue when visitors click on or view these ads. Because we also offer to license our web search technology along with Google AdSense for search, companies without their own search service can offer Google Web Search to improve the usefulness of their web sites for their users while increasing their revenue. We generally charge a fee related to these license agreements. We also offer a more customizable premium offering to web sites with significant traffic.

Google AdSense for Content. Google AdSense for content lets web sites generate revenue from advertising by serving relevant AdWords ads targeted to web content. Web sites can use our automated sign-up process to quickly display AdWords ads on their sites. Under this program, we use automated technology to analyze the meaning of the content on the web site and serve relevant ads based on the meaning of such content. For example, a web page on an automotive blog that contains an entry about vintage cars might display ads for vintage car parts or vintage car shows. These ads are displayed in spaces that our AdSense for content partners have set aside on their web sites for our AdWords content. AdSense for content allows a variety of ad types to be shown, including text ads, display ads such as image ads and video ads, and link units (which are sets of clickable links to topic pages related to page content). We share the majority of the revenues generated from these ads with the Google Network members that display the ads. Important AdSense for content features include:

• Ad Format. Web sites can customize the format of texts ads will appear on their site, including the text color, size, and font.

• Ad Filters. Web sites can block competitive ads, or other ads they want to keep off their site, simply by telling us which URLs to block. They can also review Placement Targeted ads before they appear on their site and block certain categories of ads.

• Reports. Publishers can view customizable reports about their AdSense performance.

• Sensitive Content Filters. At times, certain ads may be inappropriate for some pages. For example, Google automatically filters out ads that would be inappropriate on a news page about a catastrophic event.

Google AdSense for Domains. Google AdSense for Domains allows owners of undeveloped domains that receive traffic from users typing generic terms into browsers or search to generate revenue from relevant advertising.

Google AdSense for Mobile. AdSense for Mobile allows publishers of web sites for mobile phones to generate revenue for their content by inserting relevant AdWords text and display ads on their web sites.

Google AdSense for Mobile Applications. For developers creating applications for high-end mobile phones, such as the iPhone or Android-based phones, AdSense for Mobile Applications allows them to generate revenue by showing relevant advertising in their applications.

Google AdSense for Video. For web sites with video content, AdSense for Video allows the web site to generate revenue from their video content by inserting relevant AdWords text and video ads within their videos.

Google AdSense for Feeds. AdSense for Feeds is a free program that allows publishers to monetize their feeds through text ads targeted to the content of the feed. Feeds are content streams that users subscribe to that contain structured data such as stock and financial information, web blog posts, and weather reports.

Google AdSense for Games. AdSense for Games allows web-based game developers to generate revenue by inserting relevant advertising within their games.

Google Television Ads. Google Television Ads is a product that allows advertisers to use their AdWords account to create television campaigns. Advertisers can use our online advertising platform to place and monitor the effectiveness of their television ads, enhancing relevance and accountability.

Display Advertising

Display advertising comprises the videos, images, banners, Adobe Flash, and other interactive ads that run across the web. Today Google serves display ads across the Google Network. We also offer a variety of display ads such as videos, images, and Flash ads on YouTube. Our goal across both the Google Network and YouTube is to deliver the best possible performance for advertisers.

With our acquisition of DoubleClick, we also provide ad serving technology to publishers, agencies, and advertisers, which is the infrastructure that enables billions of ads to be served each day across the web. Buying and selling display advertising is still a very complicated process, and we plan to simplify that process through the evolution of these platforms.

Finally, we recently launched the DoubleClick Ad Exchange to create an open marketplace for the trading of display ad space. This will open up the display ecosystem for participants of all sizes.

The Technology Behind Google’s Advertising Programs

Our AdWords and AdSense programs serve millions of relevant, targeted ads each day based on search terms users enter or content they view on the web. The key elements of our advertising technology include:

Google AdWords Auction System. The Google AdWords auction system lets advertisers automatically deliver relevant, targeted advertising. Every search query we process involves the automated execution of an auction, resulting in our advertising system often processing hundreds of millions of auctions per day. To determine whether an ad is relevant to a particular query, this system weighs an advertiser’s willingness to pay for prominence in the ad listings (the cost-per-click or cost-per-impression bid) and interest from users in the ad as measured by the click-through rate and other factors. Our Quality-based bidding system also assigns first page bids to advertiser keywords based on the Quality scores of those keywords—the higher the Quality score, the lower the first page bid. The Quality score is determined by an advertiser’s keyword click-through rate, the relevance of the ad text, historical keyword performance, the quality of the ad’s landing page and other relevancy factors. This prevents advertisers with irrelevant ads from “squatting” in top positions to gain exposure, and rewards more relevant, well-targeted ads that are clicked on frequently. Because we are paid only when users click on ads, the AdWords ranking system aligns our interests with those of our advertisers and our users. The more relevant and useful the ad, the better for our users, for our advertisers and for us.

The AdWords auction system also incorporates the AdWords Discounter, which automatically lowers the amount advertisers actually pay to the minimum needed to maintain their ad position. Consider a situation where there are three advertisers—Pat, Betty and Joe—each bidding on the same keyword for ads that will be displayed on Google.com. These advertisers have ads with equal click-through rates and bid $1.00 per click, $0.60 per click and $0.50 per click, respectively. With our AdWords discounter, Pat would occupy the first ad position and pay only $0.61 per click, Betty would occupy the second ad position and pay only $0.51 per click, and Joe would occupy the third ad position and pay only $0.01 per click. The AdWords discounter saves money for advertisers by minimizing the price they pay per click, while relieving them of the need to constantly monitor and adjust their cost-per-click. Advertisers can also experience greater discounts through the application of our smart pricing technology, which can reduce the price of clicks for ads served across the Google Network based on the expected value of the click to the advertiser.

AdSense Contextual Advertising Technology. Our AdSense technology employs techniques that consider factors such as keyword analysis, word frequency and the overall link structure of the web to analyze the content of individual web pages and to match ads to them almost instantaneously. With this ad targeting technology, we can automatically serve contextually relevant ads. To do this, Google Network members embed a small amount of custom HTML code on web pages that generates a request to Google’s AdSense service whenever a user views the web page. Upon receiving a request, our software examines the content of web pages and performs a matching process that identifies advertisements that we believe are relevant to the content of the specific web page. The relevant ads are then returned to the web pages in response to the request. We employ similar techniques for matching advertisements to other forms of textual content, such as email messages and Google Groups postings. For example, our technology can serve ads offering tickets to fans of a specific sports team on a news story about that team.

Our display advertising programs provide advertisers and publishers services related to the delivery of branded display advertising. The key elements of our display advertising technology include:

DoubleClick Advertiser Platform. The DoubleClick Advertiser Platform provides tools for media planning, buying, selling, ad delivery, measurement, and optimization. The key technologies included in this platform are:

• Google Ad Planner and MediaVisor. This research and media planning tool allows agencies and advertisers to identify the web sites their target customers are likely to visit. MediaVisor improves media buying by replacing formerly manual tasks in the media buying process.

• DART for Advertisers. DART for advertisers is an ad management and serving solution that can manage, traffic, serve and report on an advertiser’s online campaign.

• DoubleClick Rich Media and Video. This tool covers the process of creating, managing and reporting on rich media and video advertising.

DoubleClick Publisher Platform. The DoubleClick Publisher Platform provides tools that address key challenges throughout the publisher ad sales cycle and helps maximize the value of publisher content. The key technologies included in this platform are:

• The DART Ad Serving Platform. DART for Publishers is our hosted ad serving platform and DART Enterprise is our licensed software solution. Both provide tools to manage digital ad sales operations for publishers.

• DART Sales Manager. This proposal and finance management tool is designed for companies using the DART platform.

• DART Adapt for Publishers. This tool is DoubleClick’s solution designed to increase campaign performance by managing publisher inventory.

• DoubleClick Ad Exchange. The DoubleClick Ad Exchange connects advertisers, agencies, and networks with online publishers to improve yield for sellers and campaign performance and return on investment for buyers.

YouTube. YouTube offers video ads solutions to advertisers that provide advertisers with a way to promote their content to the YouTube community as well as to associate themselves with content being watched by their target audience. YouTube offers analytic tools to help advertisers understand their audience and derive general business intelligence. The key solutions provided by YouTube include:

• Promoted Videos. Promoted videos allows advertisers of any size to use a self-service tool to reach users who are interested in their content, products, or services.

• YouTube Homepage Ads. These video ads enable advertisers to upload and promote their videos on the YouTube homepage, using several interactive formats.

• Engagement Programs and Contests. These programs enable a sponsored thematic experience often using user and partner videos to present viewers with a branded experience.

• Display and Linear ads. These ads including traditional branded display, linear ads, and video overlay ads, let advertisers monetize video playback and share money with the content owner.

• Click to Buy. Click to buy allows advertisers to create a marketplace for items driven from the video playback.

Google Enterprise

Schools and businesses continue moving towards web-based applications and away from licensed software. Since web-based applications require minimal up-front investment, businesses can pay as they use them and receive automatic updates.

Through Google Apps, we provide hosted, web-based applications for businesses, schools, and nonprofit organizations. In addition, we provide our search technology for use within enterprises through the Google Search Appliance and on their public-facing sites with Google Site Search and Google Commerce Search. Finally, we provide versions of our Google Maps API (hosted) for businesses as well as Google Earth Enterprise, a behind-the-firewall software solution for imagery and data visualization.

Google Apps. Google Apps provides hosted communication, collaboration, and security tools for organizations such as businesses, governments, and schools. Google Apps includes messaging features such as Gmail, Google Calendar, and Google Talk, and Google Groups collaboration features such as Google Docs, Google Video, Google Sites, and eDiscovery/Compliance powered by Postini. Google Apps is available in Standard, Education, Partner, and Premier Editions. Postini services are hosted security and archiving solutions for businesses that work with Google Apps or any mail server.

Google Search Appliance. The Google Search Appliance family of products serves businesses of all sizes, ranging from small businesses (with the Google Mini) as well as larger organizations and government agencies with the Search Appliance. Some features of the Google Search Appliance include integration with advanced corporate security protocols, integration with other enterprise applications, such as content management systems, portals and other systems, and real-time search of business applications. The Google Search Appliance is available in three models, tiered by the quantity of information to be searched: the Google Mini for small business, the GB-7007 for mid-size document counts, and the GB-9009, with the ability to search billions of documents. The appliances search customer-facing web sites and company-wide intranet applications and support centralized deployments for global business units.

Google Site Search. The Google Site Search product is based on the popular Google Custom Search Engine (CSE) and offers businesses the performance and quality of Google search for their web site while giving them control of branding, positioning, and API access to ensure a full and rich integration.

Google Commerce Search. Google Commerce Search is a powerful hosted search solution designed specifically with online retail enterprises in mind. Leveraging the Google Product Search backend infrastructure, Google Commerce Search provides online retailers fast, accurate, attribute-based search with high reliability and low latency at a fraction of the cost of traditional on premise systems.

Google Maps API Premier. Google Maps API Premier makes it easy for companies to include fully interactive Google Maps on their public and internal web sites. The Maps API helps an enterprise’s customers and employees make the right business and purchasing decisions by visualizing important information on a familiar map, internally and on external sites.

Google Earth Enterprise. Google Earth Enterprise offerings let business users visualize their data in a geographic context, and create a common operating picture for employees and viewers. Google Earth Pro, a downloadable application, lets users overlay company-specific data and information in Google Earth for presentation to internal and external users. Google Earth Enterprise lets companies integrate large amounts of proprietary geographic data, satellite imagery, and terrain data with Google Earth content, and visualize the data in Google Maps or 3D Google Earth globes, either behind the company firewall or integrated with public systems or the internet.

Competition

Our business is characterized by rapid change and converging, as well as new and disruptive, technologies. We face formidable competition in every aspect of our business, particularly from companies that seek to connect people with information on the web and provide them with relevant advertising. We face competition from:

• Traditional search engines, such as Yahoo! Inc. and Microsoft Corporation’s Bing.

• Vertical search engines and e-commerce sites, such as WebMD (for health queries), Kayak (travel queries), Monster.com (job queries), and Amazon.com and eBay (commerce). We compete with these sites because they, like us, are trying to attract users to their web sites to search for product or service information, and some users will navigate directly to those sites rather than go through Google.

• Social networks, such as Facebook, Yelp, or Twitter. Some users are relying more on social networks for product or service referrals, rather than seeking information through traditional search engines.

• Other forms of advertising. We compete against traditional forms of advertising—such as television, radio, newspapers, magazines, billboards, and yellow pages—for ad dollars.

• Mobile applications. As the mobile application ecosystem develops further, users are increasingly accessing e-commerce and other sites through those companies’ stand-alone mobile applications, instead of through search engines.

• Providers of online products and services. We also provide a number of online products and services, including Gmail, YouTube, and Google Docs, that compete directly with new and established companies that offer communication, information, and entertainment services integrated into their products or media properties.

We compete to attract and retain users of our search and communication products and services. Most of the products and services we offer to users are free, so we do not compete on price. Instead, we compete in this area on the basis of the relevance and usefulness of our search results and the features, availability, and ease of use of our products and services.

Neither our users nor our advertisers are locked in to Google. For users, other search engines are literally one click away, and there are no costs to switching search engines. Our advertisers typically advertise in multiple places, both online and offline. We compete to attract and retain content providers (Google Network members, as well as other content providers for whom we distribute or license content) primarily based on the size and quality of our advertiser base, our ability to help these partners generate revenues from advertising, and the terms of the agreements.