CERTIFICATE PERTAINING TO FOREIGN INTERESTS
Document Type:
Keywords:
Collection:
Document Number (FOIA) /ESDN (CREST):
0001487899
Release Decision:
RIPPUB
Original Classification:
U
Document Page Count:
19
Document Creation Date:
June 22, 2015
Document Release Date:
September 29, 2008
Sequence Number:
Case Number:
F-2007-00886
Publication Date:
May 14, 2004
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STANDARD FORM 32 1MCK) (REV 712001)
Confidential
CERTIFICATE PERTAINING TO FOREIGN INTERESTS
Submitted to the Central Intelligence Agency by Google Inc.
May 14, 2004
Question 1:
a. Do any foreign person(s), directly or indirectly, own or have beneficial
ownership of 5% or more of the outstanding shares of your organization's
equity securities?
ANSWER: No.
b. Has any foreign person directly or indirectly subscribed 5% or more of your
organization's total capital commitment?
ANSWER: No.
Question 2: Does your organization directly or indirectly through your subsidiaries
and/or affiliates, own 10% or more of any foreign interest?
ANSWER:
Question 3 . Do any non-US citizens serve as members of your organization's board of
directors (or similar governing body), officers, executive personnel, general partners,
regents, trustees or senior management officials?
ANSWER:
Question 4: Does any foreign person(s) have the power, direct or indirect, to control the
election, appointment, or tenure of members of your organization's board of directors (or
similar governing body) or other management positions of your organization, or have the
power to control or cause the direction of other decisions or activities of your
organization?
ANSWER: No,
Question 5: Does your organization have any contracts, agreements, understandings, or
arrangements with a foreign person(s)?
If yes, for each instance, provide the name of the foreign person, country, percentage of
gross income derived, and nature of involvement, including:
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Whether defense/nuclear related or not;
Involvement with classified or export controlled technology;
Compliance with export control requirements;
where the organization has a large number of involvements are not
defense/nuclear related and represent a small percentage of gross income, the
explanation can be a generalized statement addressing the totals by country.
ANSWER: Yes. Google generates revenue by selling online advertising through
our AdWords and AdSense programs. The AdWords program allows businesses
to place relevant ads targeted to search results or web content, The AdSense
program allows the thousands of third party websites that comprise the Google
Network to deliver relevant ads that are relevant to search results or content on
their website, with Google and those websites sharing advertising fees.
Google has a contract with each of its advertisers and Google Network members,
This is a large and diverse ou currently numbering more than
businesses and individuals.
Google's Ad Words and AdSense advertising programs are not defense/nuclear-
related technologies, and are not involved with classified or export-controlled
technology.
Google also sells the Google Search Appliance, an integrated hardware/software
search solution for enterprise customers. The only country outside the United
States in which Search Appliances have been sold is Canada. In 2003, Canadian
sales amounted to approximate) f total search appliance revenue. To the
best of Google's knowledge, none of oogle's Canadian customers is
defense/nuclear-related, or involved in classified or export-controlled technology.
Following is a list of Google's Canadian search appliance customers in 2003;
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In order to provide a complete picture of the nature of Google's business, we
have attached as Appendix A recently ~o the Securities and portion
Form S-1 filing that Google ntlY
Commission.
Question 6: Does your organization, whether as a borrower, surety, guarantor or
otherwise have any indebtedness, liabilities or obligations to a foreign person(s)?
ANSWER:. No.
Question 7: During your last fiscal year, did your organization derive:
a, 5% or more of its total revenues or net income from any single foreign
person?
b. In the aggregate 30% or more of its revenues from foreign persons?
If yes to either part of the question;
Provide overall percentage of income derived from foreign sources by
country, nature of involvement, and type of services or products.
Indicate if any single foreign source represents in excess of 5% of total
revenues or net income.
Indicate whether any classified information is involved.
State whether facility is in compliance with applicable export control
requirements.
ANSWER:
(a) No.
(b) In 2003, Google's non-US advertising revenue was 26% of total revenue,
based on billings to advertisers. In 2004, Google's non-US advertising
revenue will likely exceed 30% of the total. Following is a breakdown of the
i the
n
h
g
ow
current top 25 countries in terms of number of advertisers, s
percentage of revenue derived from advertisers in that country:
Country
US; Untied
states _-__ - t
UK: Unrred
K/n dom
DE.- Germany
Percentage
adveri/sers of revenue
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/P,; Japan
CA: Canada
X. NeG' erIands
FR: France
ES, Spain
AUAustrWIe
/T.' Italy
DK Denmark
CH, Switrerland
AT., Austria
SE: Sweden
BR: Brazil
CM, China
BE., Belo/um
NZ; New Zealand
/E: Ireland
IL: Israel
Fl: Finland
TR: Turkey
NO, Norway
No single foreign source represents in excess of 5% of total advertising revenues
or net income. No classified information is involved in Google's advertising
programs.
Question 8: Is 10% or more of your organization's securities held in "nominee shares,"
in "street names" or in some other method which does not disclose the beneficial owner?
ANSWER;
Question 9; Do any of the members of your organization's board of directors (or similar
governing body), officers, executive personnel, general partners, regents, trustees or
senior management officials hold any positions with, or serve as consultants for, any
foreign person(s)?
ANSWER
Question 10: Is there any other factor(s) that indicates or demonstrates acapability on
the part of foreign persons to control or influence the operations or management of your
organization?
ANSWER:
Confidential
APPENDIX A: Except of Google's Form S?i, as filed with the Securities and Exchange
Commission on April 29, 2004
Overview
Google is a global technology leader focused on improving the ways people connect with
information. Our innovations in web search and advertising have made our web site a top Internet
destination and our brand one of the most recognized in the world. We maintain the world's largest online
index of web sites and other content, and we make this information freely available to anyone with an
Internet connection. Our automated search technology helps people obtain nearly instant access to relevant
information from our vast online index,
We generate revenue by delivering relevant, cost-effective online advertising. Businesses use our
AdWords program to promote their products and services with targeted advertising. In addition, the
thousands of third-party web sites that comprise our Google Network use our Google AdSense program to
deliver relevant ads that generate revenue and enhance the user experience.
Our Mission
Our mission is to organize the world's information and make it universally accessible and useful, We
believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put
the needs of our users first. We have found that offering a high-quality user experience leads to increased
traffic and strong word-of-mouth promotion. Our dedication to putting users first is reflected in three key
commitments we have made to our users:
? We will do our best to provide the most relevant and useful search results possible, independent
of financial incentives. Our search results will be objective and we will not accept payment for
inclusion or ranking in them.
We will do our best to provide the most relevant and useful advertising. If any element on a
result page is influenced by payment to us, we will make it clear to our users. Advertisements
should not be an annoying interruption,
We will never stop working to improve our user experience, our search technology and other
important areas of information organization.
We believe that our user focus is the foundation of our success to date. We also believe that this
focus is critical for the creation of long-term value. We do not intend to compromise our user focus for
short-term economic gain.
How We Provide Value to Users, Advertisers and Web Sites
Our Users
We serve our users by developing products that enable people to more quickly and easily find, create
and organize information. We place a premium on products that matter to many people and have the
potential to improve their lives, especially in areas in which our expertise enables us to excel.
Search is one such area. People use search frequently and the results are often of great importance to
there. For example, people search for information on medical conditions, purchase decisions, technical
questions, long-lost friends and other topics about which they care a great deal. Delivering quality search
results requires significant computing power, advanced software and complex processes-areas in which
we have expertise and a high level of focus.
Communication is another such area, People increasingly rely on the Internet to communicate with
each other. Gmail, our new email service (still in test mode), offers a gigabyte of free storage for each user,
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along with email search capabilities and relevant advertising. Delivering an improved user experience in
Gmail has similar in computing and software requirements.
Some of the key benefits we offer to users include:
Relevant and Useful Information. Our technologies sort through a vast and growing amount of
information to deliver relevant and useful search results in response to user queries. This is an area of
continual development for us. When we started the company five years ago, our web index contained
approximately 30 million documents. We now index more than 4 billion web pages, or more than 100 times
as much information. We are also constantly developing new functionality. Recent enhancements include
personalization, which lets users specify interests to help our technology generate customized search
results; and local search, which lets users look for web pages and businesses based on a certain geographic
location. We also provide convenient links to specialized information, such as definitions, maps and travel
information.
Objectivity, We believe it is very important that the results users get from Google are produced
with only their interests in mind. We do not accept money for search result ranking or inclusion. We do
accept fees for advertising, but it does not influence how we generate our search results. The advertising is
clearly marked and separated. This is similar to a newspaper, where the articles are independent of the
advertising. Some of our competitors charge web sites for inclusion in their indices or for more frequent
updating of pages. Inclusion and frequent updating in our index are open to all sites free of charge. We
apply these principles to each of our products and services. We believe it is important for users to have
access to the best available information and research, not just the information that someone pays for them
to see.
Global Access. We strive to provide Google to everyone in the world. Users from around the world
visit our destination sites at Google.com and our 95 other international domains, such as Google.de,
Google,fr, Google.co.uk, Google,co,jp and Google.ca. The Google interface is available in 97 languages.
Through Google News, we offer an automated collection of frequently updated news stories tailored to 10
international audiences. We also offer automatic translation of content between various languages. We
provide localized versions of Google in many developing countries, Although we do not currently recover
our costs in these countries, we believe providing our products and services is an important social good and
a valuable long-term business investment,
Ease of Use. We have always believed that the most useful and powerful search technology hides
its complexity from users and provides them with a simple, intuitive way to get the information they want.
We have devoted significant efforts to create a streamlined and easy-to-use interface based on a clean
search box set prominently an it page free of commercial clutter. We have also created many features that
enhance the user experience. Our products present these features when we believe they will be most useful,
rather than promoting them unnecessarily, For example, Google WebSearch offers maps when a search
appears to be for a geographic location.
Pertinent, Useful Commercial Information, The search for information online often involves an
interest in commercial information-researching a purchase, comparing products and services or actively
shopping, We help people find commercial information through our search services and by presenting ads
that are relevant to the information people seek. To ensure we display only the most relevant commercial
information, our technology automatically rewards ads that users prefer and removes ads that users do not
find helpful. For example, among our search services, we offer Froogle, a search engine for finding
products for sale online.
Our Advertisers
As more people spend additional time and money online, advertisers are increasingly turning to the
Internet to market their products and services to consumers, For these advertisers, we offer Google
AdWords, an auction-based advertising program that enables them to deliver relevant ads targeted to search
results or web content. Our AdWords program provides advertisers with a cost-effective way to deliver ads
to customers across Google sites and through the Google Network. The advertisers using AdWords range
from small businesses targeting local customers to many of the world's largest global enterprises.
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The AdWords program offers advertisers the following benefits:
Effective Return on Investment. Many advertising dollars are wasted because they are spent
delivering messages that are ignored or that reach too broad an audience. With Google AdWords,
businesses can achieve greater cost-effectiveness with their marketing budgets for two reasons--AdWords
shows ads only to people seeking information related to what the advertisers are selling, and advertisers pay
us only when a user clicks on one of their ads. Because we offer a simple ad format, advertisers can avoid
incurring significant design, copywriting or other production costs associated with creating ads. As a result;
even small advertisers find AdWords cost-effective for connecting with potential customers, In addition,
advertisers can easily create many different ads, increasing the likelihood that an ad is exactly suited to a
user's search, Users can find advertisements for exactly what they are seeking, and advertisers can find
users who want exactly what they are offering. When the interests of users and advertisers align, both are
well served.
Access to the Google Network. We serve AdWords ads to the thousands of third-party web sites
that make up the Google Network. As a result, advertisers that use our AdWords program can target users
on our sites and on search and content sites across the web. This gives advertisers increased exposure to
people who are likely to be interested in their offerings. The Google Network significantly enhances our
ability to attract interested users.
Precise 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 on an ad, Our online tracking tools and reports
give advertisers timely updates on how well their campaigns are performing and enable them to make
changes or refinements quickly. Advertisers can also target their campaigns by neighborhood, city, country,
region or language.
Global Support. We provide customer service to our advertiser base through our global support
organization as well as through field sales offices in 11 countries. AdWords is available on a self-service
basis with email support. Advertisers with more extensive needs and budgets can request strategic support
services, which include an account team of experienced professionals to help them set up, manage and
optimize their campaigns.
Web Sites
Nearly every web site in the world is indexed and made searchable by Google, Our users do searches
and are directed to relevant web sites. Google provides a significant amount of traffic to web sites with
which we have no business relationship. Many web sites are able to generate revenue from that traffic, but
others have difficulty doing so. We are enthusiastic about helping sites make money and thereby
facilitating the creation of better content to search. If there is better content on the web, people are likely to
do more searches, and we expect that will be good for our business and for users. To address this
opportunity, we created Google AdSense. Our Google AdSense program enables the web sites--large and
small--that make up the Google Network to deliver AdWords ads that are relevant to the search results or
content on their pages, We share most of the revenue generated from ads shown by a member of the
Google Network with that member-creating an additional revenue stream for them. Web sites can also
license our Google WebSearch product to offer the Google search experience to their users. The key
benefits we offer to web sites in the Google Network include:
Access to Advertisers. Many small web site companies 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 gives
these web sites immediate access to our base of advertisers and their broad collection of ads. In addition to
helping web sites in the Google Network generate revenue more effectively, the automated nature of
AdSense enables them to generate revenue more efficiently.
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Improved User Satisfaction. In their quest for revenue, many Internet companies have cluttered
their web sites 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 for users by enabling web sites to display
AdWords ads in a fashion that we believe people find useful rather than disruptive.
Products and Services
Our product development philosophy is centered on rapid and continuous innovation, with frequent
releases of test products that we seek to improve with every iteration. We often make products available
early in their development stages by posting them on Google Labs, at test locations online or directly on
Google.com. If our users find a product useful, we promote it to "beta" status for additional testing. Our
beta testing periods often last a year or more. Once we are satisfied that a product is of high quality and
utility, we remove the beta label and make it a core Google product. Our current principal products and
services are described below.
Gongle.com
We are focused on building products and services that benefit our users and enable them to find
relevant information quickly and easily. We offer, free of charge, all of the following services at
Google,corn and many of them at our international sites.
Google WebSearch. In addition to providing easy access to more than 4 billion web pages, we have
integrated special features into Google WebSearch to help people find exactly what they are looking for on
the web. The Google.eom search experience also includes:
? 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.
? Spell Checker-suggests alternate search terms when a search appears to contain misspellings or
typing errors,
? Web Page Translation--automatically translates web pages published in French, German,
Italian, Portuguese and Spanish into English, or vice versa.
? Stock Quotes-provides links to stock and mutual fund information.
? Street Maps----provides links to street maps and directions.
? Calculator-solves math problems involving basic arithmetic, complicated math or physical
constants and converts between units of measure,
? Definitions-provides definitions for words or phrases based on content we have indexed.
? PhoneBook--provides U.S. street addresses and phone numbers for U.S. businesses and
residences.
? Search by Numbers-enables people to conduct quick searches by entering FedEx, UPS and
USPS package tracking numbers, vehicle ID numbers, product codes, telephone area codes,
patent numbers, FAA airplane registration numbers and FCC equipment ID numbers.
? Travel Information-enables people to check the status of U,S. airline flights and see delays and
weather conditions at U.S. airports.
? Cached Links-provides snapshots of web pages taken when the pages were indexed, enabling
web users to view web pages that are no longer available.
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Google Image Search. Google Image Search is our searchable index of 880 million images found
across the web. To extend the usefulness of Google Image Search, we offer advanced specific web sites features, domasuch
searching by image size, format and coloration and restricting searches to sGoogle News. Google News gathers information from nearly 10,000 news sources worldwide and
are selec
n the Googlee ews home page. These headlines t tee leading
proare stories
a headlines searchable
stories d for display
are presented
entirely by a computer algorithm, without regard to political
enables vipeople see ewpoint or ideolo many d fferents uses an
automated process to pull together related headlines, people
viewpoints on the same story. Because topics are updated continuously throughout the y
our ogle News
generally see new stories each time they check Google News, We currently provide
service tailored to 10 international audiences.
Google Toolbar. The Google Toolbar makes our search technology constantly and easily available
fa can improve
st download and
ble as a free
il
,
a
as people browse the web. The Google Toolbar is ava
people's web experience through several innovative features, including:
locker hard',
eiit ~~ Fc.nrkea .. ...
Pop-up Blocker-blocks pop-up advertising while people use the web.
PageRank Indicator-displays Geegle's ranking of any page on the web.
AutoFill-completes web forms with information saved securely on a user's own computer.
Highlight-highlights search terms where they appear on a web page, with each term marked in
a different color.
Word Find-finds search terms wherever they appear on a web page.
Froogle. Froogle enables people to easily find products for sale online. By focusing entirely on
product search, Froogle applies the power of our search technology to a very specific task-locating stores
price directly view product photos. shop. Froogle
data feedss
that sell the iterns users r c, seek and speif ' a pointing
can sort results s b by puce, specify
directly from merchants to ensure that product information is up-to-date and ac u acts Most on
not charge
merchants are also automatically included in Froogle's index of shopping sites, merchants for inclusion in Froogle, our provide relevant and unbiased. As with many of our produc~}hes
with confidence that the results we p
Froogle displays relevant advertising separately from search results,
Google Groups. Google Groups enables easy participation in Internet discussion groups by
providing users with tools to search, read and browse these groups and to post messages of their own. roups
back
dating
to 198 1 Google Groups contains the entire archive of Usenet Intern discussion discussions in these groups cQ erga broad range of discourse and more
than 845 million posted messages. The
provide a comprehensive look at evolving viewpoints, debate and advice on many subjects.
Google Wireless. Google Wireless offers people the ability to search and view both the "mobile
web," consisting of 5 million pages created c ossisupports common mobile Internetstaadards,oiz~Bludingx of
more than 4 billion web pages Google
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WML, HDML and HTML, and i-mode and J-Sky compatible HTML mobile Internet standards. Google
Wireless is available through many wireless and mobile phone services worldwide.
Google Web Directory. Google Web Directory enables people to browse and search Through weeb
sites that have been organized into categories. Out directory combines Google s search technology with
categorization developed by the Open Directory Project and is available in 73 languages.
Google Local, Google Local enables users to find relevant local information based on zip codes,
cities or specific addresses. Google Local results include neighborhood business listings, addresses, phone
numbers, maps and directions.
Goole Answers. Google Answers provides people with help funding information and answering
questions. Users set a fee they are willing to pay and submit questions to the Google Answers service, One
of more than 500 carefully
s are screened web searchers researchers with strong communication skills Answers who often have
researchers are experienced
expertise in various fields. An extensive collection of past responses is available to our users free of charge.
Google Catalogs. With Google Catalogs, we provide access to the full content of more than 6,600
mail-order catalogs, many of which were previously unavailable online,
web
publishers to available to
Google Print. Google Print brings information online had
Their
searchers. Under this program, we have been experimenting with a
evaluate content and rank their publications our
links results
book sellergs tthe same hat maytoffer the full versions of these web
sites, On Google Print pages, we provide
publications for sale, and we show content-targeted ads that are served through the Google Ad Sense
program
Google Labs, Google Labs to our playground ifor Our engineers and for adventurous GOOgle t feedback on how the technology could be used or and On Google Labs, we post product p h'p
improved. Current Google Labs examples include,,
? Google Personalized Search--provides customized search results based on an individual user's
interests.
? Google Deskbar-enables people to search with Google from the taskbar of their computer
without launching a web browser.
Voice Search-enables people to dial a phone number, u l our system what they are looking for
and hear Google search results read to them by a comp
Froogle Wireless-gives people the ability to search for product information from their mobile
phones and other wireless devices.
,Slogger, Blogger is a leading web-based publishing tool that gives people the ability to publish to e up of short,
informal the web instantly using saarraedchrronolog cally. Blogs can fa ilitate communications among
frequently updated posts s that that are g
small groups or to a worldwide audience in a way that is simpler and easier to follow than traditional email
or discussion forums.
Examples our product offerings are in their tial tet include Gmail, our free phaOrkase&
an%e
Limited Availability Services. Some
currently available to limited audnenees mPlei acquaintances and find others
invitation-based online meeting place where people can socialize, make new
who share their interests.
Google AdWords
Google AdWords is our global advertising program, which enables advertisers to present ads to
people at the precise moment those people are looking for information related to what the advertiser has to
offer. Advertisers use our automated tools, often with little or no assistance from us, to create text-based
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ads, bid on the keywords that will trigger the display of their ads and set daily spending budgets. AdWords
features an automated, low-cost online signup process that enables advertisers to implement ad campaigns
that can become live in 15 minutes or less. The total sign-up cost for becoming an AdWords advertiser is
only $5.00,
Ads are ranked for display in AdWords based on a combination of the maximum cost per click (CPC)
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 for both the person looking for
information and the advertiser looking for interested customers. AdWords has many features that make it
easy to set up and manage ad campaigns for maximum efficiency and effectiveness:
? 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, The campaign
management tools built into AdWords enable advertisers to quickly shift their budgets to ads
that deliver the best results.
? Keyword targeting, Businesses can deliver targeted ads based on specific search terms
(keywords) entered by users or found in the content on a web page, We also offer tools that
suggest synonyms and useful phrases to use as keywords or ad text. These sus gge ti the can
improve ad click-through rates and the likelihood of a user becoming
advertiser.
? Traffic estimator. This tool estimates the number of searches and potential costs related to
advertising on a particular keyword or set of keywords. These estimates can help advertisers
optimize their campaigns.
Budgeted delivery. Advertisers can set daily budgets for their campaigns and control the timing
for delivcry of their ads.
Performance reports. We provide continuous, timely reporting of the effectiveness of each ad
campaign.
? Multiple payment options. We accept credit and debit cards and, for selected advertisers, we
offer several options for credit terms and monthly invoicing. We accept payments in 48
currencies.
? Ad Words discounter. This feature gives advertisers the freedom to increase their maximum
CPCs because it automatically adjusts pricing so that they never pay more than one cent over the
next highest bid.
For larger advertisers, we offer additional services that help to maximize returns on their Internet
marketing investments and improve their ability to run large, dynamic campaigns. These include:
? Creative maximization. Our AdWords specialists help advertisers select relevant keywords and
create more effective ads. This can improve advertisers' ability to target customers and to
increase the click-through rates and conversion rates for their ads.
? Vertical market experts. Specialists with experience in particular industries offer guidance on
how to most effectively target potential customers,
? Bulk posting. We assist businesses in launching and managing large ad campaigns with
hundreds or even thousands of targeted keywords.
? Dedicated client service representatives. These staff members continuously look for ways to
better structure their clients' campaigns and to address the challenges large advertisers face.
Google AdSense twork
a Our Google AdSense program senables be based on Goole.
oreon webtconntt We share most
from our AdWords advertiser Targeting can
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of the revenue generated from ads shown by a member of the Google Network with that member. For
network members, we offer:
Google AdSense for search. For Internet companies with potentially large search audiences, we
offer Google AdSense for search. Web sites use AdSense for search to generate additional revenue by
serving relevant AdWords ads targeted to search results. 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 WebSearch to improve the usefulness of their web sites for their users while increasing their
revenue.
Google AdSense for content. Google AdSense for content enables web sites to generate revenue
from advertising by serving relevant AdWords ads targeted to web content. Our automated technology
analyzes the meaning of web content and serves relevant advertising, usually in a fraction of a second. We
believe that some of the best content on the web comes from web sites aiming to reach small but highly
targeted audiences. AdSense for content can help these web sites offset some of their publishing costs. We
believe this may help them continue to publish by tapping into the value of their content, There is no charge
for web sites to participate in our AdSense for content program. Using our automated sign-up process, web
sites can quickly display AdWords ads on their sites. We share the majority of the revenues generated from
click-throughs on these ads with the Google Network members that display the ads. For web sites with
more than 20 million page views per month, we provide customization services,
Google Search Appliance
We provide our search technology for use within enterprises through the Google Search Appliance
(GSA). The GSA is a complete software and hardware solution that companies can easily implement to
extend Google's search performance to their internal or external information. The GSA can often be
installed and launched in as little as one day. It leverages our search technology to identify the most
relevant pages on intranet and public web sites, making it easy for people to find the information they need.
The GSA offers several useful features, including automated spell-checking, cached pages, dynamic
snippets, indented results and automatic conversion of Microsoft Office and PDF files to HTML. The GSA
is available in three models: the GB-1001, for departments and mid-sized companies; the GB-5005, for
dedicated, high-priority search services such as customer-facing web sites and company-wide intranet
applications; and the GB-8008, for centralized deployments supporting global business units. List prices for
our GSA models start at $32,000 for the GB-1001, $230,000 for the GB-5005 and $600,000 for the GB-
8008.
Technology
We began as a technology company and have evolved into a software, technology, Internet,
advertising and media company all rolled into one. We take technology innovation very seriously. We
compete aggressively for talent, and our people drive our innovation, technology development and
operations. We strive to hire the best computer scientists and engineers to help us solve very
challenges across systems design, artificial intelligence, machine learning, data mining, g,
software engineering, testing, distributed systems, cluster design and other areas. We work hard to provide
an environment where these talented people can have fulfilling jobs and produce technological innovations
that have a positive affect on the world through daily use by millions of people. We employ technology
whenever possible to increase the efficiency of our business and to improve the experience we offer our
users.
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We provide our web search an
computers running custom software developed in-house. Some elements of our technology include:
Web Search Technology
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. We do not explain how we do ranking in great detail because some people try to manipulate
our search results for their own gain, rather than in an attempt to provide high-quality information to users.
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PageRank and Ranking Technology. One element of our technology for ranking web pages is
called PageRank. While we developed much of our ranking technology after the company was formed,
PageRank was developed at Stanford University with the involvement of our founders, and was therefore
published as research. Most of our current ranking technology is protected as trade-secret. 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 PageRank 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 people are trying to find.
Advertising Technology
Our advertising program serves millions of relevant, targeted ads each day based on search terms
people enter or content they view on the web. The key elements of our advertising technology include:
Google AdWords Auction System. We use the Google AdWords auction system to enable
advertisers to automatically deliver relevant, targeted advertising. Every search query we process involves
the autoniated 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 CPC) and interest from
users in the ad as measured by the click-through rate and other factors. If an ad does not attract user clicks,
it moves to a less prominent position on the page, even if the advertiser offers to pay a high amount. This
prevents advertisers with irrelevant ads from "squatting" in top positions to gain exposure. Conversely,
more relevant, well-targeted ads that are clicked on frequently move up in ranking, with no need for
advertisers to increase their bids. Because we are paid only when users click on ads, the AdWords ranking
system aligns our interests equally 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 our 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 the minimum bid of $0.05 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 CPCs. Advertisers can experience
greater discounts through the application of our smart pricing technology introduced in April 2004. This
technology 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, font size 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. For example, our
technology can serve ads offering tickets to fans of a specific sports team on a news story about that team.
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Large-Scale Systems Technology
Our business relies on our 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 key benefits. It 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
allows us to pursue innovation more cost effectively.
We constantly evaluate new hardware alternatives and software techniques to help further reduce our
computational costs. This allows us to improve our existing products and services and to more easily
develop, deploy and operate new global products and services.
Sales and Support
We have put significant effort into developing our sales and support infrastructure. We maintain 21
sales offices in 11 countries, and we deploy specialized sales teams across 18 vertical markets. We bring
businesses into our advertising network through both online and direct sales channels. In all cases, we use
technology and automation wherever possible to improve the experience for our advertisers and to grow
our business cost-effectively, The vast majority of our advertisers use our automated online AdWords
program to establish accounts, create ads, target users and launch and manage their advertising campaigns,
Our direct advertising sales team focuses on attracting and supporting companies around the world with
sizeable advertising budgets. Our AdSense program follows a similar model. Most of the web sites in the
Google Network sign up for AdSense using an automated online process. Our direct sales force focuses on
building AdSense relationships with leading Internet companies. Our global support organization
concentrates on helping our advertisers and Google Network members get the most out of their
relationships with us.
Marketing
We have always believed that building a trusted, highly-recognized brand begins with providing
high-quality products and services that make a notable difference in people's lives, Our user base has
grown primarily by word-of-mouth, which can work very well for products that inspire a high level of user
loyalty because users are likely to share their positive experiences with their friends and families. Our early
marketing efforts focused on feeding this word-of-mouth momentum and used public relations efforts to
accelerate it. Through these efforts and people's increased usage of Google worldwide, we have been able
to build our brand with relatively low marketing costs, Today, we use the quality of our own products and
services as our most effective marketing tools, and word-of-mouth momentum continues to drive consumer
awareness and user loyalty worldwide. We do not promote products before they are successful for our
users, preferring to test them until they achieve broad acceptance. We also engage in targeted marketing
efforts, such as those we deliver to our advertising clients, designed to inform potential advertisers, Google
Network members and enterprises of the benefits they can achieve through Google.
Competition
We face formidable competition in every aspect of our business, and particularly from other
companies that seek to connect people with information on the web and provide them with relevant
advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo.
We also face competition from other web search providers, including companies that are not yet
known to us. We compete with Internet advertising companies, particularly in the areas of pay-for-
performance and keyword-targeted Internet advertising, We may compete with companies that sell
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products and services online because these companies, like us, are trying to attract users to their web sites
to search for information about products and services, In addition to Internet companies, we face
competition from companies that offer traditional media advertising opportunities.
We compete to attract and retain relationships with users, advertisers and web sites. The bases on
which we compete differ among the groups,
? Users, 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.
Advertisers, We compete to attract and retain advertisers, We compete in this area principally
on the basis of the return on investment realized by advertisers using Our AdWords program, We
also compete based on the quality of customer service, features and ease of use of AdWords.
? Web sites. We compete to attract and retain web sites as members of our Google Network
based on the size and quality of our advertiser base, our ability to help our Google Network
members generate revenues from advertising on their web sites and the terms of agreements with
our Google Network members,
We believe that we compete favorably on the factors described above, However, our industry is
evolving rapidly and is becoming increasingly competitive. Larger, more established companies than us are
increasingly focusing on search businesses that directly compete with us.
Intellectual Property
We rely on a combination of patent, trademark, copyright and trade secret laws in the U.S. and other
jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary
technology and our brand. We also enter into confidentiality and invention assignment agreements with our
employees and consultants and confidentiality agreements with other third parties, and we rigorously
control access to proprietary technology.
Google is a registered trademark in the U.S. and several other countries. Our unregistered trademarks
include: AdSense, AdWords, Blogger, Froogle, Gmail, I'm Feeling Lucky and FageRank,
The first version of the PageRank technology was created while Larry and Sergey attended Stanford
University, which owns a patent to PageRank. We hold a perpetual license to this patent. In October 2003,
we extended our exclusivity period to this patent through 2011, at which point our license is non-exclusive.
Circumstances outside our control could pose a threat to our intellectual property rights. For example,
effective intellectual property protection may not be available in every country in which our products and
services are distributed. Also, the efforts we have taken to protect our proprietary rights may not be
sufficient or effective. Any significant impairment of our intellectual property rights could harm our
business or our ability to compete, Also, protecting our intellectual property rights is costly and time
consuming. Any increase in the unauthorized use of our intellectual property could make it more expensive
to do business and harm our operating results.
Companies in the Internet, technology and media industries own large numbers of patents, copyrights
and trademarks and frequently enter into litigation based on allegations of infringement or other violations
of intellectual property rights. As we face increasing competition, the possibility of intellectual property
claims against us grows. Our technologies may not be able to withstand any third-party claims or rights
against their use.
Culture and Employees
We take great pride in our company culture and embrace it as one of our fundamental strengths. We
remain steadfast in our commitment to constantly improve the technology we offer to our users and
advertisers and to web sites in the Google Network. We have assembled what we believe is a highly
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talented group of employees. Our culture encourages the iteration of ideas to address complex technical
challenges. In addition, we embrace individual thinking and creativity. As an example, we encourage our
engineers to devote 20% of their time to work on independent projects. Many of our significant new
products have come from these independent projects, including Google News, AdSense for content and
Orkut.
Despite our rapid growth, we constantly seek to maintain a small-company feel that promotes
interaction and the exchange of ideas among employees. We try to minimize corporate hierarchy to
facilitate meaningful communication among employees at all levels and across departments, and we have
developed software to help us in this effort, We believe that considering multiple viewpoints is critical to
developing effective solutions, and we attempt to build consensus in making decisions. While teamwork is
one of our core values, we also significantly reward individual accomplishments that contribute to our
overall success. As we grow, we expect to continue to provide compensation structures that are more
similar to those offered by start-ups than established companies. We will focus on very significant rewards
for individuals and teams that build amazing things that provide significant value to us and our users.
At March 31, 2004, we had 1,907 employees, consisting of 596 in research and development, 961 in
sales and marketing and 350 in general and administrative. All of Google'a employees are also
shareholders, with significant collective employee ownership. As a result, many employees are highly
motivated to make the company more successful.
Legal Proceedings
From time to tine, we may become a party to litigation and subject to claims incident to the ordinary
course of business. Although the results of litigation and claims cannot be predicted with certainty, we
believe that the final outcome of such matters will not have a material adverse effect on our business.
Regardless of outcome, litigation can have an adverse impact on us because of defense costs, diversion of
management resources and other factors.
In 2002, Overture Services (now owned by Yahoo) sued us, claiming that the Google AdWords
program infringes certain claims of an Overture Services patent. It also claims that the patent relates to
Overture Services' own bid-for-ad placement business model and its pay-for-performance technologies,
We believe that the lawsuit is without merit and we will continue to vigorously defend the lawsuit litigating
this case. If Overture Services wins, it may significantly limit our ability to use the AdWords program and
we also may be required to pay damages.
We lease approximately 506,000 square feet of space in our headquarters in Mountain View,
California under a lease that expires in 2012. We also lease additional research and development, sales and
support offices in Amsterdam, Atlanta, Bangalore, Boston, Chicago, Dallas, Denver, Detroit, Dublin,
Hamburg, Hyderabad, London, Los Angeles, Madrid, Milan, Mountain View, New York, Paris, Santa
Monica, Seattle, Sydney, Tokyo, Toronto and Zurich. We operate data centers in several domestic and
international locations.