September 5, 2008

Google Hits 10 Year Anniversary

It may sound preposterous with the benefit of hindsight, but only ten years ago, on September 7, 1998, Larry Page and Sergey Brin founded their new company, Google.  It all began with little more than four computers, a healthy dose of initiative, and a $100,000 investment from Sun Microsystems co-founder Andy Bechtolsheim.

With that, they made their bet that an Internet search engine could change the world. 

A decade later, the company now has 20,000 employees, a $150 billion market value and processes nearly 1.5 billion searches per day.  Indeed, Google has made an indelible impact on the world of technology, media and marketing.

Looking ahead, perhaps the most significant challenge the company faces is pursuing its ambitious goals without triggering a backlash that could potentially derail the company.

"You can't do some of the things that they are trying to do without eventually facing some challenges from the government and your rivals," Danny Sullivan, editor-in-chief of SearchEngineLand who has followed Google since its inception, told the Associated Press.

The company's dominant industry position and growing control of Internet traffic and advertising has already raised monopoly concerns, and escalating political and regulatory scrutiny could result in future obstacles.   Even today, U.S. antitrust regulators may decide to challenge Google's plans to sell ads for Yahoo Inc., an Internet company whose recent challenges have only been highlighted by Google's success.

Privacy advocates have also intensified their criticism of Google's collection of potentially sensitive data about the 650 million people who use the company's search engine and other services such as Gmail, YouTube and Maps.  Should these concerns result in new rules restricting Google's data collection practices, the relevance and profitability of its search engine and ad network could both be in jeopardy.

To protect its interests, Google has hired lobbyists to make its case to lawmakers, and has beefed up its public relations staff to steer public opinion as the company prepares to conquer new frontiers.

"Google will keep pushing the envelope," John Battelle, who wrote a book about the company, told the Associated Press.  Battelle also runs Federated Media, a conduit for Internet publishers and advertisers.

"It's one of the things that seems to make them happy," he said.

In perhaps latest example of its ambitions, Google has just released a Web browser to make its search engine and other online services even more attractive to users. However, not all of the company's plans have proceeded smoothly, with several of its ancillary products having failed or fallen short of their hype.

Among the top of the company's goals for the coming decade is expanding Google's services to cell phones and other mobile devices.  The company's agenda also includes making digital copies of every book in the world, leading the alternative energy initiative away from fossil fuels, establishing electronic files for people's health records, selling applications to businesses over the Internet and improving its search engine to better understand requests entered in plain language.

"There are people who think we are plenty full of ourselves right now, but from inside at least, it doesn't look that way," Craig Silverstein, the first employee hired by Page and Brin and now the company's technology director, told the AP.
"I think what keeps us humble is realizing how much further we have to go," he said.

Page and Brin, each 35 and worth nearly $19 billion, view Google as a force for good, a philosophy evident by their corporate motto: "Don't Be Evil."

"If we had a lightsaber, we would be Luke (Skywalker)," said Silverstein.

On the other hand, a "Star Wars" lightsaber analogy could just as easily be used to depict Google as an imposing empire that holds powerful leads in both the Internet search and advertising markets and processes nearly two-thirds of the world's online search requests.   According to the research firm eMarketer Inc., the company sells about 75 percent of ads associated with search requests.

Google's dominance has resulted in $48 billion of Internet ad revenue since 2001.  But the company hasn't hoarded all of that money, instead the company has paid $15 billion in commissions to Web sites that have run its ads during the same period.  Such payments have helped support major Web sites such as  AOL, Ask.com and MySpace in addition to many bloggers.

"Google is the oxygen in this ecosystem," Battelle said.

Never one to rest on its laurels, the company hopes to earn even more Internet advertising from its $3.2 billion acquisition of online marketing service DoubleClick Inc., the biggest deal in Google's 10 year history, completed six months ago.

The company is also trying to earn more from its second-largest acquisition, YouTube.  The Internet's leading video channel is on track to generate $200 million in revenue this year, an amount analysts say barely taps its true moneymaking potential.

This year alone, Google will exceed $20 billion in annual revenue for the first time.  However, Chairman Eric Schmidt, 53, wants the company to eventually generate $100 billion.  Should they succeed in achieving this goal, Google would then be roughly the same size as Hewlett-Packard Co. and IBM Corp., the two largest information-technology companies.   

Schmidt became Google's CEO in 2001, and seems determined to stick around to reach his goal.   He, Page and Brin have made an informal pact to remain the company's brain trust through 2024, and perhaps beyond.

But Google's competition is not standing still, with some rivals determined to thwart the Internet search giant.   Viacom Inc., a movie conglomerate, is suing Google for $1 billion for alleged copyright infringement at YouTube.  And earlier this year Microsoft indicated its desire to topple Google through its $47.5 billion acquisition offer to Yahoo.

Microsoft later withdrew bid amid disputes over Yahoo's value, but some analysts still believe the two companies may get together should they fall even farther behind Google.

The very idea that Microsoft, the richest technology company in the world, would spend so much time worrying about Google seemed preposterous in September 1998, when Page and Brin decided to convert their Stanford University research project into a formal company.

Brin, a University of Maryland alum, and Page, a University of Michigan graduate, began working on a search engine, initially named BackRub, in 1996.  Their work was based on a belief that important content was not being located on the Internet since the leading search engines at that time, Yahoo, AltaVista and Excite, seemed focused on building multifaceted Web sites.

In fact, Internet search was considered such a nascent priority at the time that Page and Brin couldn't even find a buyer for their technology.  Instead, they received a $100,000 initial investment from Sun Microsystems Inc. co-founder Andy Bechtolsheim.  Page and Brin then filed incorporation papers so they could cash the check made out to Google Inc.

In an acknowledgement of their roots as children of math and computer science professors, the duo derived the company's name from the mathematical term "googol" "” a 1 followed by 100 zeros.

Brin and Page would later go on to raise about $26 million from family, friends and various venture capitalists to help fund the company. But even after Google officially became a company in 1998, it continued its humble operations out of the founders' Stanford dorm rooms.

Similar to Google's stripped-down home page, the company itself had a bare-bones aesthetic.  Page's room became a "server farm" for the three computers that ran the search engine.  Back then, the company processed about 10,000 daily requests, a tiny fraction of the 1.5 billion it processed today.   In a nearby dorm hall, Brin's room served as the corporate headquarters.

Within a few weeks of incorporating, the company moved into the garage of a home owned by Susan Wojcicki, who became a Google executive and is now Brin's sister-in-law.  Google bought the Menlo Park, Calif.-based house in 2006.   Even back in 1998, there was some of the now-famous employee perks like free meals and snacks, which usually included bags of M&Ms and Silverstein's homemade bread.

Today, Google occupies a 1.5 million-square-foot headquarters called the "Googleplex".   It also inhabits 24 other offices and hubs in the U.S. in addition to more than 30 other countries.   Its search engine, which is thought to index more than 40 billion Web pages, now runs on hundreds of thousands of computers that operate in massive data centers throughout the world.

Silverstein is dumbfounded by the growth. His initial goal was to help make the company successful enough to employ 80 people.

"It's natural when a company gets big that some people become fearful of that," he said.

"All we can do is to be as upfront and straightforward as possible. We are not trying to be malicious or have some sneaky plan to put you in our thrall. There are some people who will never believe that."


Image Caption: Left to right, Eric E. Schmidt, Sergey Brin and Larry Page of Google. Courtesy Joi Ito - Wikipedia


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