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Important Facts - The History of Google's Establishment as the Largest Search Engine

Important Facts - The History of Google's Establishment as the Largest Search Engine

Google, officially known as Google LLC previously named Google Inc. (1998–2017), is an American search engine company founded in 1998 by Sergey Brin and Larry Page. Currently, Google is a subsidiary of the parent company Alphabet Inc.

More than 70 percent of online search requests worldwide are served by Google, making it an integral part of the Internet user experience. Google is also one of the leading brands globally. Its headquarters are located in Mountain View, California.

Google initially started as an online search company, but now they provide over 50 internet services and products, ranging from email and online document creation to software for phones and tablets.

Furthermore, after acquiring Motorola Mobility in 2012, Google also became capable of selling hardware in the form of phones. Its extensive product portfolio and size make Google one of the four influential companies in the high-tech market, along with Apple, IBM, and Microsoft.

Despite having many products, their original search tool remains the core of their success. In 2016, nearly all of Alphabet's revenue came from Google ads based on user search requests.

Searching for Business Information

Sergey Brin and Larry Page

Brin and Page, who met while they were graduate students at Stanford University, were intrigued by the idea of extracting meaning from a vast amount of data accumulated on the Internet.

They began working from Page's dorm room at Stanford to design a new search technology, which they called BackRub. The key was leveraging the Web users' ranking capability themselves by tracking the "backing links" or supportive links of each website. That is, the number of other pages linking to these websites.

Most search engines only returned a list of websites sorted by how often the search phrase appeared on the site. Brin and Page incorporated the number of links each website had into the search function. In other words, websites with thousands of links were logically more valuable than sites with only a few links, and the search engine would place these highly linked sites higher on the list of possibilities.

Furthermore, links from well-linked websites would be more valuable "votes" than links from lesser-known websites.

In the mid-1998, Brin and Page began to receive external funding (one of their first investors was Andy Bechtolsheim, one of the founders of Sun Microsystems, Inc.).

They eventually managed to raise around 1 million dollars from investors, family, and friends, then opened a business in Menlo Park, California, under the name Google.

This name was derived from a spelling mistake of the original name plan by Page, which was googol (a mathematical term for one followed by 100 zeros).

In the mid-1999, when Google secured a venture capital funding of $25 million, they were already processing 500,000 search requests per day. In the year 2000, the activity surged further as Google became the search engine for one of the most popular sites on the Web, namely Yahoo!.

In 2004, when Yahoo! stopped using Google's services, users were already conducting 200 million searches a day on Google. This growth continued.

By the end of 2011, Google was handling around three billion searches each day. The company's name became so common that it entered the vocabulary as a verb: "to Google" became a common expression for searching on the Internet.

To accommodate this immense amount of data, Google built 11 data centers around the world, each housing hundreds of thousands of servers (essentially, multiprocessor personal computers and hard drives arranged in specially designed racks). The number of connected computers in Google likely reached several million.

However, at the core of Google's operations lay three proprietary computer codes:

  • Google File System (GFS)
  • Bigtable
  • MapReduce

GFS organizes data storage into "chunks" across multiple machines, Bigtable is the company's database program, and MapReduce is used by Google to generate high-level data (for example, creating indexes of web pages containing the words "Chicago," "theater," and "participatory").

Google's remarkable growth led to challenges in internal management. Almost from the beginning, investors felt that Brin and Page needed an experienced manager to lead, and in 2001, they agreed to hire Eric Schmidt as the company's chairman and chief executive officer (CEO).

Schmidt, who had previously held the same position at the software company Novell Inc., holds a doctorate degree in computer science and aligns with the technocratic aspirations of the company's founders.

During Schmidt's tenure as CEO, Page served as President of Products, and Brin became President of Technology. The three of them ran the company as a "triumvirate" until Page assumed the CEO role in 2011. Schmidt became Executive Chairman, and Brin took on the title of Director of Special Projects.

The company's Initial Public Offering (IPO) in 2004 raised $1.66 billion for the company and instantly made Brin and Page billionaires. In fact, the IPO created 7 billionaires and 900 millionaires among the initial shareholders.

The IPO also garnered attention due to its unconventional handling. Shares were sold through a public auction aimed at providing equal opportunities for regular investors and professionals in the financial industry.

Google was also included in the Standard and Poor's 500 (S&P 500) stock index in 2006. In 2012, Google's market capitalization made it one of the largest American companies not included in the Dow Jones Industrial Average.

In August 2015, Google underwent a structural change, becoming a subsidiary of a parent company named Alphabet Inc. Services such as internet search, advertising, apps, maps, Android mobile operating system, and the video-sharing site YouTube remained under Google's umbrella.

Meanwhile, Google's special projects, such as the health research company Calico, home products company Nest, and Google X research lab, became separate companies under the Alphabet umbrella.

Larry Page became the CEO of Alphabet, while Sergey Brin became its President, and Eric Schmidt its Executive Chairman. Sundar Pichai, Senior Vice President of Products, became the new CEO of Google.

Then, in 2017, Alphabet underwent another reorganization by establishing an intermediate parent company named XXVI Holdings, and changing Google's status to a limited liability company (LLC).

In 2018, Eric Schmidt resigned from his position as Executive Chairman. More changes occurred in 2019, where both Brin and Page stepped down from their roles as President and CEO, respectively.

Nevertheless, they both remained members of Alphabet's board of directors. Pichai then became the CEO of the Alphabet parent company while retaining that position at Google.

Read also: The Journey of Sergey Brin, Co-founder of Google and Former President of Alphabet

Advertising Growth

Advertising Growth

The positive financial results of Google reflect the rapid growth of internet advertising in general, and the popularity of Google in particular. Analysts attribute part of this success to the shift of advertising spending towards the internet and away from traditional media, such as newspapers, magazines, and television.

For instance, newspaper advertising in America declined from its peak of $64 billion in 2000 to $20.7 billion in 2011, while global online advertising grew from around $6 billion in 2000 to over $72 billion in 2011.

Since its inception, Google has invested a substantial amount of money to ensure profitability in the crucial realm of internet marketing. In 2003, for example, Google spent $102 million to acquire Applied Semantics, the company behind AdSense, a service that invites website owners to display various types of ads on their web pages.

In 2006, Google once again paid $102 million for another web advertising business, namely dMarc Broadcasting, and in the same year, they announced a $900 million deal over three and a half years to sell ads on MySpace.com.

In 2007, Google made its largest acquisition up to that point, purchasing online advertising company DoubleClick for $3.1 billion. Two years later, the company responded to the rapid growth of the mobile app market with a $750 million deal to acquire mobile advertising network AdMob.

All of these acquisitions are part of Google's effort to expand from a search engine business to an advertising business, by leveraging data information from various companies to tailor ads to individual consumer preferences.

Other Services

Google Video and YouTube

Google Video and YouTube

Google's growth, largely driven by keyword-based web advertising, provided a strong foothold for them to compete in dominating new services on the Web. One of these is video content delivery.

In January 2005, Google launched Google Video, allowing individuals to search for text displayed as closed captions from television broadcasts. A few months later, Google began accepting user-submitted videos, with senders setting prices for others who wanted to download and watch those videos.

In January 2006, the Google Video Store was opened, featuring premium content from traditional media companies like CBS Corporation (TV shows) and Sony Corporation (movies). In June 2006, Google began offering premium content for free, but with advertisements.

Despite having strong marketing advantages, Google couldn't surpass the emerging leader in online video, which was YouTube. Introduced in 2005, YouTube quickly became users' favorite platform to upload short video files, some of which attracted millions of viewers.

However, Google couldn't achieve the same level of uploads and viewership as YouTube. Therefore, in 2006, Google acquired YouTube for $1.65 billion in stock. Rather than merging the two websites, Google decided to continue operating YouTube as a separate entity.

Youtube

In 2012, Google shut down the Google Video service and moved its videos to YouTube. In the same year, despite estimated revenues of over 1 billion dollars, Google stated that YouTube remained an "investment" and hadn't disclosed whether the division was profitable.

In 2004, Google began offering free web-based email accounts to a select group of beta testers (beta products are products that are not yet in their final form). This service was known as Gmail, and in 2007, it was opened to the general public, although still officially in beta.

One intriguing aspect of Gmail is that it provides users with email addresses independent of specific internet service providers (ISPs), making it easier to maintain a permanent address.

Furthermore, the service offered unprecedented free email storage space of one gigabit (one billion bytes), though users were also served ads based on keywords found by Google's search engine in their messages.

Later on, Google increased the amount of free storage space given to users to seven gigabits and allowed users to rent additional space.

In 2007, the company acquired Postini, an email service company, for $625 million to enhance Gmail security, particularly in Google's efforts to onboard businesses. In 2009, Google removed the beta status from Gmail, making it more appealing to business users.

In January 2010, Google announced that they had detected a series of sophisticated hacking attacks originating from China. These attacks targeted Gmail accounts of Chinese human rights activists and foreign journalists working in China. 

In some cases, the accounts had been reconfigured to forward all incoming and outgoing emails to unknown addresses.

Google's immediate response was to change Gmail's protocol from standard Web HTTP to encrypted HTTPS, which improved security but sacrificed a bit of speed.

These attacks also led Google to threaten to reverse its previous decision, which allowed the Chinese government to censor Google.cn and enabled Chinese users to receive unfiltered search results. This put the company in conflict with the Chinese government and raised the possibility of Google completely leaving the Chinese market.

In March, Google avoided direct conflict by automatically redirecting Chinese users from Google.cn to the unfiltered Google.com.hk site. This arrangement continued until the government license for Google to operate in China had to be renewed annually at the end of June.

At that point, Google modified Google.cn to allow users to choose between using the censored Chinese site for services like music search, or manually clicking a link to Google.com.hk for web searches. This move won over the Chinese government, which renewed Google's license in July 2010.

Also read: Success Story of Larry Page, One of the Co-founders of Google

Google Books

Google Books

Before Google was even established as a company, its founders had been working on a digital book project at Stanford and had always envisioned a time when internet users could search for content within books.

In 2004, the company announced Google Print, a project that involved several major libraries worldwide and aimed to make their collections accessible for free on the internet.

They began by scanning books in the public domain from these library collections, using advanced equipment. The digital files were then converted into Portable Document Format (PDF) files that could be searched, downloaded, and printed.

Copyrighted works were only displayed in fragmented "snippets."

In 2005, the project's name was changed to Google Books, and about a million books per year were scanned in its early years of operation. By 2012, Google had scanned over 15 million books.

Meanwhile, a group of authors and publishers filed a lawsuit to prevent the company from providing portions of their copyrighted books on the internet.

In 2008, Google reached a legal settlement where the company agreed to pay $125 million to these groups for past infringements, although users could still read up to 20 percent of each scanned work by Google for free.

In return for permission to have portions of their works read online, authors and publishers would receive 63 percent of all advertising revenue generated from the display of their material on the Google website.

Google Earth

Google Earth

In 2004, Google acquired Keyhole Inc., which was partly funded by the venture capital arm of the United States Central Intelligence Agency, In-Q-Tel. Keyhole had developed an online mapping service, which Google later rebranded as Google Earth in 2005.

This service allows users to discover detailed satellite images of most locations on Earth and also create combinations (known as "mashups") with various other databases, integrating details such as street names, weather patterns, crime statistics, coffee shop locations, property prices, and population density into maps created by Google Earth.

While many of these mashups were created for convenience or simple uniqueness, some of them became crucial tools for lifesaving. For instance, after Hurricane Katrina in 2005, Google Earth provided interactive satellite overlays of the affected area, enabling rescuers to better understand the extent of the damage. As a result, Google Earth became a vital tool in many disaster recovery efforts.

However, Google's commitment to privacy came into question after introducing the related mapping service called Street View, which displayed street-level photographs first from around the United States and later from other countries, searchable by street address. Some photos provided glimpses through house windows or showed people sunbathing.

Google defended this service by stating that the images only depicted what someone could see while walking down the street.

In response to privacy concerns in Germany, in 2010 Google allowed people to opt out of having their homes and businesses included in Street View, and 244,000 people (3 percent of the country) did so.

Nevertheless, despite a 2011 German court ruling that Street View was legal, Google announced that they would not be adding new photos to the service.

Google Apps and Chrome

Google Apps and Chrome

In 2006, Google introduced Google Apps, a software application hosted by Google and run through users' web browsers.

The initial set of free programs included Google Calendar (scheduling program), Google Talk (instant messaging program), and Google Page Creator (web page creation program).

Users could utilize these free programs by viewing advertisements and storing their data on Google's servers. This kind of distribution, where data and programs are hosted on the internet, is commonly referred to as cloud computing.

Between 2006 and 2007, Google acquired or developed various traditional business programs (word processing, spreadsheets, and presentation software), ultimately branded as Google Docs. Like Google Apps, Google Docs is used through a browser connected to data on Google's servers.

In 2007, Google introduced the Premier edition of Google Apps, which included 25 gigabytes of email storage, security features from the newly acquired Postini software, and no advertisements.

As Google Docs components became available, they were added to both the ad-supported free version of Google Apps and the Premier Edition. Google Docs was marketed as a direct competitor to Microsoft's Office Suite (Word, Excel, and PowerPoint).

In 2008, Google released Chrome, a web browser with an advanced JavaScript engine better suited for running in-browser programs. The following year, the company announced plans to develop an open-source operating system, known as Chrome OS. The first devices using Chrome OS were released in 2011 and were called Chromebooks.

Chrome OS, running on the Linux kernel, required fewer system resources compared to most other operating systems as it relied heavily on cloud computing. The only software running on devices with Chrome OS is the Chrome browser, with all other software applications provided by Google Apps.

By 2012, Chrome surpassed Microsoft's Internet Explorer (IE) to become the most popular web browser and retained its position above IE, Microsoft's successor Edge, Mozilla Firefox, and Apple Inc.'s Safari until 2020.

Android Operating System

Android Operating System

Google entered the lucrative mobile operating system market by acquiring Android Inc. in 2005, at which point Android Inc. had not released any products yet.

Two years later, Google announced the formation of the Open Handset Alliance, a consortium of dozens of technology and mobile phone companies, including Intel Corporation, Motorola, Inc., NVIDIA Corporation, Texas Instruments Incorporated, LG Electronics, Inc., Samsung Electronics, Sprint Nextel Corporation, and T-Mobile (Deutsche Telekom). This consortium was formed to develop and promote Android, a free and open-source Linux-based operating system.

The first phone to use this new operating system was the T-Mobile G1, released in October 2008, although Android-based phones truly required a more powerful third-generation (3G) wireless network to fully utilize all the features of this system, such as one-touch Google searches, Google Docs, Google Earth, and Google Street View.

T-Mobile G1

In 2010, Google entered direct competition with Apple's iPhone by introducing the Nexus One smartphone. Dubbed the "Google Phone," the Nexus One used the latest version of Android and featured a large, bright display screen, an aesthetic design, and a voice-to-text messaging system based on advanced voice recognition software.

However, the lack of native support for multi-touch, typing features, and navigation pioneered by Apple, which allowed users to interact more flexibly with the touchscreen, was considered a weakness when compared to other phones in its class.

Despite Android being considered inferior to Apple's iOS system, by the end of 2011, Android led the mobile phone industry with a global market share of 52 percent, more than three times the share of iOS.

In 2010, Google's hardware partners also began releasing Android-based tablet computers. The first products were criticized for their poor performance, but by the end of 2011, Android-based tablets began approaching the popularity of Apple's highly popular iPad.

Out of an estimated 68 million tablets shipped that year, 39 percent of them used Android, compared to nearly 60 percent being iPads.

Google found itself facing competitors in both the courtroom and the market. For example, in 2010, Oracle Corporation sued Google for damages amounting to $6.1 billion, alleging that Android had infringed upon many of Oracle's Java programming language patents.

Java Oracle

After two years of litigation, Google ultimately won the lawsuit. Instead of directly attacking Google, Apple Inc. sued Android smartphone makers such as HTC, Motorola Mobility, and Samsung for alleged patent infringements.

Apple CEO Steve Jobs reportedly once said, "I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this." Patent wars related to mobile operating systems seemed difficult to overcome, as lawsuits and counterclaims continued to be filed every time a new version was released.

Social Media and Google+

Social Media and Google+

Google was somewhat slow to acknowledge the popularity and advertising potential of social networks like Facebook and Twitter. Its first attempt at creating a social network, Google Buzz, began in 2010 and was shut down less than two years later.

Among several issues, the network was restricted to users with Gmail accounts and created privacy problems with default settings that displayed user profiles to anyone.

Even before Google Buzz was discontinued, the company launched Google+ in June 2011, initially for a limited audience and later for everyone.

Within a year of its launch, this social networking service managed to attract over 170 million users. Meanwhile, it took Facebook five years to reach 150 million users.

However, Google+ faced tough competition from Facebook, which had around 900 million users by mid-2012. Facebook users spent more time on their site, about six to seven hours per month, while Google+ users averaged just over three minutes per month.

Because Facebook didn't allow Google's web indexing software to access their servers, Google couldn't include this giant social network in its search results, thus losing potentially valuable data from one of the busiest networks on the Internet. Nevertheless, the company seemed to fully support Google+.

Seeing the value in keeping users engaged on the social network, the company quickly introduced a gaming area for this service. They also developed innovative features not available on Facebook. For instance, with Hangouts, users could instantly create free video conferences for up to 10 people.

The company also added Google+ pages for businesses to market their products and brands. However, Google+ could never replace Facebook, and the service was eventually discontinued in 2019.

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