Introduction
Google, originally founded as a search engine company in 1998, has become one of the most influential and recognizable brands in the world. The company’s evolution from a Stanford University research project to a multinational technology conglomerate is a remarkable story of innovation, strategic acquisitions, and a relentless focus on monetizing the vast amount of data generated by internet users. Today, Google operates as a subsidiary of Alphabet Inc., reflecting its expansion into a diverse range of internet-related services and products that extend far beyond its original search functionality. The ubiquitous nature and impact of Google are reflected in the fact that over 70% of global online search requests are handled by the company.
Early Investment, Rapid Growth, and a 2004 IPO
Sergey Brin and Larry Page, then graduate students at Stanford University, developed Google’s core search technology. They were fascinated by the idea of extracting meaning from the ever-expanding data on the Internet. They created a new search technology named “BackRub.” The key innovation of their design was to utilize the user’s own ranking abilities by tracking the “backing links” of each website. This meant the number of other pages linked to them. While most search engines listed websites by search phrase frequency, Brin and Page incorporated the number of links, or “votes”, that each website had. A web page with thousands of links would logically be more valuable and rank higher on a search results list than one with only a few links. Further, a link from a heavily linked and reputable website would be a more valuable vote than one from a lesser-known website.
In 1998, they received initial financing, including a $100,000 investment from Andy Bechtolsheim of Sun Microsystems. They founded Google in Menlo Park, California. The name “Google” comes from a misspelling of the number “googol,” a mathematical term for one followed by 100 zeros.
By mid-1999, they had raised about $1 million from investors, family, and friends, and found themselves processing 500,000 search queries per day. In 2000, Google became the search engine for Yahoo!, which helped the activity explode. The company’s daily searches climbed to 200 million by 2004 when Yahoo! ceased to use Google’s services. The growth never stopped. Google was handling some three billion searches per day by the end of 2011. The company’s impact on the internet was such that the name entered the common lexicon as a verb. “To google” quickly became associated with searching the Internet.
To handle this unprecedented influx of data, the company developed 11 data centers around the globe, each containing hundreds of thousands of servers. The backbone of Google’s operation is built around three proprietary pieces of computer code: Google File System (GFS), Bigtable, and MapReduce. GFS is used to store data in “chunks” across multiple machines. Bigtable is Google’s database program, and MapReduce helps generate higher-level data.
The company’s internal management faced challenges as Google grew. In 2001, they brought in Eric Schmidt as chairman and CEO to help. Schmidt had a doctorate in computer science and blended well with the founders’ technocratic ideals. Under Schmidt, Page served as president of products, and Brin was president of technology. They ran the company as a “triumvirate” until 2011, when Page became CEO, Schmidt became executive chairman, and Brin became director of special projects.
Google went public in 2004, raising $1.66 billion and making both Brin and Page instant billionaires. The stock offering was unique due to the public auction aiming to allow average investors to participate on equal footing with financial industry professionals. Google was added to the S&P 500 Index in 2006. By 2012, its market capitalization was among the largest of American companies not in the Dow Jones Industrial Average.
Strategic Acquisitions and Monetizing Google’s Search Engine
Google’s success reflects the rapid expansion of Internet advertising and the popularity of the company’s search engine. Analysts credit this success to a shift in advertising spending towards the Internet and away from traditional media. Over time, the company has made many strategic acquisitions to grow from its search capabilities into the advertising sector by combining various firms’ information databases to personalize advertisements to suit consumer preferences.
For example, in 2003, Google spent $102 million to buy Applied Semantics, the makers of AdSense. In 2006, Google again paid $102 million for dMarc Broadcasting, another Web advertisement business. It announced that same year it would pay $900 million over three and a half years to sell ads on MySpace.com. It purchased online advertising firm DoubleClick for $3.1 billion in 2007. Two years later, Google purchased the mobile advertising network AdMob for $750 million. In 2023, Alphabet took in $175 billion (57% of all Google revenue) from advertising generated by users searching on Google. Google’s diverse product portfolio and immense scale have solidified its position as one of the most influential companies in the high-tech market.
