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Google IPO

As predicted in our last issue, Google announced its IPO this week. You can view the official papers here: form 10-12G, form S-1

Google also published the "Letter from the Founders" - an open letter attached to the IPO filing. We have searched the IPO documents for the most interesting pieces of news regarding Google and the search engine world.

About Google's management:

"We run Google as a triumvirate. Sergey and I have worked closely together for the last eight years, five at Google. Eric, our CEO, joined Google three years ago. The three of us run the company collaboratively with Sergey and me as Presidents. The structure is unconventional, but we have worked successfully in this way.

To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later.

This works because we have tremendous trust and respect for each other and we generally think alike. Because of our intense long term working relationship, we can often predict differences of opinion among the three of us. We know that when we disagree, the correct decision is far from obvious.

For important decisions, we discuss the issue with the larger team. Eric, Sergey and I run the company without any significant internal conflict, but with healthy debate. As different topics come up, we often delegate decision-making responsibility to one of us."

About the risks:

"We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not."

"Currently, we consider our primary competitors to be Microsoft and Yahoo."

"We expect our growth rates to decline and anticipate downward pressure on our operating margin in the future."

"We are in the process of transferring to a third-party service provider our worldwide billing, collection and credit evaluation functions. [...] If we do not successfully implement this project, our business, reputation and operating results could be harmed."

"An increasing amount of information on the Internet is provided in proprietary document formats such as Microsoft Word. The providers of the software application used to create these documents could engineer the document format to prevent or interfere with our ability to access the document contents with our search technology."

"For example, there is a risk that the word 'Google' could become so commonly used that it becomes synonymous with the word 'search'. If this happens, we could lose protection for this trademark, which could result in other people using the word 'Google' to refer to their own products, thus diminishing our brand."

"In connection with our AdSense revenue share agreements, the Company is periodically required to make non-cancelable guaranteed minimum revenue share payments to a small number of its Google Network members over the term of the respective contracts."

"Overture Services (now owned by Yahoo) has sued the Company, claiming that the Google AdWords program infringes certain claims of an Overture Services patent. It also claims that the patent relates to an Overture Services own bid-for-ad placement business model and its pay-for-performance technologies. The Company is currently litigating this case. If Overture Services wins, it may significantly limit the Company's ability to use the AdWords program, and the Company also may be required to pay damages."

About the Google ranking algorithm:

"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."

Google chose Morgan Stanley and Credit Suisse First Boston to serve as lead underwriters for its offering. Google has plans to employ the Dutch auction system for the IPO. They didn't specify a date for the IPO.

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May 2004 search engine articles