Case Study 12
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John E. Gamble University of South Alabama
G oogle was the leading Internet search f i r m in
2012, wi th a nearly 67 percent market share in
search f r o m home and work computers and a
95 percent share in searches performed f rom mobile
devices. Google's business model allowed advertisers to
bid on search terms that would describe their product or
service on a cost-per-impression (CPI) or cost-per-click
(CPC) basis. Google's search-based ads were displayed
near Google's search results and generated advertis
ing revenues o f more than $36.5 billion in 2011. The
company also generated revenues of about $1.4 billion
i n 2010 f rom licensing fees charged to businesses that
wished to install Google's search appliance on company
intranets and f r o m a variety of new ventures. New ven
tures were becoming a growing priority wi th Google
management since the company dominated the market
for search based ads and sought additional opportu
nities to sustain its extraordinary growth in revenues,
earnings, and net cash provided by operations.
I n 2012, Google was pursuing a cloud comput
ing initiative that was intended to change the market
for commonly used business productivity applica
tions such as word processing, spreadsheets, and pre
sentation software f r o m the desktop to the Internet.
Information technology analysts believed that the
market for such applications—collectively called cloud
computing—could grow to $95 bill ion by 2013. Google
had also entered into alliances wi th Intel, Sony, DISH
Network, Logitech, and other f i rms to develop the
technology and products required to launch Google
TV. Google T V was launched i n the U.S. i n 2011 and
would allow users to search live network and cable
programming; streaming videos f rom providers such
as Netflix, Amazon Video On Demand, and YouTube;
and recorded programs on a DVR. The company also
launched its Google + social networking site i n 2011
to capture additional advertising opportunities.
Perhaps the company's most ambitious strategic
initiative i n 2012 was its acquisition of Motorola
Mobil i ty for $12.5 billion, which put i t i n the hard
ware segment of the smartphone and tablet computer
industries. Analysts fol lowing the transaction saw the
move to acquire Motorola Mobi l i ty as a direct attempt
to mimic Apple's strategy used for the iPhone and iPad
that tightly integrated hardware and software for its
most profitable and fastest growing products. Google
had launched its Android operating system for mobile
phones i n 2008 and allowed wireless phone manu
facturers such as LG, HTC, and Nokia to produce
Internet-enabled phones boasting features similar to
those available on Apple's iPhone. By 2012, Android
was the leading smartphone platform wi th a 50.9 per
cent market share.
While Google's growth initiatives seemed to take
the company into new industries and thrust i t into
competition wi th companies ranging f r o m Facebook
to Microsoft to Applet, its CEO, Eric Schmidt, saw the
new ventures as natural extensions of the company's
mission to "organize the world's information and
make i t universally accessible and useful."1
In A p r i l 2012, he explained the company's wide-
ranging strategic initiatives by commenting " In some
ways we have run the company as to let 1,000 flow
ers bloom, but once they do bioom you want to put
together a coherent bouquet."2
C O M P A N Y H I S T O R Y '
The development of Google's search technology began
in January 1996 when Stanford University computer
science graduate students Larry Page and Sergey Br in
collaborated to develop a new search engine. They
Copyright © 2012 by John E. Gamble. All rights reserved.
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b T N I B I i 1 ThelO Principles of Google's Corporate Philosophy
1. Focus on the user and all e lse will follow. From its inception, Google has focused on providing the best user experience possible. While many companies claim to put their customers first, few are able to resist the temptation to make small sacrifices to increase shareholder value. Google has steadfastly refused to make any change that does not offer a benefit to the users who come to the site:
• The interface is clear and simple.
• Pages load instantly.
• Placement in search results is never sold to anyone.
• Advertising on the site must offer relevant content and not be a distraction.
By always placing the interests of the user first, Google has built the most loyal audience on the web. And that growth has come not through TV ad campaigns, but through word of mouth from one satisfied user to another.
2. It's best to do one thing really, really well. Google does search. With one of the world's largest research groups focused exclusively on solving search problems, we know what we do well, and how we could do it better. Through continued iteration on difficult problems, we've been able to solve complex issues and provide continuous improvements to a service already considered the best on the web at making finding information a fast and seamless experience for millions of users. Our dedication to improving search has also allowed us to apply what we've learned to new products, including Gmail, Google Desktop, and Google Maps.
3. Fast is better than slow. Google believes in instant gratification. You want answers and you want them right now. Who are we to argue? Google may be the only company in the world whose stated goal is to have users leave its website as quickly as possible. By fanatically obsessing on shaving every excess bit and byte from our pages and increasing the efficiency of our serving environment, Google has broken its own speed records time and again.
4. Democracy on the web works. Google works because it relies on the millions of individuals posting websites to determine which other sites offer content of value. Instead of relying on a group of editors or solely on the frequency with which certain terms appear, Google ranks every web page using a breakthrough technique called PageRank™. PageRank evaluates all of the sites linking to a web page and assigns them a value, based in part on the sites linking to them. By analyzing the full structure of the web, Google is able to determine which sites have been 'Voted" the best sources of information by those most interested in the information they offer.
5. You don't need to be at your desk to need an answer. The world is increasingly mobile and unwilling to be constrained to a fixed location. Whether it's through their PDAs, their wireless phones or even their automobiles, people want information to come to them.
6. You can make money without doing evil. Google is a business. The revenue the company generates is derived from offering its search technology to companies and from the sale of advertising displayed on Google and on other sites across the web. However, you may have never seen an ad on Google. That's because Google does not allow ads to be displayed on our results pages unless they're relevant to the results page on which they're shown. So, only certain searches produce sponsored links above or to the right of the results. Google firmly believes that ads can provide useful information If, and only if, they are relevant to what you wish to find.
Advertising on Google is always clearly identified as a "Sponsored Link." It is a core value for Google that there be no compromising of the integrity of our results. We never manipulate rankings to put our partners higher in our search results. No one can buy better PageRank. Our users trust Google's objectivity and no short-term gain could ever justify breaching that trust.
7. There's always more Information out there. Once Google had indexed more of the HTML pages on the Internet than any other search service, our engineers turned their attention to information that was not as readily accessible. Sometimes it was just a matter of integrating new databases, such as adding a phone number and address lookup and a business directory. Other efforts required a bit more creativity, like adding the ability to search billions of images and a way to view pages that were originally created as PDF files. The popularity of PDF results led us to expand the list of file types searched to include documents produced in a dozen formats such as Microsoft Word, Excel and PowerPoint. For wireless users, Google developed a unique way to translate HTML formatted files into a format that could be read by mobile devices. The list is not likely to end there as Google's researchers continue looking into ways to bring all the world's information to users seeking answers.
(Continued)
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E X H I B I T 2 Performance of Google's Stock Price, August 1 9 , 2 0 0 4 , to June 2 0 1 2
(a) Trend in Google Inc.'s Common Stock Price
~i i i i i 1 1 r 05 06 07 08 09 10 11 12
Year
700
-100
(b) Performance of Google Inc.'s Stock Price versus the S&P 500 Index
+450%
+400%
05 06 ~07~ 08 09 Year
t̂o~ -50%
11 12
translation feature that accommodated 51 languages.
The company also released services for mobile phone
uses such as Mobile Web Search, Blogger Mobile,
Gmail, Google News, and Maps for Mobile. A complete
list of Google services and tools for computers and
mobile phones i n 2012 is presented in Exhibit 3.
G O O G L E ' S B U S I N E S S M O D E L
Google's business model had evolved since the com pany's inception to include revenue beyond the
licensing fees charged to corporations needing search capabilities on company intranets or websites. The 2000 development of keyword-targeted advertis ing expanded its business model to include revenues f rom the placement of highly targeted text-only spon sor ads adjacent to its search results. Google was able to target its ads to specific users based on the user's browsing history. The addition of advertising-based revenue allowed Google to increase annual revenues f rom $220,000 in 1999 to more than $86 mil l ion in 2001. A summary of Google's financial performance
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E X H I B I T 3 (Continued)
> J
* - *
Product Search
Search for stuff to buy
Scholar
Search scholarly papers
Toolbar
Add a search box to your browser
Trends
*"* Explore past and present search trends
Videos * Search for videos on the Web
^ Web Search
\ _ Search billions of Web pages
WVtl Code
" Developer tools, APIs and resources
Labs
Explore Google's technology playground
Blogger
Share your life online with a blog—it's fast, easy, and free
f r "1 Calendar { ) Organize your schedule and share events with friends
-% ? Docs \ rziA \\* J> Create and share your online documents, presentations, and
spreadsheets jp. Google Mail
Fast, searchable email with less spam
( f } Groups C£> Create mailing lists and discussion groups
§ Knol
Share what you know
Offcut Qrkut
Meet new people and stay in touch with friends
Picasa
Find, edit and share your photos
(Continued)
EXHIB IT 4 Financial Summary for Google, 2 0 0 1 , 2 0 0 5 - 2 0 H ($ millions, except per share amounts) n <3
Revenues $37,905 $29,321 $23,651 $21,796 $16,594 $10,605 $6,139 $86
Costs and expenses: Cost of revenues 13,188 10,417 8,844 8,622 6,649 4,225 2,577 14
Research and development 5,162 3,762 2,843 2,793 2,120 1,229 600 17
Sales and marketing 4,589 2,799 1,984 1,946 1,461 850 468 20 General and administrative 2,724 1,962 1,667 1,803 1,279 76 387 25 Contribution to Google Foundation — — — — — — 90 —
Charge related to the resolution of Department of Justice investigation 500 — — — — — — —
Total costs and expenses 26,163 •8.9-13 15,338 15,164 11,510 7,055 4,121 75 Income (loss) from Operations 11,742 10,381 8,312 6,632 5,084 3,550 2,017 11 Impairment of equity Investments — — — (1,095) — — — — Interest income (expense) and other, net 584 415 69 316 590 461 124 _LD Income (loss) before income taxes 12,326 10,796 8,381 5,854 5,674 4,011 2,142 10
Provision for income taxes 2,589 2,291 1,861 1,627 1,470 934 676 3 Net income (loss) $ 9,737 $ 8,505 $ 6,520 $ 4,227 $ 4,204 $ 3,077 $1,465 $ 7 Net income (loss) per share:
Basic $30.62 $26.69 $20.62 $13.46 $13.53 $10.21 $5.31 $0.07 Diluted $29.76 $26.31 $20.41 $13.31 $13.29 $9.94 $5.02 $0.04
Number of shares used in per share calculations: Basic 323 319 316 314 311 301 276 95 Diluted 396 323 319 318 316 310 292 187
Net cash provided by operating activities $14,565 $11,081 $ 9,316 $ 7,853 $ 5,775 $ 3,581 $2,459 N/A Cash, cash equivalents, and marketable 44,626 34,975 24,485 15,846 14,219 11,244 8,034 N/A
securities Total assets 72,574 57,851 40,497 31,768 25,336 18,473 10,272 N/A Total long-term liabilities 5,516 1,614 1,745 1,227 611 129 107 N/A Total stockholders' equity 58,145 46,241 36,004 28,239 22,690 17,040 9,419 N/A
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Source: Google, Form S-1 , filed April 29,2004; Google, 2009,2010, and 2011 10-K reports.
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C-178 Part 2 Cases in Crafting and Executing Strategy
that tracked the effectiveness of each ad. Google also
offered a keyword targeting program that suggested
synonyms for keywords entered by advertisers, a
traffic estimator that helped potential advertisers
anticipate charges, and multiple payment options
that included charges to credit cards, debit cards, and
monthly invoicing.
Larger advertisers were offered additional
services to help run large, dynamic advertising
campaigns. Such assistance included the availabil
i ty of specialists w i th expertise i n various industries
to offer suggestions for targeting potential customers
and identifying relevant keywords. Google's adver
tising specialists helped develop ads for customers
that would increase click-through rates and purchase
rates. Google also offered its large advertising cus
tomers bulk posting services that helped launch and
manage campaigns including ads using hundreds or
thousands of keywords.
Google's search-based ads were priced using an
auction system that allowed advertisers to bid on key
words that would describe their product or service.
Bids could be made on a cost-per-impression (CPI) or
cost-per-click (CPC) basis. Most Google advertisers
placed bids based on CPC frequency rather than how
many times an ad was displayed by Google. Google's
auction pricing model assigned each bidder a Qual
i ty Score, which was determined by the advertiser's
past keyword click-through rate and the relevance of
the ad text. Advertisers wi th high Quality Scores were
offered lower min imum bids than advertisers wi th
poor quality scores.
Google allowed users to pay a CPC rate lower
than their bid price i f their bid was considerably more
than the next highest bid. For example, an advertiser
who bid $0.75 per click for a particular keyword would
be charged only $0.51 per click i f the next highest bid
was only $0.50. The AdWords discounter ensured that
advertisers paid only 1 cent more than the next high
est bid, regardless of the actual amount o f their bid,
AdSense Google's AdSense program allowed web publishers
to share i n the advertising revenues generated by
Google's text ads. The AdSense program served con
tent-relevant Google text ads to pages on Google Net
work websites. For example, an Internet user reading
an article about the state of the economy at Reuters,
corn would see Google text ads by investment maga
zines and companies specializing in home business
opportunities. Google Network members shared i n
the advertising revenue whenever a site visitor clicked
a Google ad displayed on their sites. The more than
1 mil l ion Google Network members did not pay a
fee to participate i n the program and received about
60 percent of advertising dollars generated f rom the
ads. Google's AdSense program also allowed mobile
phone operators to share in Google revenues i f text
and image ads were displayed on mobile handsets.
Owners of dormant domain names, web-based game
sites, video sites, and news feed services could also
participate i n the AdSense program. The breakdown
of Google's revenues by source for 2005 through 2011
is presented in Exhibit 6.
Other Revenue Sources The company's 2006 acquisition o f YouTube allowed
it to receive advertising revenues for ads displayed
during Internet videos, while its 2008 acquisition
EXHIBIT 6 Google's Revenues by Source, 2 0 0 4 - 2 0 1 0 ($ millions)
Advertising revenues: Google websites $26,145 $19,444 $15,722 $14,414 $10,625 $ 6,333 $3,377 Google Network
websites 10,386 8,792 7,166 6,715 5,788 4,160 2,688 Total advertising
revenues 36,531 28,236 22,889 21,129 16,413 10,493 6,065 Licensing and other
revenues 1,374 1,085 762 667 181 112 74 Net revenues $37,905 $29,321 $23,651 $21,796 $16,594 $10,605 $6,139
Source: Google, 2007,2009,2010, and 2011 10-K reports.
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hX! f 7 Google's Revenues and Long-Lived Assets by Geographic Region, 2 0 0 7 - 2 0 1 1 (in millions)
United States $17,560 $14,056 $11,194 $10,636 $8,698 United Kingdom 4,057 3,329 2,986 3,038 2,531
Rest of the wodd 16,288 11,936 9,471 8,122 5,365 Total revenues $37,905 $29,321 $23,651 $21,796 $16,594
United States Rest of the world
Total long-lived assets
$15,963 3,853
$19,816
$ 9,432
1,898
$11,330
$ 9,783
1,807
$11,589
$ 7,335 712
$ 8,047
$ 5,071 363
$ 5,434
Source: Google, 2007,2009, and 2011 10-K reports.
Mobile Search and Google's Emerging Rivalry with Apple in Smartphones and Tablet Computers I n 2011, more than 5 billion people worldwide and 234
mi l l ion Americans ages 13 and older owned and used
mobile phones. More than 35 percent o f Americans
and a growing percentage worldwide accessed the
Internet f rom mobile devices, and a rapidly growing
number of mobile phone users were exchanging basic
mobile phones for smartphones. Smartphones like
Apple's iPhone could connect to the networks of wire
less carriers to make phone calls, access the Internet,
or run various Internet applications. Between March
2011 and June 2011, the number of smartphone
users i n the U.S. had grown by 10 percent to reach
82.2 mil l ion.
Apple Inc. built its early reputation in the 1980s
and 1990s on its innovative Mac computer lines, but
i n 2010, only $17.5 billion of its net sales of $65.2
bil l ion came f r o m the sale of computers. I n 2011, Apple
was the world's largest seller of smartphones, tablet
computers, and personal media players wi th market
shares of 19.1 percent, 85 percent, and 73 percent,
respectively. I n 2011, the iPhone accounted for $47.1
billion of its total sales of $108.2 billion. The iPad con
tributed revenues of $20.3 billion and iPod and related
music products accounted for sales of more than
$13 bill ion i n 2011. The company's hefty profi t margins
on its electronic devices allowed it to record a net
income of almost $26 billion i n 2011. Apple's perfor
mance accelerated i n 2012, w i th the company setting
revenue and profit records during the second quarter
of 2012. The record sales and earnings were driven
largely by the iPhone, which saw a year-over-year rev
enue increase of 88 percent and iPad, which increased
by 151 percent f r o m the same period in 2011. The
company's strong performance allowed its stock price
to increase so much that it became the most valuable
company i n the world i n 2011, as measured by market
capitalization. Apple's market capitalization hit $600
bill ion i n Apr i l 2012—a mark only achieved by one
other company in history: Microsoft, i n 1999, when its
valuation reached $619. Microsoft's market capitaliza
tion i n Apr i l 2012 stood at $260 bill ion. A summary of
Apple's financial performance between 2007 and 2011
is presented in Exhibit 8.
Google's introduction of its Android operating
system for smartphones in 2008 allowed i t to increase
its share of mobile searches f r o m about 60 percent
to approximately 95 percent in 2012, Android was
not a phone but an operating system that Google
made available free of charge to any phone manufac
turer wishing to market mobile devices wi th Internet
capability. Android's core applications matched most
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could grow to a $95 bill ion market by 2013. Moving software applications to the cloud offered many pos sible benefits to corporate users, including lower software acquisition costs, lower computing sup port costs, and easier collaboration among employ ees i n different locations. The beta version of Google Apps was launched i n 2006 as a free word process ing and spreadsheet package for individuals, but was relaunched i n 2008 as a competing product to Micro soft Office. Google Apps was hosted on computers in Google's data centers and included Gmail, a calendar, instant messaging, word processing, spreadsheets, presentation software, and file storage space. Google Apps could be licensed by corporate customers at $50 per user per year. The licensing fee for the Micro soft Office and Outlook package was typically $350 per user per year. Industry analysts estimated Google Apps users at about 25 mi l l ion and paid subscribers at about 1.5 mi l l ion i n 2010. Microsoft estimated Micro soft Office users at about 500 mi l l ion in 2010. Even though Google Apps had not yet recorded any mean ingfu l revenues as of 2012, Microsoft had launched its own cloud-based productivity package called Office 365 to defend against Google's entry into the produc tivity software market.
Google's Chrome browser, which was launched i n September 2008, and Chrome operating system (OS) launched i n July 2009 were developed specifi cally to accommodate cloud computing applications. The bare-bones Chrome browser was built on a mul tiprocessor design that would allow users to operate spreadsheets, word processing, video editing, and other applications on separate tabs that could be run simultaneously. Each tab operated independently so that i f one tab crashed, other applications running f rom Google's data centers were not affected. The Chrome browser also provided Google wi th a defense against moves by Microsoft to make it more diff icul t for Google to deliver relevant search-based ads to Internet users. Microsoft's Internet Explorer 8 allowed users to hide their Internet address and viewing his tory, which prevented Google f rom collecting user- specific information needed for ad targeting. Mozilla's Firefox browser employed a similar feature that pre vented third parties f rom tracking a user's viewing habits. The clean-running Chrome OS was an open- source operating system specifically designed as a plat fo rm for cloud computing applications. Google had entered into agreements wi th Acer, Hewlett-Packard, and Lenovo to begin producing netbooks that would use the Chrome OS and Chrome browser to access
E X H I B I T 10 Worldwide Browser Market Share Rankings, Selected Periods, September 2 0 0 8 - J u n e 2 0 1 2
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Internet Explorer 67% 53% 42% 32% Chrome 1 9 22 32 Firefox 26 31 28 25 Safari 3 4 5 7 Opera 2 2 2 2 Others 1 1 1 2
Total 100% 100% 100% 100%
Source: g s . s t a t c o u n t e r . c o m .
the cloud-based Google Apps productivity software. Worldwide market share statistics for the leading browsers for selected periods between September 2008 and June 2012 are presented i n Exhibit 10.
Google's Initiatives to Expand Search to Television In mid-2010, Google entered into an alliance wi th Intel, Sony, Logitech, Best Buy, DISH Network, and Adobe to develop Google TV. Google T V would be built on the Android platform and would run the Chrome browser software to search live network and cable programming; streaming videos f r o m provid ers such as Netflix, Amazon Video On Demand, and YouTube; and recorded programs on a DVR. Google T V users would also be able to use their televisions to browse the Web and r u n cloud-based applica tions such as Google Apps. DISH Network satellite service customers could use Google TV's features wi th the addition of a Logitech set-top box or Sony Internet TV.
Google acquired On2 Technologies, which was the leading developer of video compression technol ogy, i n February 2010 in a $124 mi l l ion stock and cash transaction. The acquisition o f On2 was expected to improve the video streaming capabilities o f Google TV. Google also lobbied the Obama administration for Federal Communications Commission "Net neu trality" rules that would require Internet providers to manage traffic i n a manner that would not restrict
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EX I if 131 i 1 2 Financial Summary for Microsoft Corporation and Microsoft's Online Services Business Unit, 2 0 0 7 - 2 0 1 1 ($ millions)
Revenue $69,943 $62,484 $58,437 $60,420 $51,112 Operating income 27,161 24,098 20,363 22,492 18,524 Net income 23,150 18,760 14,569 17,681 14,065 Cash, cash equivalents, and short-term investments $52,772 $36,788 $31,447 $23,662 $23,411 Total assets 108,704 86,113 77,888 72,793 63,171 Long-term obligations 22,847 13,791 11,296 6,621 8,320 Stockholders' equity 57,083 46,175 39,558 36,286 31,097
Revenue $ 2,528 $ 2,201 $ 2,121 $ 3,214 $ 2,441 Operating income (loss) (2,557) (2,337) (1,641) (1,233) (617)
Source: Microsoft, 2007, 2009,2011, and 2012 annual reports.
Semantic search technology offered the opportu
nity to surpass the relevancy of Google's search
results since semantic search evaluated the meaning
of a word or phrase and considered its context when
returning search results. Even though semantic search
had the capability to answer questions stated i n com
mon language, semantic search processing time took
several seconds to return results. The amount of time
necessary to conduct a search had caused Microsoft
to l imi t Powerset's search index to only articles listed
in Wikipedia. Microsoft's developers were focused on
increasing the speed of its semantic search capabilities
so that its search index could be expanded to a greater
number of Internet pages. The company's developers
also incorporated some of Powerset's capabilities into
its latest-generation search engine, Bing, which was
launched in June 2009. Banner ads comprised the bulk
of Microsoft's online advertising revenues, since its
Bing search engine accounted for only 14.4 percent of
online searches in July 2011. Even though the market
for display ads was only about one-half the size of the
search ad market in 2009, the advertising spending on
banner ads was expected to double by 2012 to reach
$15 billion.
Microsoft was also moving forward wi th its own
approach to cloud computing. The company's W i n
dows Live service allowed Internet users to store
files online at its password-protected SkyDrive site.
SkyDrive's online file storage allowed users to access
and edit files f r o m multiple locations, share files wi th
co-workers who might need editing privileges, or
make files available i n a public folder for wide distri
bution. Azure was Microsoft's most ambitious cloud
computing initiative and was intended to allow busi
nesses to reduce computing costs by allowing Micro
soft to host its operating programs and data files. I n
addition to reducing capital expenditures for software
upgrades and added server capacity, Azure's offsite
hosting provided data security i n the event of natural
disasters such as fires or hurricanes.
Yahoo Yahoo was founded i n 1994 and was the third-most- visited Internet destination worldwide in 2012, wi th nearly 500 mil l ion unique visitors each month. Face- book was the second-most-visited website, wi th more than 700 mil l ion unique visitors each month i n 2012. Almost any information available on the Internet could be accessed through Yahoo's web portal. Visi tors could access content categorized by Yahoo or set up an account wi th Yahoo to maintain a personal cal endar and e-mail account, check the latest news, check local weather, obtain maps, check T V listings, watch a movie trailer, track a stock portfolio, maintain a golf handicap, keep an online photo album, or search per sonal ads or job listings.
Yahoo also hosted websites for small businesses and Internet retailers and had entered into strategic partnerships wi th 20 mobile phone operators in the
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strong competitor to Facebook, pushing forward wi th its plans to become the dominant provider of cloud computing solutions, increasing search advertising revenues f rom markets outside the United States, and extending search to television. Some analysts believed the company's priorities should also include the devel opment of semantic search capabilities, while others were concerned that the company had strayed f rom its 10 Principles—specifically, Principle 6, "You can make money without doing evil."
The company agreed to a $500 mil l ion legal settle ment with the U.S. JusticeDepartmenttoavoid prosecu tion on charges that i t accepted hundreds of millions of dollars in illegal ads f rom unlicensed online Canadian pharmacies selling controlled substances in the U.S. Among the most disturbing aspects of the case against Google related to the Justice Department's assertion that Larry Page knew of the practice and had allowed it for years, I n commenting about the case, Rhode Island U.S. Attorney Peter Neronha stated "We sim ply know i t f r o m the documents we reviewed, the wi t nesses that we interviewed, that Larry Page knew what was going on." 1 0
The company agreed to a $22.5 mi l l ion fine levied by the FTC for bypassing Apple Safari web browser privacy settings to place tracking files on users of Apple computers, iPhones, and iPads. Also, the com pany was under investigation by authorities i n Canada, Australia, Germany, Italy, the United Kingdom, and Spain over its Street View data collection practices between 2008 and 2010. Data collected f rom home Wi-Fi signals by Google included e-mails, usernames, passwords, and other private data. I n 2010, Google co-founder Sergey Br in said the company "screwed up" by collecting personal data through wireless net works in an attempt to improve its mapping system. 1 1
In 2012, the FCC concluded that Google did not violate U.S. wiretapping laws, but that i t did obstruct the investigation, and so was fined $25,000.
Also, the company's lobbying efforts to encourage the FCC to institute policies to promote Net neutrality had drawn the scrutiny of the U.S. House Oversight Committee. The pr imaiy concern of the House Over sight Committee involved communications between the company and its former head of public policy and government affairs, Andrew McLaughlin, who had been appointed to the position of White House Deputy Chief Technology Officer. Ethics rules cre ated by an executive order signed by President Obama barred all White House officials f r o m communicat ing wi th lobbyists or a company potentially affected by pending policy matters. A Freedom of Information Act (FOIA) request by a consumer group found that McLaughlin regularly communicated wi th Google executives to discuss the administration's push to have the Internet regulated by the Federal Communications Commission to promote Net neutrality. McLaugh lin's e-mails could be obtained under the FOIA since all White House e-mail accounts were required to be archived under federal law. The House Oversight Committee was particularly disturbed by McLaugh lin's alleged use of a personal Gmail account to avoid having his communications w i th Google executives archived and subject to FOIA requests.
Some analysts believed that pressure to achieve the revenue and earnings growth necessary to main tain Google's lof ty stock price may have caused Google management to make decisions that pushed the bounds of its corporate philosophy. I t remained to be determined i f Google's strategies could sustain its growth and stock performance in a manner that would adhere to the company founders' early beliefs.
' G00Ql6 , W W W . g o o g f e . c o m / c o r p o r a t e / ,
accessed July 13, 2010. 2 As quoted In Brad Stone, 'The Education of Larry Page," Bloomberg Businessweek, April 15, 2012, pp. 12-14.
3 Quoted in Google's Corporate Information, www,goo g ! « . c o m / c o r p o r a t » / H U t o r y . h t m I. 4 Google, "Our Philosophy," www.googte .com/ corporate/tQnthfngs.htmS. 5 "For Some Who Passed on Google Long Ago, Wistful Thinking," The Wall Street Journal Online, August 23,2004.
6 Quoted in "Gates vs. Google," Fortune, April 18, 2005.
7 Ibid. 8 Quoted In "With Google Gone, WIII Microsoft Come Back to Yahoo?" Fortune, November 5,2008. 9 As quoted In "Google Announces First Quarter 2012 Results and Proposal for New Class of Stock," Google Press Release, April 12, 2012. 1 0 Quoted In "New Heat for Google CEO," The Wall Street Journal Online, August 27,2011.
" Quoted In "Google Faces European Probes on Wi-Fi Data "The Wall Street Journal Online, May 20,2010; and "Google Loses Bid to Dis miss Street View Suit Over Privacy-Violation Claims," Bloomberg Online, June 30, 2011.
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