I
Introduction

The Google phenomenon
Google under scrutiny
Google’s page ranking and indexing system
Google’s privacy policy
Google goes public
The Google founders interviewed

This guide is published as an adjunct to the new third edition of The African Studies Companion: A Guide to Information Sources (online at http://www.africanstudiescompanion.com), although it can also be used on its own.

Preceded by an examination of Google’s extraordinary growth and popularity – and looking at issues such as its page ranking methods and privacy concerns – the guide is designed to help the user get the most out of Google’s Web searching techniques, and at the same time provides a critical evaluation of Google’s many Web search features, services and tools.

Using Google for African Studies Research is intended mainly for students, but post-graduate Africanist scholars and Africana librarians may also find it helpful. It is not meant to serve as a tutorial, and assumes that users have some basic experience in using search tools on the Web, nor does it cover the full range of Google’s constantly expanding search offerings. It covers only those aspects that are relevant for academic research and, more specifically, for research on Africa and African studies, primarily in the humanities and the social sciences. It reflects the personal experience of one who has used Google extensively as a search tool, and as an aid for research in the compilation of reference resources in African studies.

The guide is interspersed with examples of searches and search strategies relating to Africa or African studies topics; some have been drawn from recent queries or requests for information posted on the H-Africa discussion groups http://www.h-net.msu.edu/~africa/. Most searches for the examples shown were conducted during the period March to July 2004 and, in terms of the number of links found, the search results at time of the publication of this guide are likely to be at least marginally different. All examples of search terms appear in italic typeface.

All cross-references to the various Google search services are hyperlinked to facilitate quick navigation. All six chapters are fully searchable by using the "Google Search" box that appears at the top of each chapter.  For a small number of terms used that may not be familiar to everyone, I have included links to definitions in Dictionary.com http://dictionary.reference.com/, the freely accessible multi-source dictionary search service produced by Lexico Publishing Group LLC.  

Using Google for African Studies Research is initially released as a freely accessible provisional or “pilot” edition, and I welcome any critical comments or suggestions, especially from Africana and reference librarians and from African studies scholars. Please e-mail these to hanszell@hanszell.co.uk. 

A shorter (and updated) version will appear as a separate section in the forthcoming 4th revised and expanded edition of The African Studies Companion (both print and online versions), which are scheduled for publication in early 2006.

Hans M. Zell
Lochcarron, Wester Ross, Scotland
August 2004

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The Google phenomenon

Google hardly needs any introduction for the millions of people all over the world who use the Web, and its name has become synonymous with Web searching. Naming it  “Google” was clever – it has a nice ring to it, and rolls off the tongue smoothly. It is a play on the word “googol”,said to have been coined by Milton Sirotta, the nine-year-old nephew of Edward Kasner (1878 – 1955), an American mathematician, at Kasner’s request.  A googol is a number equivalent to ten raised to the power of a hundred (10¹⁰⁰). A googol is a very large number and this reflects “the company's mission to organize the immense, seemingly infinite amount of information available on the Web”, making it available to millions of people (see http://www.google.com/corporate/history.html).

The brainchild of Larry Page and Sergey Brin, two graduate students in computer science at Stanford University, it was born out of a university research project and began as an experimental search engine called BackRub, a name chosen to convey its ability to analyse the links joining one Web site to another. It was then renamed Google and – initially operating out of a small office and attached garage – was launched in September 1998. Google’s beta version was soon answering 10,000 search queries every day.

Six years on, the Google of today operates from a four-building campus entitled Googleplex in Mountain View, California, answering millions of queries every day, and employing almost two thousand members of staff. Googleplex is something more akin to a commune than to the headquarters of a modern corporation. Staff reportedly enjoy free food, unlimited supplies of ice cream, can play table tennis and roller hockey or shoot pool; or they can amuse themselves with large rubber exercise balls on the floors, as well as having access to workout rooms. Complimentary massages are thrown in for good measure. In addition to Google staffers’ regular projects, the company encourages its employees to spend 20% of their time working on what they think will most benefit Google. This, they believe, empowers them to be more creative and innovative. Google staff work in high-density clusters of three or four staffers, sharing spaces with couches and dogs -- “this improves information flow and saves on heating bills,” says Google! And the Google Cafés provide healthy lunches and dinners for all staff. Meantime, with its explosive growth over a period of just six years, the company has already outgrown Googleplex and plans to move to a bigger facility soon.

Google is now one of the world’s most powerful Web sites, deservedly enjoying enormous popularity, most of it achieved by the power of word-of-mouth marketing. With its clean and uncluttered searching interface, it is now widely considered as the supreme Web search tool, consistently delivering good results even with just one- or two-word searches. From its humble beginnings as a small-player search engine, it can be said that it has progressed to the status of a cultural icon.  Google is currently (August 2004) serving over 250 million queries per day, indexing 4.28 billion Web pages, 880 million images, and 845 million Usenet pages. The Google search page is available in 97 languages using 96 domain names.

People in all walks of life and professions now search the Web, many of them every day. According to the Pew Internet Project, http://www.pewinternet.org, 88% of those with Internet access use a search engine to find information, which translates into approximately 111 million people worldwide – and many of these use Google as their first-choice search engine. According to Nielsen//Net Ratings http://www.nielsen-netratings.com Google is now the leading search site. In January 2004 it had 59.3 million unique visitors in the United States and 55.6 million in Europe. Google’s growth has been nothing short of phenomenal. Within a few years of its launch it had breezed past all its competitors, and, according to Search Engine Watch http://searchenginewatch.com, Google now represents 75% of all searches. It was the winner of Search Engine Watch’s “Outstanding Search Service” award for four years in succession from 2000 to 2003. However, in awarding it the top spot for 2003, Search Engine Watch stated, “We don’t feel that Google’s results are as great as they have been in the past” but then add, somewhat lamely, “We can’t back this up with statistics.”

Google has not only grown rapidly but has continued to offer novel and innovative search techniques and services, constantly advancing into new areas – for example, in searching images on the Web and in searching newsgroup postings – as well as adding new features such as tracking and lookup utilities. One of its recent additions was the launch of Google News in September 2003, which now offers access to more than 4,500 news sources from around the world and attracted more than 2 million unique users each month during 2003. Early in 2004 Google Labs, the research division of the company, unveiled three more offerings to add to the constantly expanding list of Google services: Google Web Alerts, Google Personalized Web Search, and Gmail.

In a welcome new project announced in October 2003, the Online Computer Library Center (OCLC) stated that it will be extracting a two-million-record subset from the more than 55 million records in its WorldCat and make them accessible via Google or Yahoo! search; it has just completed (July 2004) a trial period as a pilot (see Google/OCLC – Open WorldCat pilot).

Another project in the pipeline will see Google and 17 partner universities joining forces in a pilot programme to enable searching among DSpace repositories. Developed jointly by MIT Libraries and Hewlett-Packard (HP), Dspace http://www.dspace.org/ is a digital institutional repository that captures,stores, indexes, preserves andredistributes the intellectual output of a university’s research faculty in digital formats. It is freely available to research institutions worldwide as an open-source system that can be customized and extended. DSpace accepts all forms of digital materials, including text, images, video and audio files, and can include, for example, articles and preprints, conference papers, datasets, e-theses and reformatted digital library collections. There are currently about 125 institutions using the software (including some outside the US), but while the searching of individual repositories was possible, no tool has existed until now that could undertake searches across all the repositories, hence the collaboration with Google. For the pilot programme, Google and DSpace have enlisted the services of the OCLC to facilitate searches by acting as an intermediary between Google and the participating institutions. The agreement with Google is not, however, exclusive, and DSpace are open to working with other search engine companies or may even develop their own technology.

Whether Google will be able to continue its extraordinary growth and success in the years ahead remains to be seen. While in the past 2 or 3 years Google has completely dominated Web searches, some search-engine experts predict that there will be a search-engine war, or at least that there will be some levelling of the playing field. Indeed, early in 2004 Yahoo! – which now owns the search engine Inktomi and, with the recent purchase of Overture, also owns AlltheWeb and AltaVista – broke with Google in the delivery of its primary Web search results (which were basically repackaged results from Google) to begin using its own crawler-based results, and delivering them at Yahoo! Search http://search.yahoo.com. Making use of what it says is completely new technology, Yahoo! hopes challenge Google for the top search engine spot.

Meanwhile, the all-powerful Microsoft Network is also gunning for Google and has been working on creating its own search engine technology, although this will probably not be launched before 2005. A “sneak peak” preview of the MSN search technology was offered at  http://techpreview.search.msn.com/ for a few months but has now been withdrawn and replaced by a page saying that another preview “of our new algorithmic search engine” will be released in due course. On the basis of some test searches, there is no indication that Google would need to be unduly concerned about this competition. However, it is early days, and if Microsoft’s next generation PC operating systems are going to have their own proprietary search engine embedded in the software then that might well offer a more serious threat to Google’s search technology.

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Google under scrutiny

Not everybody is enthusiastic about “Googlemania”, and lately a measure of opposition has emerged, while others say that Google has lost some its shine and its relevancy, and tries to be all things to all people.  Moreover, words like “Googlemonster” have been coined by critics who think the Google juggernaut is getting too big and too powerful, and that in its dominance it is in danger of becoming a new Microsoft.

Some Google-suspicious Web sites have been launched, the most noteworthy of which is Google-Watch http://www.google-watch.org, which presents “a look at how Google's monopoly, algorithms, and privacy policies are undermining the Web”, and encourages scrutiny of their operations.

While there are some Google conspiracy theorists whose views must be taken with a pinch of salt, there have also been some perfectly valid concerns and reservations – or, at the very least, reservations of the kind that one ought to bear in mind when using Google.

The major complaints about Google have concentrated primarily on the following issues:

PageRank™

The heart of Google’s software is PageRank™ (see Google’s page ranking and indexing sytem), that forms the basis for all of its Web search tools, judging pages by the links to them from other Web sites. The larger the number of links, the higher the page ranking, and that usually means that these are the pages that enjoy a lot of traffic. The critics believe that the ranking criteria are discriminatory, and Google-Watch says that Google’s approach to ranking is anti-democratic “in that already-powerful pages are mathematically granted extra power to anoint other pages as powerful.”

Another criticism is that PageRank™ has a bias toward established popular sites to the disadvantage, it is argued, of newer and smaller sites. Critics want Google to adjust the balance between the different algorithms to ensure a more egalitarian approach to link popularity.

There has also been disquiet about invasion-of-privacy issues, due to the fact that Google tracks not only the users’ searches but also their general browsing habits, thus amounting to something that could be regarded as performing like spyware.

Its plan to offer a free e-mail service, Google Gmail, offering punters a gigabyte, or half a million pages, of free storage space, is likely to lead to further accusations that Google is using Big Brother tactics. The service will be free, but there is a catch. In return for taking advantage of Gmail, users must allow Google’s servers to pick up keywords in their e-mail messages and deliver related advertising messages that will appear discreetly at the side of the screen. Some users may not be too concerned about this – just as many of them are completely unconcerned about intrusion of privacy through cookies. However, those more conscious about civil liberties and protection of privacy may not be at all happy that Google is turning into a kind of Big Brother who will know not only all the Web sites they have visited and the news they have read through Google, but also the content of the e-mails they have sent, their thoughts, habits and friends.

Among the library community there has been unease among some librarians, who believe that Google encourages quick-fix solutions by students who want everything online, want it instantly, and who can’t be bothered to do old-fashioned library research or to look up print and archival resources in their library and make trips to the stacks. They say that Google and other search engines encourage students to bypass reference assistance and that, instead, they type in a few words and wait for “answers” from the Google Web Search engine.

The launch of Google Answers was seen as something of an additional threat: there has been some concern that the new service might threaten the livelihoods of librarians, and that Google Answers denigrates the work done by professional librarians. Google Answers research staff have countered that, far from wanting to put libraries out of business or compete with them, they appreciate the value of skilled library professionals and want to work with them, and to ensure that their mutual clients get what they need in terms of information.

Criticism of Google has been on the increase over the last couple of years, and – perhaps not surprisingly in view of its dominance and near monopoly – there has been a bit of a backlash against them and a measure of adverse publicity. However, it must be said that some of these attacks on Google have not been entirely fair, and it could be argued that much of the criticism could equally be levelled against most other search engines.

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Google’s page ranking and indexing system

This what Google states about its page ranking system http://www.google.com/technology/index.html

PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves "important" weigh more heavily and help to make other pages "important."

Important, high-quality sites receive a higher PageRank, which Google remembers each time it conducts a search. Of course, important pages mean nothing to you if they don't match your query. So, Google combines PageRank with sophisticated text-matching techniques to find pages that are both important and relevant to your search. Google goes far beyond the number of times a term appears on a page and examines all aspects of the page's content (and the content of the pages linking to it) to determine if it's a good match for your query.

 For more information about the Google page ranking technology, and its hypertext-matching analysis, see the Google Technology Overview pages at http://www.google.com/corporate/tech.html.

To build and constantly expand its massive index, and establish page rankings for everything it picks up, Google uses a huge number of computers to crawl the Web, collectively known as GoogleBots. Google may, however, decide not to crawl pages that don’t have incoming links, and it also does not crawl and index certain other pages and databases, Web pages that are part of the “invisible Web”, described under Google’s limitations. Moreover, many documents are too big to be indexed in their entirety as the Google indexing of the text on Web pages stops when 101KB is reached (or 120KB for files in PDF format).

The indexing update – in effect building up a completely new index of some 6 billion Web pages each time it is updated – is a task of some magnitude and is spread over more than 10,000 servers, currently placed in 13 different data centres. Until recently, when the index was updated on average about once a month, these data centres displayed different search results for the same search, and a site’s ranking could change quite dramatically over a short period of time until the update was complete. Because search results were varying from server to server between the start and the end of an update, this became known as the “Google dance”. However, the monthly indexing cycle was replaced by updating being done on an ongoing basis from mid-2003, thereby largely eliminating the sometimes unstable results caused by the monthly updates. Nonetheless, the page rank values of even well-established Web sites can change, for better or for worse, as a result of revisits by the Googlebots.

Google’s system of ranking its search results has been the subject of considerable debate, perhaps not so much in the academic community but among Web-based businesses selling products and services, who are anxious to get a top ranking when a Google user types in a particular keyword search. A whole new industry, called search engine optimization consultants (or SEO consultants/services), has arisen to advise Web site owners how to improve their rankings on Google. Some unscrupulous Webmasters, and SEO services, in a bid to manipulate Google’s search technology, have been trying to achieve this by hook or by crook.

The Google PageRank™ appears in the Google Toolbar(see How to search Google & the Google Toolbar) that millions of people have installed on their Internet Explorer browser, using a ranking system from one to ten for each site and based on the number of hyperlinks to the site. As Google indicates above, the basic thinking behind the system, and the ranking algorithm, is that each hyperlink amounts to a “vote” for the site; and the assumption is that if many others link to the site it is likely to be a site of some importance and quality. While this assumption seems to make sense in principle, it is open to interpretation – and manipulation. There are probably flaws in interpretation insofar as a good listing and high page ranking for a Web site does not necessarily indicate a link to one of high quality, although it will clearly be a highly popular site with a lot of traffic, and one which vast numbers of people access as a source of information.

However, as Google states, in delivering search results it also takes into account other factors, such as the proximity of search terms or phrases in the documents. Its ranking algorithm analyses not only the number of other pages that link to a page but also the importance of other links, measured in terms of the number of links to each of them, which is all part of what Google calls “text matching techniques”.

As far as “manipulation” is concerned, Google is well aware of shady practices; it counters the attempts by Webmasters to cheat on their rankings by penalizing them with a page rank of zero. On its Information for Webmasters-Search Engine Optimizers pages at http://www.google.com/webmasters/seo.html Google warns about unethical SEO services and their attempts to manipulate search engine results unfairly, or their bogus claims that they have a “special relationship” with Google.

To further counter abuse, Google now also uses ranking methods and techniques well beyond its original hyperlink analysis – and continues, on an ongoing basis, to make adjustments to their algorithms and the methods they use to rank Web pages – although the company doesn’t divulge much information about how this is being achieved, or about how its technology now determines what is important and what is not. And that, inevitably, causes some controversy.

Meanwhile, a number of Google pranks and games have emerged: one is the practice of “Google bombing” that has recently begun to spread among the Web blogging community. The term stands for the manipulation of search results by mass linking. A group of people (or “conspirators”, if you like) link to a specific chosen page, all of them using the same specific chosen link text. The idea is that, if enough people link to a page containing a particular term or phrase, the site will increase its position when searches are made for that text or phrase; in other words, the linkers may be able to impact Google’s page ranking of the linked site, making it appear at the very top. For the most part it is done for fun and as a challenge, but it could also be used for malicious ends or to discredit a person.

To view an amusing example of a Googlebomb, type the words

weapons of mass destruction

in the Google Web Search box. As Google retrieves the results you will see that (as at July 2004), at the very top, and well above links to US government sites, Result 1 “of about 2,050,000” displays this link:

Cannot find Weapons of Mass Destruction
These Weapons of Mass Destruction cannot be displayed. The weapons you are looking for are currently unavailable. The country might ...
www.coxar.pwp.blueyonder.co.uk/ - 5k - Cached - Similar pages

Click on http://www.coxar.pwp.blueyonder.co.uk/, and you go to a page looking just like an Internet Explorer “File not Found” page – except that there is a twist to it!

Another, albeit harmless, one is that of “Google whacking”. Its objective is to come up with a combination of two words for which Google will deliver only one result for a search, rather than its usual thousands, millions, or even tens of millions. There are rules: words may not be enclosed in quotation marks (see Using quotation marks) and have to be found in dictionaries and, more specifically, in Dictionary.com http://www.dictionary.com. Basically what you are looking for is the unique coincidence of two words on a Web site, or those elusive combinations of search terms that are so rare that they return a single result on Google, showing “Results 1 - 1 of 1.” There are even Web sites devoted to the craze, such as http://www.googlewhack.com, which invite you to submit reports of successful whacks. However, almost the moment one is posted online, it will be crawled by the Google robots and will lose its uniqueness because it will show up in search results.

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Google’s privacy policy

Many Google users may not realize that Google has put a unique identifier as a permanent cookie on their hard drive, a kind of super cookie that won’t expire until the year 2038 (although that is not actually unusual for cookies of most kinds). Google also knows their IP address, the time and date that they conducted a search, and their language of preference. Called a GUID (Guaranteed Unique Identifier), this ID number or code is not a session ID, but a permanent ID that is stored on a user’s hard disk, allowing Google to later retrieve it every time you access Google, whether it is from the Google home page or by using the Google Toolbar (see How to search Google & the Google Toolbar). If you have an ever-changing IP number, as most individual Web users will have, the cookie ID can tie them all together as coming from a single browser.

Thus Google knows what users have searched for, and their browser configuration, and aims to customize search results based on their IP numbers. All perfectly harmless, one might say, and Google and others argue that that this can’t be considered to be spying, as there is no intention to sell anything to the users. They argue that Google is collecting this information to provide you with better searches; that it is only tracking the search habits and Web surfing trends of an anonymous individual; and that it does not collect personally identifiable information unless a user explicitly agrees to provide it, i.e. in the case of those who sign up for the Google Answers pay service.

Nonetheless, many commentators have expressed concern about privacy issues as they relate to use of the Google Toolbar, especially as Google retains all the data gathered indefinitely. For example, you can clear your search history from the Google Toolbar (see How to search Google & the Google Toolbar) easily enough, but the questions remain whether the record of all your searches and browsing habits that has been recorded will be permanently retained by Google, and, if so, whether it will ever be seen or interpreted by anyone else – although Google assures users that it will not release the data to anyone unless it is compelled to do so by a valid legal process, and that they use the cookie only for innocuous and non-privacy-invasive purposes.

Weblogs and newsgroups are full of debate about the issue, and many offer suggestions and tips and tricks on how to block cookies, or how to avoid Google cookies by deleting them frequently, so that Google won’t find their cookie on their next visit and will have to issue a fresh one with every new ID number.

This is what Google states in its privacy policy http://www.google.com/privacy.html:

Google respects and protects the privacy of the individuals that use Google's search engine services. Individually identifiable information about you is not willfully disclosed to any third party without first receiving your permission, as explained in this privacy policy ("Privacy Policy").

Google and Cookies

Upon your first visit to Google, Google sends a "cookie" to your computer. A cookie is a piece of data that identifies you as a unique user. Google uses cookies to improve the quality of our service and to understand our user base more. Google does this by storing user preferences in cookies and by tracking user trends and patterns of how people search. Google will not disclose its cookies to third parties except as required by a valid legal process such as a search warrant, subpoena, statute, or court order.

Most browsers are initially set up to accept cookies. You can reset your browser to refuse all cookies or to indicate when a cookie is being sent. Be aware, however, that some parts of the Google Search Service may not function properly if you refuse cookies.

What Information Do We Collect?

Google does not collect any unique information about you (such as your name, email address, etc.) except when you specifically and knowingly provide such information. Google notes and saves information such as time of day, browser type, browser language, and IP address with each query. That information is used to verify our records and to provide more relevant services to users. For example, Google may use your IP address or browser language to determine which language to use when showing search results or advertisements.

Links to Other Sites

The sites displayed as search results or linked to by Google Search Services are developed by people over whom Google exercises no control. Other links, such as those for the Google-friends mailing list archive, are also on sites not controlled by Google. These other sites may send their own cookies to users, collect data, or solicit personal information. Google may choose to exhibit its search results in the form of a "URL redirecter." When Google uses a URL redirecter, if you click on a URL from a search result, information about the click is sent to Google, and Google in turn sends you to the site you clicked on. Google uses this URL information to understand and improve the quality of Google's search technology. For instance, Google uses this information to determine how often users are satisfied with the first result of a query and how often they proceed to later results.

With Whom Does Google Share Information?

Google may share information about you with advertisers, business partners, sponsors, and other third parties. However, we only divulge aggregate information about our users and will not share personally identifiable information with any third party without your express consent. For example, we may disclose how frequently the average Google user visits Google, or which other query words are most often used with the query word "Linux." Please be aware, however, that we will release specific personal information about you if required to do so in order to comply with any valid legal process such as a search warrant, subpoena, statute, or court order.

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Google goes public

While striving to be a company that is working for the public good, Google has never made a secret of the fact that it is a business, and according to its IPO (Initial Public Share offering, see below and also http://www.ipogoogle.org) expects to earn over US$1bn in net income in 2004. This figure is likely to be substantially exceeded as, for the six months ended June 30, 2004, Google had already posted results of $1.4 billion, a huge increase in revenue over the same period in the previous year.

While the company generates income derived from offering its sophisticated search technology to other companies, Google’s principal revenue stream comes from advertising and its “sponsored links” – a  euphemism for the mini pop-up ads (called AdWords or AdSense) based on keyword targeting – that appear, still relatively unobtrusively, alongside the search results; 70% of this revenue comes from the US.

In the Google IPO it was also revealed that, of its 1,907 full-time employees, 50% are involved in sales and marketing, while 31% devote their time to research and development, and 19% do administrative or other work.

Google has until recently prospered as a private company, but on April 29, 2004 – after much speculation and anticipation, and to tremendous press interest – it announced that it had filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its Class A common stock. The auction process that was used for the initial public offering and allocation of shares differed from methods that have traditionally been used in most other underwritten initial public offerings in the US. In this type of auction, also called a Dutch auction, a company to be floated takes bids from hopeful investors, who are required to state how many shares they want to buy, and at what price. The float price is then set by assessing bids from individual investors. This rather unorthodox way of going public by putting its shares up for auction didn’t go down too well with some Wall Street commentators; for example, Newsweek’s Wall Street Editor Allan Sloan, writing in the Washington Post called it “Google’s first bad move”.

Concerns were also voiced that the newly acquired corporate wealth might taint or corrupt Google’s shiny corporate culture and the high principles that the founders espouse: its stated commitment to always placing the interests of the user first; that its mission is to facilitate access to information by the entire world, to become an institution “that makes the world a better place”; and its belief that “you can make money without doing evil” http://www.google.com/tenthings.html (and flotation prospectus, see below).

While some may find it a bit difficult to stomach this moral high ground and the holier-than-thou corporate image which the company so relentlessly tries to convey – and some might suggest that if you want to save the world or make it a better place then do it, don’t just talk about it – Google’s flotation prospectus (revised/final version)

http://www.sec.gov/Archives/edgar/data/1288776/000119312504139655/
ds1a.htm#toc59330_25b was certainly an unusual one. For a start it was not presented in the customary legal gobbledegook, but in plain English; and it is open and candid. It starts with a letter from Google founders Larry Page and Sergey Brin – what they call a “User’s manual” for prospective Google investors – in which they tell us how they propose to handle the float and run the company after it goes public, and also explain their thinking on why Google will be better off as a public company.

In their letter they reiterate that Google is not a conventional company, and that it does not intend to become one. “Serving our end users is at the heart of what we do and remains our number one priority”, and go on to say “our goal is to develop services that improve the lives of as many people as possible.”

Larry Page and Sergey Brin warned that an investment in Google involves significant risks, and then describe clearly what they consider their key challenges and risks. They paraphrase Warren Buffett’s words, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you”, and add, assertively, that they will not shy away from high-risk, high-reward projects because of short term earnings pressure.

In the transition to public ownership, the Google founders declared that they have set up a corporate structure that will make it harder for outside parties to take over or influence Google, and while new investors will share fully in Google’s long-term growth, they will have less influence over its strategic decisions than they would at most public companies.

Page and Brin also said that they had already transferred significant ownership of Google to employees in return for their efforts in building the business, and made further undertakings in the prospectus to provide an ideal working environment, and to continue to improve benefits to Google employees (or Googlers, as they call them) rather then pare them down over time. And it cited Google Grants – a growing programme in which hundreds of not-for-profit organizations, addressing issues including the environment, poverty and human rights, receive free advertising on Google – and reported that it was in the process of establishing a charitable foundation.

The question of what Google is worth created a huge debate in the press. Prior to the announcement of the flotation, the value of the company had been variously estimated to be between $25bn and $50bn, although some sections of the financial press considered this price tag to be highly inflated, especially as only a fraction of the company was actually going to be offered for sale, some $24.6m worth of shares (restricted to US investors). In the event, and in documents lodged with the Securities and Exchange commission on 26 July 2004, it was revealed that the offering was to be priced at an aggressive valuation of $36bn, something well above the initial forecast of $25bn. Google expected shares to fetch between $108 and $135, although the actual price was to be set in the auction process.

After a series of delays, shares of Google began trading on the Nasdaq Stock Market on 19 August 2004 at $85.00 per share, under the symbol “GOOG”. The shares promptly surged 18% from the initial price of the market debut to $100.34. While this closing price was $15.34 higher than the final IPO price set by the auction, it was still lower than the $108 bottom level of the company's initial range. In subsequent trading the shares continued to attract buyers and closed at $112.26 on August 23. 

In the end, the IPO raised $1.67bn, which some market analysts considered to be something of a letdown for the company, as it profits only from the 14 million initial shares it sold at $85 each and the pre-IPO shareholders who sold 5.5 million at the same price. If the stock had been priced at $135 as originally anticipated, the offering would have raised as much as $3.6bn, giving the company a market capitalization as high as $36bn, as indicated above. However, Google, after pondering the results of the Dutch auction, was forced to pare back the price range for its IPO shortly before trading commenced, to between $85 and $95 per share, as well as cutting the number of shares on offer to some $19.5m in total (see also http://www.google.com/press/pressrel/reg2_statement.html). 

While this valued the company at something less than some of the exaggerated figures that were banded about prior to the flotation – and generated a certain amount of schadenfreude among some Wall Street commentators and the financial media – it is probably a more realistic initial valuation, as the share price was based on what individual small investors, rather than large institutional shareholders, were willing to pay.

Meantime, the offering made co-founders Sergey Brin and Larry Page paper billionaires, and a large number of Google employees who bought stock also profited handsomely.

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The Google founders interviewed

Just before the auction and the bidding process started, it was almost derailed at the last minute by the publication of an interview with Sergey Brin and Larry Page in the September 2004 issue of Playboy magazine, “Playboy Interview: Google Guys”. Although the interview was actually conducted in April 2004, well before the company filed for its IPO, there was speculation that its publication could have potentially violated the so-called “quiet period” that limits communication by company executives ahead of their IPO. (Media interviews are usually taboo prior to stock market flotation to avoid accusations of hyping up the value of the stock).

Google said that the interview – which caused quite a stir – contained some misleading information but that it did not believe its involvement in the article constituted a securities violation. It went ahead with its IPO, but in the final revised IPO documents http://www.sec.gov/Archives/edgar/data/1288776/000119312504139655/
ds1a.htm#toc59330_25b corrected a number inaccurate statements made in the Playboy article.

Google also took the unusual step of including the entire Playboy interview in the revised IPO statement, to set the record straight and to enable the auction to continue. As a result, the interview became a public domain document and – for the benefit of those not normally in the habit of buying girlie magazines – can be accessed in full at several Web sites, for example at http://google.weblogsinc.com/ or http://www.kottke.org/plus/misc/google-playboy.html.

The Playboy interview, some reported inaccuracies notwithstanding, is informative, insightful and wide-ranging. The two Google founders speak candidly about censorship, privacy issues, the page ranking methods, the company’s culture, new search technologies, the controversies surrounding the new Gmail service; and they talk about their concerns and the challenges ahead as they see them. They also offer a definition of their often-quoted “Don’t be evil” policy: they define it to mean “to be a force for good – always do the right, ethical thing”, but say that it is not enough simply not to be evil and that they also strive “actively to be good.” They say they are trying to be democratic – “Google is about getting the right information to people quickly, easily, cheaply – and for free”, making it available “to the rich, the poor, the street children in Cambodia, stock traders on Wall Street – basically everybody.” 

"One thing we know", they state in the interview, "is that people can make better decisions with better information." Most librarians will probably say Amen to that!

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Using Google for African Studies Research is  published as an adjunct  to The African Studies Companion: A Guide to Information Sources New 4th edition 2006 now published

 

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