Revenue 2024: US$350.018 billion (€323.37 billion)

Overview

The students Sergey Brin and Larry Page developed the world's fastest search engine. Thanks to contextual Internet advertising, Google (renamed Alphabet Inc. in 2015) was able to become the highest-revenue company in the media and online technology sectors. The video platform YouTube has also belonged to Alphabet since 2006. With its huge pool of user information, the company walks a fine line between user-friendliness and spying on private data. Alphabet: by far the largest of the Big Five the technology companies (Alphabet, Meta Platforms, Apple, Amazon, Microsoft).

General Information

Headquarters
1600 Amphitheatre Parkway
Mountain View, CA 94043
USA
Telephone: 001 650 253 0000
website: abc.xyz/investor/

Branches of trade: search engine, video portal, internet services, software development, cloud computing
Legal form: Stock Company
Financial year: 01.01. – 31.12.
Founding year: 1998

Basic economic data (in US$ million)

	2024	2023	2022	2021	2020
Revenue	323.370	307.394	282.836	257.637	182.527
Profit	100.118	73.795	59.972	76.033	40.269
Stock price (year end)	193,13	140,93	88,45	144,85	87,63
Employees	183.323	182.502	190.234	156.500	135.301

Turnover by divison (in million US$)

	2024	2023	2022	2021	2020
Google advertising	264.590	237.855	224.473	209.497	146.924
Google Cloud	43.229	33.088	26.280	19.206	13.059
Google subscriptions, platforms, devices	40.340	34.688	29.055	28.032	21.711
Other Bets	1.648	1.527	1.068	753	657

Executives and Directors

Management:

• Sundar Pichai, Chief Executive Officer
• Ruth M. Porad, Senior Vice President and Chief Financial Officer
• Amie Thuener O'Toole, Vice President and Chief Accounting Officer
• Prabhakar Raghavan, Senior Vice President, Google
• Philipp Schindler, Senior Vice President and Chief Business Officer, Google
• Kent Walker, Senior Vice President, Global Affairs and Chief Legal Officer, Google, and Corporate Secretary, Alphabet
  

Supervisory Board/Board of Directors:

• Larry Page, Co-Founder
• Sergey Brin, Co-Founder
• Sundar Pichai, Chief Executive Officer, Alphabet and Google
• John L. Hennessy, Chairman of the Board of Directors, Former President, Stanford University
• Frances H. Arnold, Linus Pauling Professor of Chemical Engineering, Bioengineering and Biochemistry, California Institute of Technology
• R. Martin "Marty" Chávez
• L. John Doerr, General Partner and Chairman, Kleiner Perkins
• Roger W. Ferguson Jr., President and Chief Executive Officer, TIAA
• Ann Mather, former executive vice president and chief financial officer, Pixar
• K. Ram Shriram, Managing Partner, Sherpalo Ventures
• Robin L. Washington, former executive vice president and chief financial officer, Gilead Sciences
  

History

It is said that the company's founders Larry Page and Sergey Brin were not particularly fond of each other when they first met - in 1995 as computer science students at Stanford University, California. Page was a 24-year-old graduate of the University of Michigan who was only in Stanford for the weekend. Brin, a year younger, was supposed to show Page around the university campus. The only thing they were similar about was one of the biggest challenges in the IT world: selecting relevant information from an exponentially growing online data trove.

At the beginning of 1996, Brin and Page developed the search engine "BackRub", which got its name from its ability to analyze back links from any website. Larry Page, who had previously built a printer out of Lego, developed a server environment using outdated computers. Due to chronic financial constraints, Brin and Page looked for more computers in their department that they could connect to their network. A year later, the link analysis technique brought them growing respect in the young web community. They perfected their search engine and found a way that would later be the key to the best search results: They bought a terabyte of hard drives and set up a computer warehouse in Page's dorm room, which became Google's first data center. A name that went back to the term "googol", the mathematical term for a 1 with 100 zeros. Meanwhile, Brin opened a business office and asked potential partners if they would like to license a search engine that delivered superior results - better than anything that could be found up to that point. Nevertheless, Brin and Page initially had little interest in starting a company.

Many CEOs of web portals did not recognize the enormous potential and even underestimated Google. Brin and Page therefore decided to try it on their own and started looking for an investor. Andy Bechtolsheim, one of the founders of Sun Microsystems and known for long-term thinking, just looked at the demo version. He immediately got involved with a $100,000 check. With the help of family, friends and acquaintances, the company finally raised a starting capital of one million US dollars and in mid-1998 Google, Inc. started the business in Menlo Park North, California. The door to the office was opened with a remote control as it was part of a garage that a friend had sublet to the now three-person company. Craig Silverstein, managing director of the technical department, was the first Google employee. Even at that time, Google.com, still in beta version, was processing up to 10,000 queries a day. The international press quickly became aware of the search engine, and articles about Google appeared in USA Today and Le Monde. The trade journal PC Magazine included Google in the ranking of the "Top 100 Websites and Search Engines". Google conquered the world. Open source giant Red Hat was the first company to use Google's search services as a commercial customer.

On June 7, 1999, Google announced that Sequoia Capital and Kleiner Perkins Caufield & Byers, the leading venture capital firms in Silicon Valley, had pledged $25 million in financing. Both firms, normally competitors, invested equally in Google and received the same number of seats on the board of directors. Mike Moritz of Sequoia and John Doerr of Kleiner Perkins sat down with Ram Shriram, CEO of Junglee and third investor, at the ping pong table that served as Google's conference table and planned their cooperation. Key positions were then filled with other top-class people. Omid Kordestani of Netscape, for example, became vice president of the management. Urs Hölzle, a computer scientist from the University of California, became vice president of the technical department. With the move to the "Googleplex" in Mountain View, which is still the company's headquarters today, space problems were finally eliminated. A special corporate culture developed in the Googleplex. To increase flexibility, exercise balls were converted into mobile office chairs, and the offices remained free of partition walls. While the employees had access to the latest computers, some of the desks were made of old wooden doors on sawhorses. And Charlie Ayers was hired as head chef for the canteen, and he created a health-conscious menu with dishes that he had already served as a tour chef for the Grateful Dead.

In June 2000, Google became the largest Internet search engine with a directory of one billion pages. The company began to make a profit with revenue from banner sales. In mid-2000, Google and its main competitor Yahoo announced a strategic partnership that strengthened Google's reputation - not just in technological terms, but above all in economic terms. The company's global triumph continued when the Chinese portal market leader NetEase and the Japanese service Bigglobe added Google to their sites. At the end of 2000, Google was processing around 100 million search queries a day, and by the beginning of 2004 there were five and a half billion pages available for research. 2004: Also the year of the IPO, which made the company's founders Brin and Page billionaires. The company continued to expand: the new European headquarters were built in Dublin, and offices were opened in Sao Paolo and Mexico City. In 2005, Google China was founded with Kai Fu-Lee at the helm, and closed again five years later. Officially, because the Communist Party's censorship was no longer acceptable.

The most significant expansion, besides the takeover of mobile phone manufacturer Motorola, was the purchase of the video platform YouTube. The globally popular entertainment service, which led viewers from television to the Internet, was bought in November 2006 for 1.65 billion dollars. The company's own portal Google Video had previously flopped with a market share of no more than seven percent. With YouTube, however, Google had a huge online media empire, which today user generated content with increasingly professional online formats. YouTube, which initially consisted exclusively of amateur films, has become a global channel that offers professionally produced third-party content sorted by topic. Exclusive sports clips, high-quality news offerings and complete films have long been available for free or for a fee. This means that Google is moving into the field of activity of traditional media groups: providing content, monetized through the sale of advertising.

In 2013, Google achieved a historic victory after years of legal battles with the Federal Trade Commission (FTC). The authority ruled that Google did not favor its own services and products over other providers in Google searches. This was certainly due to major lobbying efforts (in 2015, it emerged that the FTC commissioners had prevailed against the recommendations of the responsible clerks, who had clearly determined that Google was acting in a way that was detrimental to competition). In keeping with this, Google was the company that paid more than any other for lobbying in the USA in 2017, with around 14.6 million euros (in 2016, it was in second place, after Comcast). It was Donald Trump's first year in office, and taxes and antitrust law were the focus of lobbying.

Since 2015, Google has been just a division of the new parent company, Alphabet. The renaming was essentially about “satisfying the capital market” (manager magazin). Until Alphabet was founded, it was not known exactly how stable and profitable Google was: the search business was not separated from the remaining bets The Other Bets (self-driving cars, robots, connected households): loss-making “opaque adventures”. This new transparency was well received by the markets.

In Europe, Google, known as a major "tax optimizer," then had to deal with EU Competition Commissioner Margarethe Vestager in three cases with high fines: in 2017, it was 2.4 billion euros for Google's abuse of its dominant market position in Google Shopping. Then in 2018, 4.3 billion for illegal practices in the Android operating system. And in 2019, 1.5 billion for Google's bad tactics in online advertising. Just peanuts for Google? And the classic use of tax loopholes was not even affected. So the announcement on December 31, 2019 was surprising: "Google says goodbye to legal tax loopholes in Europe." For years, Google had been smuggling billions of euros out of Europe with the legal practice known as the "Double Irish With a Dutch Sandwich." More specifically, it was transferred via a Dutch subsidiary to a holding company registered in Ireland with a tax residence in Bermuda, where there is no income tax. "We will simplify our structure and now license our intellectual property through the USA and not through Bermuda," said Alphabet. The announcement of December 31, 2019 is less surprising when you know that Ireland decided to end the agreement with Google in 2014 under pressure from the European Union and the USA.

On December 3, 2019, Alphabet published a press release titled "Changes in Alphabet Management." Larry Page and Sergey Brin stepped down from operational business and from their positions as CEO and President of Alphabet, respectively, but remain active as "founders, shareholders and members of the board of directors of Alphabet." This was not a big surprise, as the two founders had been seen less and less at headquarters for some time and had hardly participated in conferences with investors. In their "Letter from Larry and Sergey," Larry Page, born in 1973, the sometimes idiosyncratic "Steve Jobs of Google," and Sergey Brin, son of Russian-Jewish emigrants and the quieter of the two (also born in 1973), said goodbye to the company's top management with: "We are honored that a small research project has developed into a source of knowledge for billions of people - a bet we made as Stanford students... Back in 1998, when we moved our servers from a dorm to a garage, we had no idea what would come of it." There were, however, observers who interpreted the whole thing as an escape. An escape from competition investigations, for example.

Then came Corona. "For many of our customers, digital transformation in the cloud became a priority in 2020. Last year, Google hosted over a trillion minutes of video meetings and over 2.9 billion users used apps like Gmail, Calendar, Drive, Docs, Sheets, Slides and Meet every day." That was Google's self-promotion at the time, on the one hand. On the other hand, the extremely low tax rates of the large US tech companies had been a cause for criticism for years. There was talk of "state-subsidized distortion of competition" when people in Europe saw that Amazon, for example, with a pre-tax profit of 11.3 billion US dollars in 2018, not only paid no tax in the USA, but also received a tax credit of 129 million dollars from the US tax authorities. Or when Netflix paid 15 million dollars in taxes in 2018 on a profit of 1.23 billion. A tax rate of 1.2 percent.

It was well known how tough the competition on the digital market is. “Anyone who shines too much, no matter where in the world, and appears on the radar of the big corporations will receive an offer that they cannot refuse.” (SZ from July 31, 2020) There was talk of a "repertoire of quasi-legal bullying" that the billion-dollar tech giants could afford: hostile takeovers, intellectual theft, legal attacks (against which no start-up company could defend itself). They were again dealing with monopolists like in the days of the oil barons and railroad magnates.

How large the market shares of the overpowering platforms with a gatekeeper–position was made clear in the “Atlas of the Digital World” (Campus-Verlag), published in autumn 2020. Based on data from the Society for Consumer Research (GfK), this was the result of an article in the FAZ (from September 24, 2020) "shocking" picture: 85.8 percent of their online time was spent by the participants of the GfK sample on the pages of the 500 strongest platforms (out of a total of 131,993 websites or apps), i.e. in the top 0.38 percent. In the initial euphoria of the Internet, it was believed that everyone, including small companies, could participate in the new online world. But this dream was long gone. An example of how Google/Alphabet secured its place at the top became known at the end of October 2023. As reported by Bloomberg, the tech group paid no less than 26 billion US dollars in 2021 (Google's largest single expenditure item) to be "the default search engine on smartphones and web browsers." More specifically, a large part of the sum probably went to Apple, “to secure Google’s position as the default search engine in the Safari web browser on iPhones and Mac computers.” (manager magazin)

But: as if the era that the Big Tech companies from the USA have shaped “economically and in terms of innovation” is coming to an end, wrote the Time on December 11, 2022: “At the beginning of 2022, shares of Apple, Microsoft, Alphabet, Amazon and Meta have entered an unexpected downward spiral after these companies have delighted investors with exorbitant price increases for a decade. But the stock market year is ending in a veritable crash for them, just like for the overwhelming rest of the tech industry." Alphabet has fallen by 33 percent since January, Apple by 21, Microsoft by 27, Amazon by 48, and Facebook's parent company Meta has even plummeted by 66 percent. Price losses that were hardly thought possible. "The Big Tech boom is over, and Wall Street knows it," the industry medium Re/code described the crash.

management

Sundar Pichai, born in 1972 in poor circumstances in the southern Indian city of Madurai and has been with Google since 2004, became the new man at the top. He had previously had a remarkable career. He only held his first phone in his hand at the age of twelve - and became one of the richest mobile managers in the world as head of Google's Android division. He campaigned to develop his own web browser with Chrome - the then Google CEO Eric Schmidt was sceptical. Pichai was subsequently responsible for some of Google's most popular applications and products, such as Chromebooks, Gmail, Docs and Maps. As head of Android, he ensured that the longstanding strict separation between Android and the other search areas was lifted. Pichai is popular and approachable among Google employees; for company founders Larry Page and Sergey Brin, the fact that he combines expertise, diplomatic skills and business acumen was the decisive factor in his promotion. He also has visionary ideas, although these have sometimes failed. With "Project Loon", for example, Pichai wanted to use giant helium balloons in the stratosphere to enable fast internet even in the most remote regions of the world. In January 2021, however, Loon was over. Although great technological progress had been made, it became apparent that a "long-term sustainable business" was impossible. Not least because of Elon Musk's private satellite network Starlink, which offers global internet access.

Business Units

First of all, Google is the global standard search engine with three billion queries a day (more than half from mobile devices), and the most visited website in the world. Its core business is selling advertising.

In addition to the search engine, the most important web and mobile applications include YouTube, the largest video community in the world (since 2018 also with the associated music streaming service YouTube Music), where 500 hours of video material were uploaded per minute in May 2019, for example. In addition, the Chrome web browser launched in 2008, map and navigation apps (Google Maps, Google Earth, Street View), instant (video) messengers, the Gmail email service and the Google Play Android app store. With the help of advertising programmes such as Google Ads, AdMob, AdSense etc. and in combination with Google Analytics, a statistical tool for measuring the frequency of search queries, search queries are linked with text ads or content with interactive ads.

Google finally lists subsidiaries in the “Other Bets” business area, with revenue in 2023: $1,527 million. Branches that could well hide “the next big thing”: investments in the areas of health, life sciences, and transportation.

Current developments

First of all, the prediction from the end of 2022 that "the big tech boom is over" seems to have been premature. In any case, the prices recovered by mid-September 2024. Alphabet rose from around 90 to 160 US$, Apple, Microsoft and Amazon doubled their numbers. And for Meta it even went from around 120 to 560 US$. All tech stock prices at record highs.

At the end of February 2024, it was reported: "Springer, Burda & Co. are demanding 2.1 billion euros in damages from Google." The "Internet giant" and "search engine giant" was accused of giving itself an advantage in advertising. Anti-competitive behavior. Google denied the claim: The lawsuit was "speculative and questionable."

Much more dangerous for the company than the trial in Europe is probably the lawsuit by the US Department of Justice, which Alphabet will have to face from September 9, 2024. The ARD Tagesschau writes that the case specifically concerns "Google's main source of income": online ads on websites. "According to the lawsuit, the company dominates this market through a complex network of takeovers, restrictions on the use of certain software and manipulation of auctions for internet advertising." There is a threat of nothing less than the break-up of by far the largest media and technology group in the world.

A breakup that will become more concrete in mid-November 2024: As the Bloomberg news agency reports, Alphabet/Google is to separate from Chrome, its most used web browser in the world. Google has "a monopoly in internet search" (it would control 90 percent of the market) and "is defending it against competition using unfair means." However, President Trump could become problematic for the Justice Department's lawsuit. He has already expressed criticism "regarding the effects of a possible breakup on competitiveness against China" (taz, November 19, 2024).