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BBW 501

Submitted by: AkankshaKumari 117503

CONTENTS
1. Introduction 2. History Growth Acquisitions and partnership 3. Product and services Advertisement Search engine Productivity tools Enterprise product

4. Special features 5. Functionality Search syntax 6. Financial summary 7. Business model 8. Bibliography

INTRODUCTION
Google Inc. is an American multinational corporation specializing in Internet-related services and products. These include search, cloud computing, software and online advertising technologies. Most of its profits are derived from Ad Words. Google was founded by Larry Page and Sergey Brin while they were Ph.D. students at Stanford University. Together they own about 16 percent of its shares. They incorporated Google as a privately held company on September 4, 1998.

HISTORY
Google began in January 1996 as a research project by Larry Page and Sergey Brin when they were both PhD students at Stanford University in Stanford, California.While conventional search engines ranked results by counting how many times the search terms appeared on the page, the two theorized about a better system that analyzed the relationships between websites.They called this new technology PageRank; it determined a website's relevance by the number of pages, and the importance of those pages, that linked back to the original site. The domain name for Google was registered on September 15, 1997, and the company was incorporated on September 4, 1998. In May 2011, the number of monthly unique visitors to Google surpassed one billion for the first time, an 8.4 percent increase from May 2010 (931 million) In January 2013, Google announced it had earned $50 billion in annual revenue for the year of 2012. This marked the first time the company had reached this feat, topping their 2011 total of $38 billion. Google's initial public offering (IPO) took place five years later on August 19, 2004. At that time Larry Page, Sergey Brin, and Eric Schmidt agreed to work together at Google for 20 years, until the year 2024. The company offered 19,605,052 shares at a price of $85 per share. Shares were sold in a unique online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal the sale of $1.67 billion gave Google a market capitalization of more than $23 billion. The vast majority of the 271 million shares remained under the control of Google, and many Google employees became instant paper millionaires. Yahoo!, a competitor of Google, also benefited because it owned 8.4 million shares of Google before the IPO took place.
GROWTH

In March 1999, the company moved its offices to Palo Alto, California, which is home to several prominent Silicon Valley technology startups. The next year, against Page and Brin's initial opposition toward an advertising-funded search engine, Google began selling advertisements associated with search keywords. In order to maintain an uncluttered page design and increase speed, advertisements were solely text-based. Keywords were sold based on a combination of price bids and click-through, with bidding starting at five cents per click. In 2001, Google received a patent for its PageRank mechanism. The patent was officially assigned to Stanford University and lists Lawrence Page as the inventor. In 2003, after outgrowing two other locations, the company leased an office complex from Silicon Graphics at 1600 Amphitheatre Parkway in Mountain View, California. The complex became known as the Googleplex, a play on the word googolplex, the number one followed by a googol zeroes. The Googleplex interiors were designed by Clive Wilkinson Architects. Three years later, Google bought the property from SGI for $319 million. By that time, the name "Google" had found its way into everyday language, causing the verb "google" to be added to the Merriam-Webster Collegiate Dictionary and the Oxford English Dictionary, denoted as "to use the Google search engine to obtain information on the Internet."
ACQUISITIONS AND PARTNERSHIP

Since 2001, Google has acquired many companies, primarily small venture capital-funded firms. In 2004, Google acquired Keyhole, Inc. The start-up company developed a product called Earth Viewer that gave a three-dimensional view of the Earth. Google renamed the service toGoogle Earthin 2005. In October 2006, Google announced that it had acquired the video-sharing site YouTube for US$1.65 billion in Google stock, and the deal was finalized on November 13, 2006. Google does not provide detailed figures for YouTube's running costs, and YouTube's revenues in 2007 were noted as "not material" in a regulatory filing. In June 2008, a Forbes magazine article projected the 2008 YouTube revenue at US$200 million, noting progress in advertising sales. On April 13, 2007, Google reached an agreement to acquire DoubleClick for $3.1 billion, giving Google valuable relationships that DoubleClick had with Web publishers and advertising agencies. Later that same year, Google purchased Grand Central for $50 million. The site would later be changed over to Google Voice. On August 5, 2009, Google bought out its first public company, purchasing video software maker On2 Technologies for $106.5 million Google also acquired Aardvark, a social network search engine, for $50 million, and commented on its internal blog, "we're looking forward to collaborating to see where we can take it" In April 2010, Google announced it had acquired a hardware startup, Agnilux. In addition to the many companies Google has purchased, the company has partnered with other organizations for research, advertising, and other activities. In 2005, Google partnered with NASAAmes Research Center to build 1,000,000 square feet (93,000 m2) of offices. The offices would be used for research projects involving large-scale data management, nanotechnology, distributed computing, and the entrepreneurial space industry. Google entered into a partnership with Sun Microsystems in October 2005 to help share and distribute each other's technologies.

The company also partnered with AOL to enhance each other's video search services. Google's 2005 partnerships also included financing the new .mobitop-level domain for mobile devices, along with other companies including Microsoft, Nokia, and Ericsson Google would later launch "AdSense for Mobile", taking advantage of the emerging mobile advertising market.Increasing its advertising reach even further, Google and Fox Interactive Media of News Corporation entered into a $900 million agreement to provide search and advertising on the then-popular social networking site MySpace. In 2008, Google developed a partnership with GeoEyeto launch a satellite providing Google with high-resolution (0.41 m monochrome, 1.65 m color) imagery for Google Earth. The satellite was launched from Vandenberg Air Force Base on September 6, 2008. Google also announced in 2008 that it was hosting an archive of Life Magazine's photographs. Some of the images in the archive were never published in the magazine. The photos were watermarked and originally had copyright notices posted on all photos, regardless of public domain status. In 2010, Google Energy made its first investment in a renewable energy project, putting $38.8 million into two wind farms in North Dakota. The company announced the two locations will generate 169.5 megawatts of power, enough to supply 55,000 homes. The farms, which were developed by NextEra Energy Resources, will reduce fossil fuel use in the region and return profits. NextEra Energy Resources sold Google a twenty-percent stake in the project to get funding for its development. Also in 2010, Google purchased Global IP Solutions, a Norwaybased company that provides web-based teleconferencing and other related services. This acquisition enabled Google to add telephone-style services to its list of products. On May 27, 2010, Google announced it had also closed the acquisition of the mobile ad network Ad Mob. These occurred days after the Federal Trade Commission closed its investigation into the purchase. Google acquired the company for an undisclosed amount. In July 2010, Google signed an agreement with an Iowa wind farm to buy 114 megawatts of energy for 20 years. On April 4, 2011, The Globe and Mail reported that Google bid $900 million for six thousand Nortel Networks patents. On August 15, 2011, Google made its largest-ever acquisition to-date when announced that it would acquire Motorola Mobility for $12.5 billion subject to approval from regulators in the United States and Europe. In a post on Google's blog, Google Chief Executive and co-founder Larry Page revealed that the acquisition was a strategic move to strengthen Google's patent portfolio. The company's Android operating system has come under fire in an industry-wide patent battle, as Apple and Microsoft have sued Android device makers such as HTC, Samsung, and Motorola. The merger was completed on the May 22, 2012, after the approval of People's Republic of China. This purchase was made in part to help Google gain Motorola's considerable patent portfolio on mobile phones and wireless technologies to help protect it in its ongoing patent disputes with other companies, mainly Apple and Microsoft and to allow it to continue to freely offer Android. After the acquisition closed, Google began to restructure the Motorola business to fit Google's strategy. On August 13, 2012, Google announced plans to lay off 4000 Motorola Mobility employees. On December 10, 2012, Google sold the manufacturing operations of Motorola

Mobility to Flextronics for $75 million. As a part of the agreement, Flextronics will manufacture undisclosed Android and other mobile devices. On December 19, 2012, Google sold the Motorola Home business division of Motorola Mobility to Arris Group for $2.35 billion in a cash-and-stock transaction. As a part of this deal, Google acquired a 15.7% stake in Arris Group valued at $300 million. On June 5, 2012, Google announced it acquired Quickoffice, a company widely known for their mobile productivity suite for both iOS and Android. Google plans to integrate Quickoffice's technology into its own product suite. On February 6, 2013, Google announced it has acquired Channel Intelligence for $125 million. Channel Intelligence, a technology company that helps customers buy products online, is active globally in 31 different countries and works with over 850 retailers. Google will use this technology to enhance its e-commerce business.. The official confirmation of Google's acquisition of the Israel-based startup Waze occurred in June 2013. Waze is promoted as a "community-based traffic and navigation app", and it is expected that the purchase will assist Google's mobile and mapping businesses. Waze CEO Noam Bardin stated as part of the announcement: We are excited about the prospect of working with the Google Maps team to enhance our search capabilities and to join them in their ongoing efforts to build the best map of the world ... Choosing the path of an IPO often shifts attention to bankers, lawyers and the happiness of Wall Street, and we decided wed rather spend our time with you, the Waze community. Following the acquisition of Waze, Google submitted a "10-Q" filing with the Securities Exchange Commission (SEC) that revealed that the corporation spent US$1.3 billion on acquisitions during the first half of 2013. The filing also revealed that the Waze acquisition cost Google US$966 million, instead of the US$1.1 billion figure that was initially presented in media sources.

PRODUCTS AND SERVICES

ADVERTISING

For the 2006 fiscal year, the company reported $10.492 billion in total advertising revenues and only $112 million in licensing and other revenues. In 2011, 96% of Google's revenue was derived from its advertising programs.Google has implemented various innovations in the online advertising market that helped make it one of the biggest brokers in the market. Using technology from the company DoubleClick, Google can determine user interests and target advertisements so they are relevant to their context and the user that is viewing them. On June 2013, Google announced the launch of Product Listing Ads in India. The new ad format will show relevant information on brands, images and prices of the products that a user will be

searching on the Google. Basically it will help web users to know about a product before buying it online or offline.

SEARCH ENGINE

Google Search, a web search engine, is the company's most popular service. According to market research published by comScore in November 2009, Google is the dominant search engine in the United States market, with a market share of 65.6%. Google indexes billions of web pages, so that users can search for the information they desire through the use of keywords and operators. In 2009, uploads to Google Video were discontinued so that Google could focus more on the search aspect of the service. The company developed Google Desktop, a desktop search application used to search for files local to one's computer, but discontinued it in 2011. Google's most recent development in search is its partnership with the United States Patent and Trademark Office to create Google Patents, which enables free access to information about patents and trademarks. One of the more controversial search services Google hosts is Google Books. The company began scanning books and uploading limited previews, and full books where allowed, into its new book search engine. On July 21, 2010, in response to newcomer Bing, Google updated its image search to display a streaming sequence of thumbnails that enlarge when pointed at. Though web searches still appear in a batch per page format, on July 23, 2010, dictionary definitions for certain English words began appearing above the linked results for web searches. Google's algorithm was changed in March 2011, giving more weight to high-quality content possibly by the use of ngrams to remove spun content
PRODUCTIVITY TOOLS

In addition to its standard web search services, Google has released a number of online productivity tools. Gmail, a free webmail service provided by Google, was launched as an invitation-only beta program on April 1, 2004 and became available to the general public on February 7, 2007. The service was upgraded from beta status on July 7, 2009, at which time it had 146 million users monthly. The service was the first online email service with one gigabyteof storage. It was also the first to keep emails from the same conversation together in one thread, similar to an Internet forum.The service offers over 7600 MB of free storage with additional storage ranging from 20 GB to 16 TB available for US$0.25 per 1 GB per year. Google Docs, another part of Google's productivity suite, allows users to create, edit, and collaborate on documents in an online environment, similar to Microsoft Word. The service was originally called Writely, but was obtained by Google on March 9, 2006, and was released as an invitation-only preview. On June 6 after the acquisition, Google created an experimental spreadsheet editing program, which was combined with Google Docs on October 10. A program

to edit presentations completed the set on September 17, 2007, before all three services were taken out of beta along with Gmail, Google Calendar, and all products from the Google Apps Suite on July 7, 2009.
ENTERPRISE PRODUCTS

Google entered the enterprise market in February 2002 with the launch of its Google Search Appliance, targeted toward providing search technology for larger organizations. Google launched the Mini three years later, which was targeted at smaller organizations. Late in 2006, Google began to sell Custom Search Business Edition, providing customers with an advertisingfree window into Google.com's index. The service was renamed Google Site Search in 2008. Google Apps is another primary Google enterprise service offering. The service allows organizations to bring Google's web application offerings, such as Gmail and Google Docs, into their own domains. The service is available in several editions: a basic free edition (formerly known as Google Apps Standard edition), Google Apps for Business, Google Apps for Education, and Google Apps for Government. Special editions include extras such as more disk space, API access, a service level agreement (SLA), premium support, and additional apps. In the same year Google Apps was launched, Google acquired Postini and proceeded to integrate the company's security technologies into Google Apps[ under the name Google Postini Services. Additional Google enterprise offerings include geospatial solutions (e.g., Google Earth and Google Maps); security and archival solutions (e.g., Postini); and Chromebooks for business and education (i.e., personal computing run on browser-centric operating systems). Other products Google Translate is a server-side machine translation service, which can translate between 35 different languages. Browser extensions allow for easy access to Google Translate from the browser. The software uses corpus linguistics techniques, where the program "learns" from professionally translated documents, specifically UN and European Parliament proceedings. Furthermore, a "suggest a better translation" feature accompanies the translated text, allowing users to indicate where the current translation is incorrect or otherwise inferior to another translation. Google launched its Google News service in 2002. The company announced the creation of a "highly unusual" site that "offers a news service compiled solely by computer algorithms without human intervention. Google employs no editors, managing editors, or executive editors." The site hosts less licensed news content than Yahoo! News. Instead, it presents topically selected links to news and opinion pieces along with reproductions of their headlines, story leads, and photographs. The photographs are typically reduced to thumbnail size and placed next to headlines from other news sources on the same topic to minimize copyright infringement claims. Nevertheless, Agence France Presse (AFP) sued Google for copyright infringement in federal court in the District of Columbia, a case which Google settled for an undisclosed amount in a pact that included a license of the full text of AFP articles for use on Google News.

In 2006, Google made a bid to offer free wireless broadband access throughout the city of San Francisco along with Internet service providerEarthLink. Large telecommunications companies such as Comcast and Verizon opposed such efforts, claiming it was "unfair competition" and that cities would be violating their commitments to offer local monopolies to these companies. In his testimony before Congress on network neutrality in 2006, Google's Chief Internet Evangelist Vint Cerf blamed such tactics on the fact that nearly half of all consumers lack meaningful choice in broadband providers. Google currently offers free wi-fi access in its hometown of Mountain View, California. In 2010, Google announced the Google Fiber project with plans to build an ultra-high-speed broadband network for 50,000 to 500,000 customers in one or more American cities. On March 30, 2011, Google announced that Kansas City, Kansas would be the first community where the new network would be deployed. In July 2012, Google completed the construction of a fiberoptic broadband internet network infrastructure in Kansas City, and after building an infrastructure, Google announced pricing for Google Fiber. The service will offer three options including a free broadband internet option, a 1Gbit/s internet option for $70 per month, and a version that includes television service for $120 per month. In 2007, reports surfaced that Google was planning the release of its own mobile phone, possibly a competitor to Apple's iPhone. The project, called Android, turned out not to be a phone but an operating system for mobile devices, which Google acquired and then released as an open source project under the Apache 2.0 license. Google provides a software development kit for developers so applications can be created to be run on Android-based phones. In September 2008, T-Mobile released the G1, the first Android-based phone. On January 5, 2010, Google released an Android phone under its own company name called the Nexus One. A report in July 2013 stated that Google's share of the global smartphone market, led by Samsung products, was 64% in March 2013. Google Goggles is a mobile application available on Android and iOS used for image recognition and non-text-based search. In addition to scanning QR codes, the app can recognize historic landmarks, import business cards, and solve Sudoku puzzles. While Goggles could originally identify people as well, Google has limited that functionality as a privacy protection. In 2011, Google announced Google Wallet, a mobile application for wireless payments. In late June 2011, Google soft-launched a social networking service called Google+. On July 14, 2011, Google announced that Google+ had reached 10 million users just two weeks after it was launched in this "limited" trial phase. After four weeks in operation, it reached 25 million users. At a launch event on July 24, 2013 in San Francisco, U.S., a newer version of the Nexus 7 Google tablet device was released to the public, alongside the Chromecast dongle that allows users to stream YouTube and Netflix videos via smartphones. Google anticipates 70 million total Android tablet activations in 2013, seven times greater than the total number of activations at the end of 2012
SPECIAL FEATURES

Besides the main search-engine feature of searching for text, Google Search has more than 22 "special features" (activated by entering any of dozens of trigger words) when searching:

Synonym search - A search can match words similar to those specified, by placing the tilde sign (~) immediately in front of a search term, such as: ~fast food. Weather - The weather humidity, temperature and forecast, for many cities, can be viewed by typing "weather" followed by the city and state, U.S. zip code, or city and country (such as: weather Lawrence, Kansas; weather Paris; weather Bremen, Germany). If the city name looks like a common word, then the U.S. state, ZIP code, or nation must also be specified. Stock quotes - The market data for a specific company or fund can be viewed, by typing the ticker symbol (or include "stock"), such as: CSCO; MSFT; IBM stock; F stock (lists Ford Motor Co.); or AIVSX (fund). Results show inter-day changes, or a five-year graph, etc. Time zone - The current time in many cities (worldwide) can be viewed by typing "time" and the name of the city (such as: time Cairo; time Pratt, KS). Sports scores - The scores and schedules, for sports teams, can be displayed by typing the team name or league name into the search box. Calculator - Calculation results can be determined, as calculated live, by entering a formula in numbers or words, such as: 6*77 +pi +sqrt(e^3)/888 plus 0.45. The user is given the option to search for the formula, after calculation. Unit conversion Measurements can be convertedby entering each phrase, such as: 10.5 cm in inches; or 90 km in miles. Currency conversion A money or currency converter can be selected, by typing names, descriptions or currency codes (listed by ISO 4217): 6789 Euro in USD; 150 GBP in USD; 5000 Yen in USD; 5000 Yuan in lira; 200 PLN in Brazilian currency (the U.S. dollar can be USD or "US$" or "$", while Canadian is CAD, etc.). Dictionary lookup A definition for a word or phrase can be found, by entering "define" plus the word(s) to look up (such as: Define philosophy) Maps Some related maps can be displayed, by typing in the name or U.S. ZIP code of a location and the word "map" (such as: New York map; Kansas map; or Paris map). Movie show times - Reviews or filmshow times can be listed for any movies playing nearby, by typing "movies" or the name of any current film into the search box. If a specific location was saved on a previous search, the top search result will display show times for nearby theaters for that movie. These listings however are sometimes totally incorrect and there is no way to ask Google to correct them; for example, on 07/25 2009,

for the El Capitan Theatre, Google show times lists Up, but according to the El Capitan website, the only movie playing that day is G-Force.

Public data - Trends for population (or unemployment rates) can be found for U.S. states and counties, by typing "population" or "unemployment rate" followed by a state or county name. Real estate and housing - Home listings in a given area can be displayed, using the trigger words "housing", "home", or "real estate" followed by the name of a city or U.S. zip code. Travel data and airports - The flight status for arriving or departing U.S. flights can be displayed by typing in the name of the airline and the flight number into the search box (such as: American airlines 18). Delays at a specific airport can also be viewed (by typing the name of the city or three-letter airport code plus word "airport"). Package tracking - Package mail can be tracked by typing the tracking number of a UPS, FedEx or USPS package directly into the search box. Results will include quick links to track the status of each shipment. Patent numbers - U.S. patents can be searched by entering the word "patent" followed by the patent number into the search box (such as: Patent 5123123). Area code - The geographical location (for any U.S. telephone area code) can be displayed by typing a three-digit area code (such as: 650). U.S. government search - Searching of U.S. government websites can be performed from webpage: www.google.com/ig/usgov

FUNCTIONALITY

Google search consists of a series of localized websites. The largest of those, the google.com site, is the top most-visited website in the world. Some of its features include a definition link for most searches including dictionary words, the number of results you got on your search, links to other searches (e.g. for words that Google believes to be misspelled, it provides a link to the search results using its proposed spelling), and many more.
SEARCH SYNTAX

Google's search engine normally accepts queries as a simple text, and breaks up the user's text into a sequence of search terms, which will usually be words that are to occur in the results, but one can also use Booleanoperators, such as: quotations marks (") for a phrase, a prefix such as "+" , "-" for qualified terms (no longer valid, the '+' was removed from Google on October 19, 2011), or one of several advanced operators, such as "site:". The web pages of "Google Search Basics" describe each of these additional queries and options. Googles Advanced Search web

form gives several additional fields which may be used to qualify searches by such criteria as date of first retrieval. All advanced queries transform to regular queries, usually with additional qualified term. UNDERSTANDING BUSINESS MODEL Google is among the leading Technology companies in the World. Google is most popular for its Search engine, which helps Internet users get useful results in response to their queries. Google maintains vast index of websites and helps users search different types of content such as Text, Images, Audio, Video, Blogs, News, and Maps through its products. Gmail is another very popular product of Google, for free email services to the users. Google provides social networking services to its users through its Google+ product. Google provides its services to the Internet users for free. Google makes the revenues from Advertisers who are interested in reaching out to the online users. Google helps them create textbased Ads through Google Ad words a self-serve auction-based advertising program. These ads appear next to the search results. Most advertisers pay Google on a Cost per Click (CPC) basis, which means advertisers pay when users click their Ads. Google helps advertisers extend their Ad campaigns to the Google Network members websites through its AdSense program. Google Network members get a share of Ad revenues in return. Google provides Display Advertising services through DoubleClick advertising technology. Display advertising comprises of video, text, images, and other interactive ads. Display ads appear on YouTube, Google Finance, and Google Network member websites. Google has developed Android an open source mobile software platform that can be used by handset manufacturers to install on their devices and by developers to create applications for mobile devices. Google provides Chrome browser for web browsing. Google is working with several OEMs (Original Equipment Manufacturers) to bring computers running Chrome OS. Google serves the Enterprise market through hosted web-based applications called Google Apps. Google Apps include Gmail, Google Docs, Google Calendar, and Google Sites. People need a browser and an Internet connection to use the Google Apps. Google business has 4 key costs elements: R&D, Data center operations, Traffic Acquisition, and Sales & Marketing. Google invests heavily into R&D to create new products and improve existing products. Google is estimated to have over 1 million servers in data centers around the world that process nearly 1 billion search requests every day. Google has invested heavily in these data centers and managing their operations continue to be a key cost element. Traffic acquisition costs comprises of money paid to the Google Network websites under the AdSense program and to the distribution partners who distribute Google Toolbar and other products or drive traffic to the Google websites. Google Sales & Marketing costs include the cost of managing global sales and support teams as well as advertising and promotional expenditures. Google generates over 96% of its revenues from advertising and this has remained true for last several years. Though Google has evolved its Search offering, got into Mobile space, trying to get into Operating systems, and has build offerings for the Enterprises, any of them has not yet

resulted into major revenue streams. Apple, on the other hand, earned 70% of the revenues from products (iPhone and iPad) that didnt existed 5 years ago.

FINANCIAL SUMMARY (2013)

Google Inc. reported consolidated revenues of $13.97 billion for the quarter ended March 31, 2013, an increase of 31% compared to the first quarter of 2012. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2013, TAC totaled $2.96 billion, or 25% of advertising revenues.
FINANCIAL HIGHLIGHTS

Revenues and other information - On a consolidated basis, Google Inc. revenues for the quarter ended March 31, 2013 were $13.97 billion, an increase of 31% compared to the first quarter of 2012. Google Revenues (advertising and other) - Google revenues were $12.95 billion, or 93% of consolidated revenues, in the first quarter of 2013, representing a 22% increase over first quarter 2012 revenues of $10.65 billion.

Google Sites Revenues Google-owned sites generated revenues of $8.64 billion, or 67% of total Google revenues, in the first quarter of 2013. This represents an 18% increase over first quarter 2012 Google sites revenues of $7.31 billion. Google Network Revenues Googles partner sites generated revenues of $3.26 billion, or 25% of total Google revenues, in the first quarter of 2013. This represents a 12% increase from first quarter 2012 Google network revenues of $2.91 billion. Other Revenues Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in the first quarter of 2013. This represents a 150% increase over first quarter 2012 other revenues of $420 million.

Google International Revenues Google revenues from outside of the United States totaled $7.1 billion, representing 55% of total Google revenues in the first quarter of 2013, compared to 54% in the fourth quarter of 2012 and in the first quarter of 2012. Foreign Exchange Impact on Google Revenues Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2012 through the first quarter of 2013, our Google revenues in the first quarter of 2013 would have been $11 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2012 through the first quarter of 2013, our Google revenues in the first quarter of 2013 would have been $110 million higher. TAC Traffic acquisition costs, the portion of revenues shared with Googles partners, increased to $2.96 billion in the first quarter of 2013, compared to $2.51 billion in the first quarter of 2012. TAC as a percentage of advertising revenues was 25% in the first quarter of 2013, compared to 25% in the first quarter of 2012. The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.28 billion in the first quarter of 2013. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $680 million in the first quarter of 2013. Motorola Mobile Revenues (hardware and other) Motorola Mobile revenues were $1.02 billion, or 7% of consolidated revenues in the first quarter of 2013. Other Cost of Revenues Other cost of revenues, which is comprised primarily of manufacturing and inventory-related costs, data center operational expenses, amortization of intangible assets, and content acquisition costs, increased to $2.98 billion, or 21% of revenues, in the first quarter of 2013, compared to $1.28 billion, or 12% of revenues, in the first quarter of 2012. Operating Expenses Operating expenses, other than cost of revenues, were $4.55 billion in the first quarter of 2013, or 33% of revenues, compared to $3.47 billion in the first quarter of 2012, or 33% of revenues.

Amortization Expenses Amortization expenses of acquisition-related intangible assets were $315 million for the first quarter of 2013. Of the $315 million, $153 million was as a result of the acquisition of Motorola, of which $116 million was allocated to Google and $37 million was allocated to Motorola Mobile. Operating Income On a consolidated basis, GAAP operating income in the first quarter of 2013 was $3.48 billion, or 25% of revenues. This compares to GAAP operating income of $3.39 billion, or 32% of revenues, in the first quarter of 2012. Non-GAAP operating income in the first quarter of 2013 was $4.22 billion, or 30% of revenues. This compares to non-GAAP operating income of $3.94 billion, or 37% of revenues, in the first quarter of 2012.

Google Operating Income GAAP operating income for Google was $3.75 billion, or 29% of Google revenues, in the first quarter of 2013. This compares to GAAP operating income of $3.39 billion, or 32% of Google revenues, in the first quarter of 2012. NonGAAP operating income in the first quarter of 2013 was $4.40 billion, or 34% of Google revenues. This compares to non-GAAP operating income of $3.94 billion in the first quarter of 2012, or 37% of Google revenues. Motorola Mobile Operating Loss GAAP operating loss for Motorola Mobile was $271 million, or -27% of Motorola Mobile revenues in the first quarter of 2013. NonGAAP operating loss for Motorola Mobile in the first quarter of 2013 was $179 million, or -18% of Motorola Mobile revenues.

Interest and Other Income, Net Interest and other income, net, was $134 million in the first quarter of 2013, compared to $156 million in the first quarter of 2012. Income Taxes Our effective tax rate was 8% for the first quarter of 2013. Net Income GAAP net income in the first quarter of 2013 was $3.35 billion, compared to $2.89 billion in the first quarter of 2012. Non-GAAP net income was $3.90 billion in the first quarter of 2013, compared to $3.33 billion in the first quarter of 2012. GAAP EPS in the first quarter of 2013 was $9.94 on 337 million diluted shares outstanding, compared to $8.75 in the first quarter of 2012 on 330 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2013 was $11.58, compared to $10.08 in the first quarter of 2012. Cash Flow and Capital Expenditures Net cash provided by operating activities in the first quarter of 2013 totaled $3.63 billion, compared to $3.69 billion in the first quarter of 2012. In the first quarter of 2013, capital expenditures were $1.2 billion, the majority of which was for production equipment, data center construction and facilities-related purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2013, free cash flow was $2.43 billion. Cash As of March 31, 2013, cash, cash equivalents, and marketable securities were $50.1 billion.

Headcount On a worldwide basis, we employed 53,891 full-time employees (38,739 in Google and 9,982 in Motorola Mobile and 5,170 in Motorola Home) as of March 31, 2013, compared to 53,861 full-time employees as of December 31, 2012. U

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