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 California.[31]
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.[32] They called this new technology PageRank, where a website's relevance was determined by the number of pages, and the importance of those pages, that linked back to the original site.[33][34]
A small search engine called "RankDex" from IDD Information Services designed by Robin Li was, since 1996, already exploring a similar strategy for site-scoring and page ranking.[35] The technology in RankDex would be patented[36] and used later when Li founded Baidu in China.[37][38]
Page and Brin originally nicknamed their new search engine "BackRub", because the system checked backlinks to estimate the importance of a site.[39][40][41]
Eventually, they changed the name to Google, originating from a misspelling of the word "googol",[42][43] the number one followed by one hundred zeros, which was picked to signify that the search engine wants to provide large quantities of information for people.[44] Originally, Google ran under the Stanford University website, with the domain google.stanford.edu.[45]
The domain name for Google was registered on September 15, 1997,[46] and the company was incorporated on September 4, 1998. It was based in a friend's (Susan Wojcicki[31]) garage in Menlo Park, California. Craig Silverstein, a fellow PhD student at Stanford, was hired as the first employee.[31][47][48]
In May 2011, unique visitors of Google surpassed 1 billion mark for the first time, an 8.4 percent increase from a year ago with 931 million unique visitors.[49]
Financing and initial public offering
The first iteration of Google production servers was built with inexpensive hardware[50]
The first funding for Google was an August 1998 contribution of US$100,000 from Andy Bechtolsheim, co-founder of Sun Microsystems, given before Google was even incorporated.[51] Early in 1999, while still graduate students, Brin and Page decided that the search engine they had developed was taking up too much of their time from academic pursuits. They went to Excite CEO George Bell and offered to sell it to him for $1 million. He rejected the offer, and later criticized Vinod Khosla, one of Excite's venture capitalists, after he had negotiated Brin and Page down to $750,000. On June 7, 1999, a $25 million round of funding was announced,[52] with major investors including the venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.[51]
Google's initial public offering (IPO) took place five years later on August 19, 2004. The company offered 19,605,052 shares at a price of $85 per share.[53][54] Shares were sold in a unique online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal.[55][56] The sale of $1.67 billion gave Google a market capitalization of more than $23 billion.[57] 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.[58]
Some people speculated that Google's IPO would inevitably lead to changes in company culture. Reasons ranged from shareholder pressure for employee benefit reductions to the fact that many company executives would become instant paper millionaires.[59] As a reply to this concern, co-founders Sergey Brin and Larry Page promised in a report to potential investors that the IPO would not change the company's culture.[60] In 2005, however, articles in The New York Times and other sources began suggesting that Google had lost its anti-corporate, no evil philosophy.[61][62][63] In an effort to maintain the company's unique culture, Google designated a Chief Culture Officer, who also serves as the Director of Human Resources. The purpose of the Chief Culture Officer is to develop and maintain the culture and work on ways to keep true to the core values that the company was founded on: a flat organization with a collaborative environment.[64] Google has also faced allegations of sexism and ageism from former employees.[65][66]
The stock's performance after the IPO went well, with shares hitting $700 for the first time on October 31, 2007,[67] primarily because of strong sales and earnings in the online advertising market.[68] The surge in stock price was fueled mainly by individual investors, as opposed to large institutional investors and mutual funds.[68] The company is now listed on the NASDAQ stock exchange under the ticker symbol GOOG and under the Frankfurt Stock Exchange under the ticker symbol GGQ1.
Mark Zuckerberg wrote Facemash, the predecessor to Facebook, on October 28, 2003, while attending Harvard as a sophomore. According to The Harvard Crimson, the site was comparable to Hot or Not, and "used photos compiled from the online facebooks of nine houses, placing two next to each other at a time and asking users to choose the 'hotter' person"
To accomplish this, Zuckerberg hacked into the protected areas of Harvard's computer network and copied the houses' private dormitory ID images. Harvard at that time did not have a student "facebook" (a directory with photos and basic information). Facemash attracted 450 visitors and 22,000 photo-views in its first four hours online.[15][17]
The site was quickly forwarded to several campus group list-servers, but was shut down a few days later by the Harvard administration. Zuckerberg was charged by the administration with breach of security, violating copyrights, and violating individual privacy, and faced expulsion. Ultimately, however, the charges were dropped.[18] Zuckerberg expanded on this initial project that semester by creating a social study tool ahead of an art history final, by uploading 500 Augustan images to a website, with one image per page along with a comment section.[17] He opened the site up to his classmates, and people started sharing their notes.
The following semester, Zuckerberg began writing code for a new website in January 2004. He was inspired, he said, by an editorial in The Harvard Crimson about the Facemash incident.[19] On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com.[20]
Six days after the site launched, three Harvard seniors, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra, accused Zuckerberg of intentionally misleading them into believing he would help them build a social network called HarvardConnection.com, while he was instead using their ideas to build a competing product.[21] The three complained to the Harvard Crimson, and the newspaper began an investigation. The three later filed a lawsuit against Zuckerberg, subsequently settling.[22]
Membership was initially restricted to students of Harvard College, and within the first month, more than half the undergraduate population at Harvard was registered on the service.[23] Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes soon joined Zuckerberg to help promote the website. In March 2004, Facebook expanded to Stanford, Columbia, and Yale.[24] It soon opened to the other Ivy League schools, Boston University, New York University, MIT, and gradually most universities in Canada and the United States.[25][26]
Facebook incorporated in the summer of 2004, and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company's president.[27] In June 2004, Facebook moved its base of operations to Palo Alto, California.[24] It received its first investment later that month from PayPal co-founder Peter Thiel.[28] The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.[29]
Total active users[N 1]Date Users
(in millions) Days later Monthly growth[N 2]
August 26, 2008 100[30] 1,665 178.38%
April 8, 2009 200[31] 225 13.33%
September 15, 2009 300[32] 160 9.38%
February 5, 2010 400[33] 143 6.99%
July 21, 2010 500[34] 166 4.52%
January 5, 2011 600[35][N 3] 168 3.57%
July 6, 2011 750[36] 182 2.54%
Facebook launched a high-school version in September 2005, which Zuckerberg called the next logical step.[37] At that time, high-school networks required an invitation to join.[38] Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft.[39] Facebook was then opened on September 26, 2006, to everyone of age 13 and older with a valid email address.[40][41]
Paul Allen and Bill Gates, childhood friends with a passion in computer programming, were seeking to make a successful business utilizing their shared skills. The January 1975 issue of Popular Electronics featured Micro Instrumentation and Telemetry Systems's (MITS) Altair 8800 microcomputer. Allen noticed that they could program a BASIC interpreter for the device; after a call from Gates claiming to have a working interpreter, MITS requested a demonstration. Since they didn't actually have one, Allen worked on a simulator for the Altair while Gates developed the interpreter. Although they developed the interpreter on a simulator and not the actual device, the interpreter worked flawlessly when they demonstrated the interpreter to MITS in Albuquerque, New Mexico in March 1975; MITS agreed to distribute it, marketing it as Altair BASIC.[4] They officially established Microsoft on April 4, 1975, with Gates as the CEO.[5] Allen came up with the original name of "Micro-Soft," as recounted in a 1995 Fortune magazine article. In August 1977 the company formed an agreement with ASCII Magazine in Japan, resulting in its first international office, "ASCII Microsoft".[6] The company moved to a new home in Bellevue, Washington in January 1979.[5]
Microsoft entered the OS business in 1980 with its own version of Unix, called Xenix.[7] However, it was DOS (Disk Operating System) that solidified the company's dominance. After negotiations with Digital Research failed, IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS, which was set to be used in the upcoming IBM Personal Computer (IBM PC).[8] For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products, branding it as MS-DOS, which IBM rebranded to PC-DOS. Following the release of the IBM PC in August 1981, Microsoft retained ownership of MS-DOS. Since IBM copyrighted the IBM PC BIOS, other companies had to reverse engineer it in order for non-IBM hardware to run as IBM PC compatibles, but no such restriction applied to the operating systems. Due to various factors, such as MS-DOS's available software selection[citation needed], Microsoft eventually became the leading PC OS vendor.[3][9] The company expanded into new markets with the release of the Microsoft Mouse in 1983, as well as a publishing division named Microsoft Press.[10] Paul Allen resigned from Microsoft in February after developing Hodgkin's disease.[11
Yahoo! grew rapidly throughout the 1990s. Like many search engines and web directories, Yahoo! diversified into a Web portal. It also made many high-profile acquisitions. Its stock price skyrocketed during the dot-com bubble, Yahoo! stocks closing at an all-time high of $118.75 a share on 3 January 2000. However, after the dot-com bubble burst, it settled at a post-bubble low of $4.05 on 26 September 2001.
In 2000, Yahoo! began using Google for search results. Over the next four years, it developed its own search technologies, which it began using in 2004. Yahoo! also revamped its mail service to compete with Google's Gmail in 2007. The company struggled through 2008, with several large layoffs.
In February 2008, Microsoft Corporation made an unsolicited bid to acquire Yahoo! for USD $44.6 billion. Yahoo! subsequently formally rejected the bid, claiming that it "substantially undervalues" Yahoo! and was not in the interest of its shareholders. Three years later, Yahoo! had a stock market capitalization of USD $22.24 billion.[12] Carol Bartz replaced cofounder Jerry Yang in January 2009.[13]