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Highlights

$8.44 billion in the 4th quarter of 2010

Revenues – Google reported revenues of $8.44 billion in the fourth quarter of 2010, representing a 26% increase over fourth quarter 2009 revenues of $6.67 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC. Google Sites Revenues - Google-owned sites generated revenues of $5.67 billion, or 67% of total revenues, in the fourth quarter of 2010. This represents a 28% increase over fourth1/4 2009 revenues of $4.42 billion. Google Network Revenues - Google’s partner sites generated revenues, through AdSense programs, of $2.50 billion, or 30% of total revenues, in the fourth quarter of 2010. This represents a 22% increase from fourth quarter 2009 network revenues of $2.04 billion. International Revenues - Revenues from outside of the United States totaled $4.38 billion, representing 52% of total revenues in the fourth quarter of 2010, compared to 52% in the third quarter of 2010 and 53% in the fourth quarter of 2009. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2010 through the fourth quarter of 2010, our revenues in the fourth quarter of 2010 would have been $201 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2009 through the fourth quarter of 2010, our revenues in the fourth quarter of 2010 would have been $132 million higher.


Android OS Timeline Android - 2005 Android 1.5 Cupcake - April 2009 Android 1.6 Donut - September 2009 Android 2.0 Eclair - October 2009 Android 2.2 Froyo - May 2010 Android 2.3 Gingerbread - August 2011 Android 3.0 Honeycomb - November 2011 Android 4.0 Ice Cream Sandwhich January 2011 Android 5.0 Jellybean - 2012


I would like to thank you for being a shareholder of Google! There are lots of things instore for the future!

This year was a big year for Android; it has been nationally ranked as the #1 mobile operating system in 2011!

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Today, the vast majority of the world’s population has access to mobile phones

Founder’s Letter My father did not have the freedom to pursue the career of his choice in the Soviet Union. Nevertheless, he produced copious research on dynamical systems, a branch of mathematics, in his spare time When I was four years old, there was an international conference on the subject in Warsaw- a rare event in any scientific field behind the Iron Curtain. Even though he was not not officially allowed to attend it was challenging to get permission to travel, my father was able to make the trip with the help of supporters in Poland. What he learned there went well beyond mathematics, and dramatically changed the course of our lives. Contrary to what my father had been taught, the mathematicians from the other side of the Iron Curtain were not monsters. They were fellow scientists who shared the same passions. The key differences were that they were free: free to pursue the career of their choice, free to voice their opinions, free to travel and above all they were free freom fear of their own government. That small but powerful piece of information drove my family to flee the Soviet Union two years later and start a new life in the United States of America. Today the vast majority of the world’s population has access to mobile phones, and over two billion people are connected to the Internet. As a result, the trickle of information that made its way into closed societies such as the USSR when I was a child has now become a torrent—and millions of people living under totalitarian regimes are able to glimpse freedom every day of their lives, albeit virtually.

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While the trends in technology and communication that made this all possible have been clear for decades, I believe we have now reached an important inflection point. As I write this letter, a wave of change is passing through the Middle East and North Africa. I cannot predict what countries it will touch,

We founded Google to help connect people to the information they need

or what the state of the world will be by the time you read this in two months. But I can be certain of one thing: access to information will play a key role. Acess to Information We founded Google to help connect people to the information they need— and we have been obsessively focused on that goal ever since. Today, hundreds of milions of people rely on Google to search through many petabytes of the world’s knowedge. We do it across nations, languages and cultures, for information that’s both online and offline, on PCs and tablets, phones and televisions, with text and image and video and sound... whatever it takes. Over the past year, the whole web experience has become richer, thanks to faster processors and improved software in both client computers and data centers. For example, Google Instant (launched late last year) starts searching with every keystroke, thereby saving users time on every search. To date, Google Instant has now saved our users over 100 billion keystrokes and counting. Going forward, this is just the tip of the iceberg in terms of the kind of interactivity one should expect to see in search. Because we serve users in nearly every country and 146 languages, the best available information is not always in a language that they understand. To that end, our translation systems have been very important ever since we introduced them I’ve years ago. Google Translate now works in 58 languages including Hindi, Persian and Swahili, and can offer translations between 3,306 language pairs. It’s still far from perfect, but we’ve come a long, long way, thanks to improved algorithms and scaled computing power. For geographic information, we literally cover the globe with imagery from satellites, airplanes, and cars, and we’ve made street maps available of nearly 100 countries. Some of the best information in the world across many cultures was not born on the web, but resides in the world’s books. This is why we launched our books project in 2004 and we’ve now scanned (and enable searchers to discover) more than 15 million books, which we estimate to be more than 10 percent of all the books published since Gutenberg—and we’re still going strong. These books span hundreds

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of languages and over three million are already available online as Google eBooks. In the past year, we expanded our scanning reports to encompass other kinds of physical content, such as Yad Vashem’s Holocaust archives, Nelson Mandela’s personal documents, and minutely-detailed scans of some of the world’s greatest paintings as part of the Art Project. A Video is Worth a Million Words There is rarely a more compelling way to capture and convey something than by video, and thanks to advances in processors, networks and storage, video is quickly becoming as ubiquitous as text. YouTube, which is only six years old, now serves over two billion videos per day from a selection of over 500 million. While it may have been known for its “lolcats” videos several years ago, YouTube is now used for citizen engagement (such as interviews with President Obama), documenting human rights violations (such as in Tunisia, Egypt, and Libya), full-length movies, education, and much more. Although it seemed a dream a decade ago, today YouTube enables viewers to watch what they want, when they want, on the device of their choosing, and to post their own videos for the world to see. The ability to easily publish video has leveled the playing held between the select few and the rest of the world in terms of being able to communicate using this powerful medium.

Nearly 10% of YouTube playbacks now happen on mobile phones


Clever, strategic, wise…… it’s hard to think of anyone on the planet who could have done a better job than Eric has, and we would both like to thank him from the bottom of our hearts. The good news is that as Larry takes over as Chief Executive (again!), Eric is still very much involved as Executive Chairman, and all three of us are just as excited about the next 10 years as we were about the last decade.

Power in Every Pocket

Nearly 10 percent of YouTube playbacks now happen on mobile phones, which is remarkable given the technical hurdles that needed to be overcome in order to stream video to small, low-power wireless devices. Increasingly, technology is moving to the world’s five-billion- plus mobile phones, thereby democratizing information well beyond the PC. The more sophisticated functionality is typically available on the fast-growing smartphone segment, which shipped over 300 million devices last year alone. Android, our own mobile operating system for smartphones, first shipped only two years ago, and now it’s the most used in the world with over 300,000 devices activated daily. New Internet-connected screens, such as tablets and televisions, also provide an ever-growing base to deploy these The Internet, mobile phones, and other technologies. technologies are having profound And new mobile applications are springing up everywhere. Just a few years ago effects on the spread of information mapping and navigation were the domain of specialized devices. Today, more and the lives of people worldwide. It’s than 150 million people use Google Maps every month on their mobile phones, a virtuous circle, with the information and nearly 10 million now use Google Latitude to connect with their friends and revolution directly accelerating the families on maps. pace of technical development as Moreover, via mobile phones, what were once considered the far- flung corners inventors and entrepreneurs benefit of artifcial intelligence research have now reached the mainstream. For example, from the increased demand for new Google Goggles utilizes leading edge machine vision to identify and learn more products, the opening of new markets about objects and places by sight. Our Voice Actions feature enables millions of and dramatic gains in productivity. As people to use state of the art speech recognition to more easily interact with their a result, new technologies that emerge phones to dictate emails or searches. With Google Translate on mobile phones, from research labs fall into the hands people can now—literally—speak in one language and have it repeated in another. of users within a few years; new online offerings reach tens of millions of What’s Next? people in months; and startups spring Larry and I have always shared a profound belief in the potential for technology to up overnight. make the world a better place. It’s why we’ve been prepared, from the get-go, to place big bets on new technologies—with the full knowledge that not all of these will always pay off. In the last year we have seen Google Wave fail, but our browser Chrome has succeeded beyond what we thought was possible.As always, we learn as much

Decades ago, my father had to make a journey to Poland for the information that would shape my family’s life. Today, billions of people can make that journey online every day—and from our failures as our successes, and are constantly reminded that execution the world will never look the same. and delivery matter as much as great ideas. For the last decade, Eric has done In the coming years, technology will an unbelievable job as CEO steering Google through rapid growth, while also evolve even more rapidly, and what is still science fiction today will have managing two willful founders. worldwide impact almost overnight.

Sergey Brin Co-Founder

Larry Page Co-Founder/Chief Executive Officer

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TheFuture of Android

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03 Annual Report

By the end of 2012, nearly half of all spartphones purchased worldwide will run on some version of the Android OS

A NEW and IMPROVED version of our popular Android Operating System has been in the works. We are proud to present Android Jellybean to our family!

We are really excited to show off Android 5.0. We predict an increase in production and sales for 2013.

It’s Simple, Beautiful, and Useful: were key concepts when creating Android Jellybean (5.0)

These innovations are launching android into the future; alongside with all other technologies and mobile devices and even appliances!

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Today, the vast majority of the world’s population has access to mobile phones

Introducing:

*Android 5.0

*AndroidJellybean

Android 5.0 (Jellybean) is the latest version of the Android platform for phones, tablets, and more. It builds on the things people love most about Android — easy multitasking, rich notifications, customizable home screens, resizable widgets, and deep interactivity — and adds powerful new ways of communicating and sharing.

Refined, evolved UI Focused on bringing the power of Android to the surface, Android 4.0 makes common actions more visible and lets you navigate with simple, intuitive gestures. Refined animations and feedback throughout the system make interactions engaging and interesting. An entirely new typeface optimized for high-resolution screens improves readability and brings a polished, modern feel to the user interface. Virtual buttons in the System Bar let you navigate instantly to Back, Home, and Recent Apps. The System Bar and virtual buttons are present across all apps, but can be dimmed by applications for full-screen viewing. You can access each application’s contextual options in the Action Bar, displayed at the top (and sometimes also at the bottom) of the screen. Multitasking is a key strength of Android and it’s made even easier and more visual on Android 5.0. The Recent Apps button lets you jump instantly from one task to another using the list in the System Bar. The list pops up to show thumbnail images of apps used recently — tapping a thumbnail switches to the app. For incoming calls, you can respond instantly by text.

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Control over network data Mobile devices can make extensive use of network data for streaming content, synchronizing data, downloading apps, and more. To meet the needs of you with tiered or metered data plans, Android 5.0 adds new controls for managing network data usage. In the Settings app, colorful charts show the total data usage on each network type (mobile or Wi-Fi), as well as amount of data used by each running application. Based on your data plan, you can optionally set warning levels or hard limits on data usage or disable mobile data altogether. You can also manage the background data used by individual applications as needed.

SIMPLE,BEAUTIFUL,USEFUL Designed for accessibility A variety of new features greatly enhance the accessibility of Android 5.0 for blind or visually impaired users. Most important is a new explore-by-touch mode that lets you navigate without having to see the screen. Touching the screen once triggers audible feedback that identifies the UI component below; a second touch in the same component activates it with a full touch event. The new mode is especially important to support users on new devices that use virtual buttons in the System Bar, rather than dedicated hardware buttons or trackballs. Also, standard apps are updated to offer an improved accessibility experience. The Browser supports a script-based screen reader for reading favorite web content and navigating sites. For improved readability, you can also increase the default font size used across the system. The accessibility experience begins at first setup — a simple touch gesture during setup (clockwise square from upper left) activates all accessibility features and loads a setup tutorial. Once accessibility features are active, everything visible on the screen can be spoken aloud by the standard screen reader.

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Communication and sharing Throughout the system, your social groups, profiles, and contacts are linked together and integrated for easy accessibility. At the center is a new People app that offers richer profile information, including a large profile picture, phone numbers, addresses and accounts, status updates, events, and a new button for connecting on integrated social networks.

“ I want an operating system where I control the data; not the other way around”

Your contact information is stored in a new “Me” profile, allowing easier sharing with apps and people. All of your integrated contacts are displayed in an easy to manage list, including controls over which contacts are shown from any integrated account or social network. Wherever you navigate across the system, tapping a profile photo displays Quick Contacts, with large profile pictures, shortcuts to phone numbers, text messaging, and more. Unified calendar, visual voicemail To help organize appointments and events, an updated Calendar app brings together personal, work, school, and social agendas. With user permission, other applications can contribute events to the calendar and manage reminders, for an integrated view across multiple calendar providers. The app is redesigned to let you manage events more easily. Calendars are color-coded and you can swipe left or right to change dates and pinch to zoom in or out agendas. In the phone app, a new visual voicemail features integrates incoming messages, voice transcriptions, and audio files from one or more providers. Third-party applications can integrate with the Phone app to add your own voice messages, transcriptions, and more to the visual voicemail inbox.

Becka from P.A.

Powerful web browsing The Android Browser offers an experience that’s as rich and convenient as a desktop browser. It lets you instantly sync and manage Google Chrome bookmarks from all of your accounts, jump to your favorite content faster, and even save it for reading later in case there’s no network available. To get the most out of web content, you can now request full desktop versions of web sites, rather than their mobile versions. You can set your preference for web sites separately for each browser tab. For longer content, you can save a copy for offline reading. To find and open saved pages, you can browse a visual list that’s included with browser bookmarks and history. For better readability and accessibility, you can increase the browser’s zoom levels and override the system default text sizes. Across all types of content, the Android Browser offers dramatically improved page rendering performance through updated versions of the WebKit core and the V8 Crankshaft compilation engine for JavaScript. In benchmarks run on a Nexus S device, the Android 4.0 browser showed an improvement of nearly 220% over the Android 2.3 browser in the V8 Benchmark Suite and more than 35% in the SunSpider 9.1 JavaScript Benchmark. When run on a Galaxy Nexus device, the Android 4.0 browser showed improvement of nearly 550% in the V8 benchmark and nearly 70% in the SunSpider benchmark.

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Board of Directors

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04 Annual Report

Meet: Google Board of Directors

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Patrick Pichette

Nikesh Arora

Senior Vice President and Chief Financial Officer

Senior Vice President & Chief Business Officer

Eric E. Schmidt

David C. Drummond

Executive Chairman

Senior Vice President, Corporate Development and Chief Legal Officer

*Larry Page - CEO Sergey Brin - Co-founder


Index NoteAboutForward-LookingStatements...........................................................................................................................................1 PART I Item 1. Item1A. Item 1B. Item 2. Item 3. PART II Item 5. Item 6. Item 7. Item7A. Item 8. Item 9. Item9A. Item9B. PART III Item 10. Item 11. Item 12. Item 13. Item 14. PART IV Item15. Business.................................................................................................................................................................................................3 RiskFactors............................................................................................................................................................................................9 UnresolvedStaffComments................................................................................................................................................................20 Properties..............................................................................................................................................................................................20 LegalProceedings..................................................................................................................................................................................20 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities .................21 SelectedFinancialData.........................................................................................................................................................................24 Management’s Discussion andAnalysis of Financial Condition and Results of Operations........................................................25 QuantitativeandQualitativeDisclosuresAboutMarketRisk...............................................................................................................44 FinancialStatementsandSupplementaryData...................................................................................................................................46 Changes in and Disagreements WithAccountants onAccounting and Financial Disclosure.....................................................81 ControlsandProcedures.......................................................................................................................................................................81 OtherInformation................................................................................................................................................................................81 Directors,ExecutiveOfficersandCorporateGovernance...................................................................................................................82 ExecutiveCompensation.....................................................................................................................................................................82 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters................................ 82 CertainRelationshipsandRelatedTransactions,andDirectorIndependence.............................................................................82 PrincipalAccountingFeesandServices.................................................................................................................................................82 Exhibits,FinancialStatementSchedules.............................................................................................................................................83

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Financial Information

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05 Annual Report

The Real Dessert Facts & Figures

Q4 Financial Summary Google reported revenues of $8.44 billion for the quarter ended December 31, 2010, an increase of 26% compared to the fourth quarter of 2009. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the fourth quarter of 2010, TAC totaled $2.07 billion, or 25% of advertising revenues. Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAPmeasures in the accompanying financial tables GAAP operating income in the fourth quarter of 2010 was $2.98 billion, or 35% of revenues. This compares to GAAP operating income of $2.48 billion, or 37% of revenues, in the fourth quarter of 2009. Non-GAAP operating income in the fourth quarter of 2010 was $3.38 billion, or 40% of revenues. This compares to non-GAAP operating income of $2.76 billion, or 41% of revenues, in the fourth quarter of 2009. GAAP net income in the fourth quarter of 2010 was $2.54 billion, compared to $1.97 billion in the fourth quarter of 2009. Non-GAAP net income in the fourth quarter of 2010 was $2.85 billion, compared to $2.19 billion in the fourth quarter of 2009. GAAP EPS in the fourth quarter of 2010 was $7.81 on 326 million diluted shares outstanding, compared to $6.13 in the fourth quarter of 2009 on 322 million diluted shares outstanding. Non-GAAP EPS in the fourth quarter of 2010 was $8.75, compared to $6.79 in the fourth quarter of 2009. Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the fourth quarter of 2010, the charge related to SBC was $396 million, compared to $276 million in the fourth quarter of 2009. The tax benefit related to SBC was $89 million in the fourth quarter of 2010 and $62 million in the fourth quarter of 2009.


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