The Football Association Premier League Limited et al v. Youtube, Inc. et al

Filing 166

DECLARATION of Elizabeth Anne Figueira in supoport of Class Plaintiffs' Statement of Uncontroverted Material Facts in support of Their Motion For Partial Summary Judgment in Support re: 158 MOTION for Partial Summary Judgment dismissing with prejudice Defendants' First Defense asserted in Defendants' Answer to the Second Amended Class Action Complaint... Document filed by The Music Force LLC, Cal IV Entertainment, LLC, Cherry Lane Music Publishing Company, Inc., The Football Association Premier League Limited, Robert Tur, National Music Publishers' Association, The Rodgers & Hammerstein Organization, Edward B. Marks Music Company, Freddy Bienstock Music Company, Alley Music Corporation, X-Ray Dog Music, Inc., Federation Francaise De Tennis, The Scottish Premier League Limited, The Music Force Media Group LLC, Sin-Drome Records, Ltd., Murbo Music Publishing, Inc., Bourne Co.. (Attachments: # 1 Exhibit Exhibit 1, # 2 Exhibit Exhibit 2, # 3 Exhibit Exhibit, # 4 Exhibit Exhibit 4, # 5 Exhibit Exhibit 5, # 6 Exhibit Exhibit 6, # 7 Exhibit Exhibit 7, # 8 Exhibit Exhibit 8, # 9 Exhibit Exhibit 9, # 10 Exhibit Exhibit 10, # 11 Exhibit Exhibit 11, # 12 Exhibit Exhibit 12, # 13 Exhibit Exhibit 13, # 14 Exhibit Exhibit 14, # 15 Exhibit Exhibit 15, # 16 Exhibit Exhibit 16, # 17 Exhibit Exhibit 17, # 18 Exhibit Exhibit 18, # 19 Exhibit Exhibit 19, # 20 Exhibit Exhibit 20, # 21 Exhibit Exhibit 21, # 22 Exhibit Exhibit 22, # 23 Exhibit Exhibit 23, # 24 Exhibit Exhibit 24, # 25 Exhibit Exhibit 25, # 26 Exhibit Exhibit 26, # 27 Exhibit Exhibit 27, # 28 Exhibit Exhibit 28, # 29 Exhibit Exhibit 29, # 30 Exhibit Exhibit 30, # 31 Exhibit Exhibit 31, # 32 Exhibit Exhibit 32, # 33 Exhibit Exhibit 33, # 34 Exhibit Exhibit 34, # 35 Exhibit Exhibit 35, # 36 Exhibit Exhibit 36, # 37 Exhibit Exhibit 37, # 38 Exhibit Exhibit 38, # 39 Exhibit Exhibit 39, # 40 Exhibit Exhibit 40, # 41 Exhibit Exhibit 41, # 42 Exhibit Exhibit 42, # 43 Exhibit Exhibit 43, # 44 Exhibit Exhibit 44, # 45 Exhibit Exhibit 45, # 46 Exhibit Exhibit 46, # 47 Exhibit Exhibit 47, # 48 Exhibit Exhibit 48, # 49 Exhibit Exhibit 49, # 50 Exhibit Exhibit 50, # 51 Exhibit Exhibit 51, # 52 Exhibit Exhibit 52, # 53 Exhibit Exhibit 53, # 54 Exhibit Exhibit 54, # 55 Exhibit Exhibit 55, # 56 Exhibit Exhibit 56, # 57 Exhibit Exhibit 57, # 58 Exhibit Exhibit 58, # 59 Exhibit Exhibit 59, # 60 Exhibit Exhibit 60, # 61 Exhibit Exhibit 61, # 62 Exhibit Exhibit 62, # 63 Exhibit Exhibit 63, # 64 Exhibit Exhibit 64, # 65 Exhibit Exhibit 65, # 66 Exhibit Exhibit 66, # 67 Exhibit Exhibit 67, # 68 Exhibit Exhibit 68, # 69 Exhibit Exhibit 69, # 70 Exhibit Exhibit 70, # 71 Exhibit Exhibit 71, # 72 Exhibit Exhibit 72, # 73 Exhibit Exhibit 73, # 74 Exhibit Exhibit 74, # 75 Exhibit Exhibit 75, # 76 Exhibit Exhibit 76, # 77 Exhibit Exhibit 77, # 78 Exhibit Exhibit 78, # 79 Exhibit Exhibit 79, # 80 Exhibit Exhibit 80, # 81 Exhibit Exhibit 81, # 82 Exhibit Exhibit 82, # 83 Exhibit Exhibit 83, # 84 Exhibit Exhibit 84, # 85 Exhibit Exhibit 85, # 86 Exhibit Exhibit 86, # 87 Exhibit Exhibit 87, # 88 Exhibit Exhibit 88, # 89 Exhibit Exhibit 89, # 90 Exhibit Exhibit 90, # 91 Exhibit Exhibit 91, # 92 Exhibit Exhibit 92, # 93 Exhibit Exhibit 93, # 94 Exhibit Exhibit 94, # 95 Exhibit Exhibit 95, # 96 Exhibit Exhibit 96, # 97 Exhibit Exhibit 97, # 98 Exhibit Exhibit 97 part 2, # 99 Exhibit Exhibit 98, # 100 Exhibit Exhibit 99, # 101 Exhibit Exhibit 100, # 102 Exhibit Exhibit 101, # 103 Exhibit Exhibit 102, # 104 Exhibit Exhibit 103, # 105 Exhibit Exhibit 104, # 106 Exhibit Exhibit 105, # 107 Exhibit Exhibit 106, # 108 Exhibit Exhibit 107, # 109 Exhibit Exhibit 108, # 110 Exhibit Exhibit 109, # 111 Exhibit Exhibit 110, # 112 Exhibit Exhibit 111, # 113 Exhibit Exhibit 112, # 114 Exhibit Exhibit 113, # 115 Exhibit Exhibit 114, # 116 Exhibit Exhibit 115, # 117 Exhibit Exhibit 116, # 118 Exhibit Exhibit 117, # 119 Exhibit Exhibit 118, # 120 Exhibit Exhibit 119, # 121 Exhibit Exhibit 120, # 122 Exhibit Exhibit 121, # 123 Exhibit Exhibit 122, # 124 Exhibit Exhibit 123, # 125 Exhibit Exhibit 124, # 126 Exhibit Exhibit 125, # 127 Exhibit Exhibit 126, # 128 Exhibit Exhibit 127, # 129 Exhibit Exhibit 128, # 130 Exhibit Exhibit 129, # 131 Exhibit Exhibit 130, # 132 Exhibit Exhibit 131, # 133 Exhibit Exhibit 132, # 134 Exhibit Exhibit 133, # 135 Exhibit Exhibit 134, # 136 Exhibit Exhibit 135, # 137 Exhibit Exhibit 136, # 138 Exhibit Exhibit 137, # 139 Exhibit Exhibit 138, # 140 Exhibit Exhibit 139, # 141 Exhibit Exhibit 140, # 142 Exhibit Exhibit 141, # 143 Exhibit Exhibit 142, # 144 Exhibit Exhibit 143, # 145 Exhibit Exhibit 144, # 146 Exhibit Exhibit 145, # 147 Exhibit Exhibit 146, # 148 Exhibit Exhibit 147, # 149 Exhibit Exhibit 148, # 150 Exhibit Exhibit 149, # 151 Exhibit Exhibit 150, # 152 Exhibit Exhibit 151, # 153 Exhibit Exhibit 152, # 154 Exhibit Exhibit 153, # 155 Exhibit Exhibit 154, # 156 Exhibit Exhibit 154 Part 2, # 157 Exhibit Exhibit 154 Part 3, # 158 Exhibit Exhibit 154 Part 4, # 159 Exhibit Exhibit 155, # 160 Exhibit Exhibit156, # 161 Exhibit Exhibit 157, # 162 Exhibit Exhibit 158, # 163 Exhibit Exhibit 159, # 164 Exhibit Exhibit 160, # 165 Exhibit Exhibit 161, # 166 Exhibit Exhibit 162, # 167 Exhibit Exhibit 163, # 168 Exhibit Exhibit 164, # 169 Exhibit Exhibit 165, # 170 Exhibit Exhibit 166, # 171 Exhibit Exhibit 167, # 172 Exhibit Exhibit 168, # 173 Exhibit Exhibit 169, # 174 Exhibit Exhibit 170, # 175 Exhibit Exhibit 171, # 176 Exhibit Exhibit 172, # 177 Exhibit Exhibit 173, # 178 Exhibit Exhibit 174, # 179 Exhibit Exhibit 175, # 180 Exhibit Exhibit 176, # 181 Exhibit Exhibit 177, # 182 Exhibit Exhibit 178, # 183 Exhibit Exhibit 179, # 184 Exhibit Exhibit 180, # 185 Exhibit Exhibit 181, # 186 Exhibit Exhibit 182, # 187 Exhibit Exhibits 183 - 187, # 188 Exhibit Exhibit 188)(Figueira, Elizabeth)

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Earnings

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Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

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TRANSCRIPT LENGTII 11EADLINE
9428

071708a1885195.795

words

Q2

2008

Google

Earnings

Conference

Call

Final

BODY
Corporate
Participants

Krista Bessinger

Google

JR

Eric

Schmidt

Google
Sergey

Chairman
Brin

of the

Board

CEO SVP

George President Global

Reyes

Google

SVP CFO
Jonathan

Hal Varian Google Google

Chief

Economist

Google

Co-Founder Google

Teclmology
Sales Operations

Rosenberg

SVP

Product

Management

Omid

Kordestani

Conference

Call Participants

Imran Khan
Sachs Analyst

uP Morgan
Justin

Analyst
Merrill

Brian

Pitz

Banc

of America Quarles

Securities

Analyst Weisel

James

v1itchell

Goldman

Post

Lynch Ben

Analyst Schachter

Christa

Thomas Mark
Jeffrey

Partners
Citi

Analyst
Jeetil

Doug
Patel

Anmuth Lehman
Deutsche

Brothers Analyst

Analyst

TiES

Analyst Analyst

Mahaney
Lindsay

Analyst

Bank

David

Joseph

Morgan

Stanley

Sanford

Bernstein

Analyst

Presentation

OPERATOR
this

Good
like to

day
turn

and
the

welcome
call

everyone
to

to

the

Google

Inc.

conference

call.

This call
Relations.

is

being

recorded.

At

time

would

over

Ms.

Bessinger

Director

of Investor

Please

go ahead

maam. KRISTA
earnings

conference

BESSENGER We
call.

JR.

GOOGLE
slightly

Good

afternoon

have

different

and welcome everyone With us are Eric lineup today. and President

to

todays

second-quarter Chief Executive

2008
Officer Senior and

Schmidt

George Reyes
Vice Hal then President

Chief

Financial

Officer

Sergey

Brin Founder
Kordestani Hal and

of Teclmology of Global
their

Jonathan Sales and

Rosenberg
Operations
the

of Product

Management Omid
Eric

Senior Vice Sergey
will

President

Varian our Chief Economist.
Jonathan Please and

George

provide

us with

thoughts

on

quarter

and

Omid
this

will

join us for

QA.
cast

note
is

that also

call

is

being

web
site

from with

our Investor
slides that

Relations

web

site

and

our press release remarks.

issued replay

few

minutes
call will

ago
also

posted

on
on

the

web

along

accompany
few
hours.

todays

prepared

of this

be

available

our Investor Safe

Relations

web

site in

Now
looking
in the cost

let

me

quickly

cover

the

Harbor.

Some

of the
in

statements business
the benefits

we make
of our
risks

today

may
traffic

be

considered

forward
costs increase our

including of sales
level

statements
international

regarding

investments statements

our core

seasonality

acquisition

growth

regarding

acquisition

of DoubleClick
that

and

expected
actual date

of capital
to differ

expenditures.

These note

statements
that these

involve

number of

and

uncertainties

could only
as

cause of the
to these

results

materially.

Please undertake

forward-looking
to revise or

statements

reflect the

our opinions
results

of this presentation

and

we

no obligation

publicly release

of any

revision

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0002 forward-looking
quarterly detailed the

statements

in

light for

of new
the quarter that

information ended
affect

or future

events.

Please
as

refer as

to

our

SEC

filings

including
for

our

report

on Form
of the

10-Q
risk

March

1st

2008
Copies

well can be

our earnings obtained from

press release
the

more

description

factors

may

our results.

SEC

or

by

visiting

Investor

Relations

section

of our website.

Also operating based

please

note
are

that

certain

financial

measures

we

use on and have

this

call

such

as

EPS

net income charges
to

operating
relating capital to

margin and
stock-

income

expressed

on
also

non-GAAP
adjusted
free

basis

been

adjusted to

exclude

compensation.

We
we

have

our net cash
flow.

provided

by operating
and

activities to

remove

expenditures found
in

which

refer

to

as

cash

Our

GAAP

results

GAAP

non-GAAP

reconciliation

can

be

our earnings that
its

press release. pleasure
to

With

my

turn

the

call

over

to

Eric.

ERIC SCHMIDT
obviously very and pleased revenue

CHAIRMAN
with

OF THE

BOARD
are

CEO GOOGLE
in

Thank weaker

you very much
quarters in

Krista.

Were
yearly well
cycle. despite

what we believe
is

good

results

one

of the

our normal held up

The

traffic

growth

strong across everybody emphasis such
as

all

regions

and

verticals.

Traffic

and revenue

have

uncertain

economic

conditions

as

knows.

International

of course

big markets

for

Google
and
are

is

once

again

contributing

more than
to

50%

of our revenue

good

growth

in

rapidly growing
in the

Brazil
that

China.

We
is

continue

of course
in

make

critical

and

fundamental
to or

investments
scale

infrastructure

of the
to

things
sure result that

most important
the

and
freshest

particular possible

our search.

We

continue

our index people

we

continue

make
as

our information continuing

and we

are

reducing of the

latency

delay that relevant

experience.
results

So

were

to

deliver

on

our

fundamental

mission

most

and

fastest

web
all

and other kind of information.
normal
testified

In ads signature

in

addition

to

of the

ad

improvements
ago

that

we
--

see

the to

partnership

with

Yahoo was
--

obviously
it

the

event.

David Drummond
it.

two days and

during

both

the

House
thats

and due

Senate
to the

liked

so

much

wanted
hallmark with

to

read
since

The

Internet

is

dynamic

competitive commercial

environment and
agreement
--

openness
the

that

has been
--

its

inception.

Our nonexclusive
and while

its

very

important
that

by
will

way

nonexclusive

Yahoo

will

maintain

expand

that

competition privacy
will

create

some new

efficiencies

benefit will

consumers
remain
fierce for the

advertisers

and

publishers

protecting

and
fuel

spurring

innovation. thats

Google
for are the

and

Yahoo

competitors.
Internet central

This continuing
for the

competition

help

innovation and of

good

Internet
to

users

good
at

and good
to the

economy.
Internet

Openness
and
--

interoperability to the

competition
free
is

central

our culture
that the

Google
ad
it

vibrancy
its

of the not

central that

growth with

market.

We
the

believe industry

nonexclusive because

deal

--

remember
to

search

deal

was

done
is

Yahoo

win

for

primarily

allows

Yahoo

remain

independent of course

which
is

we

believe

very pro-competitive.

DoubleClick
display
is

the

other big

piece

of news.

Integration

is

now underway
strategy

and going

very
to

smoothly but
advertisers

big
is

opportunity. that

Its

big opportunity very

by

the

way

because

the

of

offering

values

and

publishers Putting

one

we

can

offer

much we

worldwide.

our team

together

of course
to

have

really

now

delivered

on

this

global

organization ad

that tools

everybody
that

here

knows

about

and

its

beghming
Zurich

bear

fruit.

for

example

developed

some great new
lets

were
video see not to

delivered
traffic

last quarter.

created developed

our new another of ones

Insight feature great

on YouTube
feature

which
called

anyone

who

uploads point
is

information.
the

new YouTube
all

My
but to say
it

here

is

highlight

hundreds

and

hundreds

that

happen

the

time every

quarter

really

global

company.
So

we now
just

have

more than

30

products

that to

support

more than
in their

30

languages language

up from
and

five

products

and

30

languages
Just

year ago.
in

So people
hopefully

want
short

use Google

own

we

are

delivering

on

that.

to

finish his

up
20

my

comments
in to financial

we

are

very very happy
and

to

have

Patrick
telco

Pichette industry.

on Ive

board

as

our
to

new

CFO

with

of experience years going

operations

management
at the

in the

talked

him hes coming up to speed. Hes Were very very excited about that. And
George
person

be

tremendous

contributor

Google

level

for

many

years to come.

want
stayed

to

make

sure

that

we thank
and

once year help

again
after
all

on board
is to try to

even

more than

he

George Reyes announced his

my
intent

friend to

and

colleague This shows

for

more than
the

20 years of
to

retire.

you

kind

that

he

help Google

of us meet our objective.

Hes made

tremendous

contribution

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0003

Google
with

which

weve

highlighted

before.

We

are

going

to

miss him and

were

very

much

looking

forward

to

working

Patrick.

In our order today
Ill

were

going and
so the

to

have

George
have

who

Ive just

highlighted

so

can Larry

boast
is

about

him some
Hal
is

more
is

but

make

him too embarrassed
there

then

well

him followed
about and

by Hal

Varian.

out this week. so forth. Hal
for

our chief

economist and
person do
to talk to

have

been
does

many
auction

questions
really

Yahoo/Google what does
the

economics global

and

the

perfect

about take

how
it

work

environment

mean

Google.

George

you want

away SVP CFO GOOGLE We
Google.com
performed extent monetization. continued focus

GEORGE REYES
Q2
of 2007
to to

had another

strong

quarter with

gross revenue

increasing

39%

over

$5.4

billion.

growth and
sequential
seasonality.

lesser

driven by strong well up 42% year over year to $3.5 billion AdSense revenue grew 22% over Q2 of 2007 but was down slightly

traffic

on

basis

reflecting

on delivering

high-quality traffic

to

our advertisers

and

typical

Q2

Now
properties

lets as

take

look
as

at

aggregate

paid clicks.
sites.

Aggregate Aggregate
reflecting

paid clicks paid clicks continued

include

clicks

related

to

ads served over

on Google
of 2007
to

well

ads served

on our partner
basis

grew
focus

approximately

19%

Q2

and

were down
and

slightly typical

on

sequential
seasonality.

again

on delivering

high-quality traffic

our

advertisers

Q2

Now
The

Ill

discuss
solid

our international revenues

performance. million

International

revenue year

accounted but

for

52%

of revenue

or

$2.8

billion.

UK

was

with

of $774 impact. and
parts

up 29%
growth

year over
in

down 4%

sequentially driven by

reflecting

typical

Q2

seasonality
in

and

negligible

FX

Revenue

EMEA

was

strong

primarily

strong Spain and Italy

performance fueled

Benelux
strong

Ireland

of Western automotive with

continental

Europe

including goods.

Germany France
Asia and Latin being

by

relatively to

performance

in as

and

consumer packaged
Argentina Australia

America
notably strong
in

continued Q2.

show

impressive

growth

well

Japan

Brazil

and China

Now
from
traffic to

turning
in

to

expenses

traffic

acquisition

costs

were $1.5

billion related

or to

28.4% of

total

advertising

revenue
others

down
direct

29.2%

Q1.

AdSense
totaled

TAC
$154

was $1.3

billion

while

TAC
going

distribution

partners

and network

who

our websites

million in the pressure include on $9

quarter. rates

As we grow our AdSense
forward.

partner

and

embark

on new

initiatives

we may
costs

see

additional

TAC

Other

of revenue
largest

which

million in stock-based
the to increase anticipate totaled in

compensation
costs that related to

increased our data of sales

$49 million over
including going

Q1

to

$674

million.

The

driver

of the

increase was

centers could

depreciation forward. Other

equipment than
cost

and

operations.

We
related

continue

other costs
billion

increase

of revenue Expenses

operating
to

expenses

$1.64

including $1

approximately

$264 $810

million in

stock-based

compensation. end of the

payroll and

facilities

increased

million over 448

Q1

to

million.

At
roughly

the

quarter

we had
follow
to invest

full-time hires

employee

base
in

of 19604.

We

added
followed

net new
sales

employees

in

Q2

with have

half the and

new

non-DoubleClick
to

coming

on board

engineering
in
all

by

and

marketing.
as

We
that

implemented
in the

continue continue

disciplined in

hiring

process both with

areas

of our organization.
internationally. year.

But

weve
also

indicated

past
see

we

will

our core

business coinciding excludes
that

in the the

US

and

Remember

we

usually

an uptick

in starts

over

the

summer
profit

end

of academic

Turning with

to

non-GAAP
operating

operating margins
this

which Note

stock-based

compensation
and due other in
to

increased $58

to

$1.9

non-GAAP

of 34.5%.

interest

income was
as this

Q2 was

million
it

billion in Q2 down $109

million from Q1. lower
yields

To be clear

was not
lower

write-down
cash of-under

now

any

losses.

Instead
first

was primarily
to

due

to

on

our cash
net as

balance
realized result

average
the sale

balances

result

of cash

used
sale

in the

quarter

acquire and an

DoubleClick

lower

gains on

net realized our foreign

gains on the exchange $1.77
to

of our marketable programs.

securities

increase in expenses Finally
million.

of more activity cash flow

hedging
billion

turning
in

to

cash

operating
the

remained

strong

at

with

CapEx

for

the

quarter

of $698 data

As

previous

quarters

majority and

of our CapEx networking

was

related

IT infrastructure expect
to

investments
to

including
significant

center construction investments Free
at in

production
in future

of servers
quarters.

equipment.

We

continue

make

CapEx flow

cash

non-GAAP
year over

measure which
year.

we

define

as

cash

flow

from

operations

less

CapEx

remained

strong

$1.07

billion

up 63%

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0004 In pursue

summary we
long-term
this

believe

our core

business

continues

to

demonstrate

strength

while

we make

key

investments

to

growth

opportunities.

At had
Hal. the

point

want

to

take with

moment
all

to

thank and

Eric
this
is

Larry an

Sergey

and
that

the

rest

of the never

management
forget.

team

for

having
it

privilege

of working

of them

opportunity

Twill

So

let

me

turn

over

to

HAL VARIAN
environment year-on-year generally

CHIEF
that
is

ECONOM
impacting such
as

GOOGLE
When
positive

Eric

asked

me

to

comment
of the even
also
is

on

the

state

of the

economic
see that

and how
basis
the

Google.

we
in real

look every
estate

across
sector

sectors

United

States

we

on
are

query

growth has been

we
travel.

track

including
see that

those

sectors

that

economically
positive in

sensitive

automotive except

and and

We
one

year-on-year small

revenue amount.

growth

is

every

major

sector

for real

estate

even

that

only

down by
are

When
would
These

we

look
to see

at the

subsectors

we

see

some

interesting

patterns.

The weaker home

components
financing and have
to

just

the

ones

you

expect
are as the
all

based

on

the

macroeconomic
expect
are the to

climate
see

--

auto auto

financing
or real

real

estate

agencies. place.

sorts

of queries you would fewer
is

when
in

estate Its

transactions

already taken
that

And

we

know

transactions

taking

place
in

those

sectors.
is

interesting interpret side.

note
as

year-over-year auto
this as

automotive
advertisers

ad spend
are
is

up
to

even

though

growth

auto

financing
is

down.

this

saying that should

willing

spend

on clicks seems

but the
to

weakness
holding

on

the

consumer
in

However

emphasize
such

behavior

not universal. and

Spending
furnishing.

be

up

pretty

well

other

consumer durable categories

home

appliances

home

When
revenue every

we

turn

to

Europe
the

we
sole

see

similar

pattern. real

In the
estate.

UK

we had

across-the-board Europe

year-to-year both
queries

growth
and

in

both
in

and

queries with
vertical.

exception

being

Continental

grew

in

revenue

major

To summarize
patterns be
just as

when

we

look

across

verticals

we
think an

see that
the

consumers

are

being

cautious

in

their

online

spending

they are

in their

off-line in

spending.
sectors.

Despite
this

weakness
the to cut

in the

holding

up remarkably economic
let

well

most
the

illustrates

point
is its

economy advertising that weve made several
spending

revenue
times.

seems
During

to

periods So

of slow with

growth
the

last

thing

advertiser

wants

on search-based
doing
in

advertising.

that

me

pass

mic

to

Sergey

who

is

going

to

talk

about

what weve

been

products.
Its

SERGEY BRIN CO-FOUNDER
exciting just start for

PRESIDENT TECHNOLOGY
past quarter

GOOGLE

Hello everyone. new

really

me

to

update

you. Over

the

weve had

lot

of substantial

improvements

launches.

Let

me

with

search.

Weve
refresh greater

substantially

increased has also

the

size

of our index. tremendously.

And
So

in

particular

actually

the

index

of documents and
faster

that

we
across

every range

few

minutes

grown

now

our users get

much

fresher

results

and

of sources.

Weve
roughly one

just

all

told

to

day.

Md
pages

give you of the
in

sense
highlights

for

this launched
--

over

100

search

quality in

improvements universal

this

quarter

so

some

again

we

have

increased
all

coverage those
for

search
to

which

means

you get your
more.

Web
as

mixed

with

video

and images
and
it

news books
double

things
all

were

able

show

more and
doing

And

that

improves

our search Search.

results

pays

us

dividend

of the

work

weve been

inaudible such

Book

We
put
into

also

just

added

blog results than

at the in

bottom
the

of the

page

in the

past quarter

and

our blending

of

Maps

results

weve

130

more
also

countries

we had

past.

Weve
OneBox know
More
with
in

been

ruiming
the

more OneBoxs.
soccer tournament.
that

For Let

example

those
take

of you
step

in

Europe
from

might
the

have basic

enjoyed
search.

our Euro

2008

June during
and

me

just

away

just

Many

of

you

use iGoogle than themes themes

in fact

we know now
have

because

weve
US.

had

such

tremendous very

growth and
important 68
to

especially

internationally. in particular

60%
this for

of iGoogle
quarter. the

users are

outside seen

of the

We
artist

had some campaign

developments
across
for

You might
and
this

our iGoogle hundreds
to

where

artists

22

countries

created
the

new

products
of

encouraged
their

of thousands
artists

of people

sign up

iGoogle.

Of course

existing

users

many

them changed

themes

these

themes.

have get

personally
feel

set

my

Google page
pretty exciting

now
and

to

go do

rotation

across

the

top theme

so thats

really

fun.

Every

day

new

aesthetically

varied.

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0005
If

you

are that

listening

to

me

right

now
that

you probably

speak

English

pretty

well though
not. Its

of course
to

if

youre reading
able to

transcript

has been

translated in

using Google

Translate

then

you might
if

very important
speaker.

be

have of

access

to

information thats

languages
that

you dont speak
useful
to

especially

youre
in

non-English your native

The amount
is

information

out there

can

be

you thats not necessarily
It

language

huge.

To

this

end

we

have

been

of course and

working

on Google
let

Translate.

now
one

covers of those

over

20

languages.
to

We
other

have

added

10 just

in this

past quarter

alone

now we
to

you
the

translate

from

any and

languages growth
literally

any

of those

languages.
also

We
are able

have

been

able

improve

performance So

have

tremendous
just

in

usage

as

well.

Weve
that

been

working on our cross-language
to that

search. results in

we dont

necessarily

search

in the

language can

you
us to

search.

We
to

produce work. should

translated

other languages

now more

automatically.

And you

expect

continue

expand

In ads

highlight important. support

notable
Its this

development.
to

Our AdSense
advertisers.

network
Just as

now
one

allows

third

parties
is

to

host and

serve

ads and
with

this

has been

important kind

many

example
that

Lenovo

now

advertising about of
are
it

us because

we

can

of third-party

ad

serving. the

We

also

now

advertisers that lets

find

out more
see

where
sites the out.

they should
particular

be advertising audience thats

because
interested
It

weve
in

launched whatever

Google
advertiser

Ad
is

Plaimer.

And

you
do

what kind

the

the

advertising analyses
data.

which and

sites

they visit

what
to try

breakdowns Even
Let
if

of demographics.

lets its

you do very complicated
pretty

statistical

encourage

you

all

youre not an advertiser
just

fun to be

able

to

play with

that

me
and

jump

little

bit

onto

YouTube.
that
it

videos
single

in fact

our data
as

suggests

minute.

So

you can
of course

imagine
to

most of you have had chance to try to watch some YouTube Probably 13 hours of video more and more of you are. We now have uploaded every would take quite videos. It also many life times to watch all YouTube gives
in

you

the

opportunity on

watch

video

very with
film

specific

topics

that

may

be

of interest

to

you.

Weve
successes.

also

YouTube
marked
just

been
the

experimenting opening
that

variety

of advertising

formats
for

and weve and

had
it

some great
over million

Lions

Gate

of the

The Forbidden
that

Kingdom
exciting for

example
for

had

video

views

on YouTube
mention
that its that

from

promotion. has been

So

was very
quite

us and

Lions

Gate.

should partnership

Mobile Search
this

growing

bit

and

of course Japan

you may have
is

heard

about
for

our

weve
because

launched of the mobile

past quarter with because of the

NTT DoCoMo
culture
its just

in Japan. really

very

strong market

Mobile

Search
People

and do

devices
searches.

tremendous
there for

tremendous
Search.

environment.

many
are

many

We

have

robust advertising

market

Mobile Japan

And we
rest

certainly as the

optimistic

that culture

many
catch

of these
up.

advances

which

may

initiate

in

will

carry

over

in the

of the

world

devices

and

want

to

also

mention

that faster

our Mobile
is

Search

experience
lot

which
in that

we

have

now

rolled

out to more countries

and

weve

made One of

substantially

also

causing
to

of growth

segment

us.

the

things

that

Im most

excited with

tell

you about

today

is

our progress with

Apps.

And
There

should
are

mention
than

first

of all that

our enterprise
that are

business

respect to Apps

has been day-to-day

growing very
productivity
in this

rapidly.

now more

0.5

million businesses

using Google

Apps

for

their

and

thats just

tremendous one of the

number.

But

just

to

give

you color of what
suppliers

some of these businesses
has

include

past quarter

\Taleo

worlds

leading
Sites the

automotive so forth.

now

32000

users using D.C.

Google Apps

including

of course Apps.

Gmail

Calendar
has
users.

Docs
adopted

and

The government
of the

of Washington

has 38000

users on and

Google
thats

General on over

Electric

securities

side

Apps

products

which
the
that.

was formerly Media
from an and

Postini

ruiming

300000

And
Apps. So

just
it

to

call

out

few other highlights
very exciting
quarter really for

Telegraph
Starting this to

Group and 500000

Sanmina both
businesses

also

adopted

Google

has been

these

including

some of these

incredibly successful
also

businesses

we

expect

be

important

area for growth and

development.
create

just

want

to

tell

you we dont view Google Apps

what not

--

we dont want

to

closed

environment and

or

walled

garden.

We

really in

want

to

encourage cloud

more and more cloud
solutions. basically

computing
things
that

and

want

to

see more
in this

more companies
to

out there
that
it is

successful
the

deploying engine

One of means
to try

the that to

weve
can
all

launched
easily

past

quarter

help out with and deploy

Google

App

which
rather

developers

write an

application data centers

on our scaled
all

infrastructure

than
for the

having

put together

their

own computers
growing
base.

networking

that

stuff

We

handle

all

that

developers.

And weve had

rapidly

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0006
Just

few
to

fun examples
his

--

we had
the

nine-year-old

boy who contacted

us with he no

bunch
able

of questions
to

and then
because

he

has

been

able

develop

app

on
all

Google

App

engine.

And

he

said

that

has been longer
that

do

it

now

previously Other
after are

he

was

spending

of his

allowance include

on hosting Source
purchased

and

he chat

could

afford

that.

more commercial
it

ventures
it

application network

switched

to

Google

Apps

engine

they launched
into

and

was subsequently
very popular

by
app

the

social
is

As well
and

as

for

those

of you

who

poking on
expect
the

BuddyPoke
Google

open

social

which

miming on orkut

MySpace

has also

been

developed

App
going

engine.

We
Google
simplicity

that

were

to

have

lot

of uptake
that the

of our various cloud
is

developer
really

products
to

and

APIs

including because

the

App
for

engine.

And
users
it

ultimately access

we we

think
the

just

great place them.
Its

deploy

apps
great

of the

end

to

them
and

ease

of updating
it

and

maintaining be

really

environment.
in their

We
day-to

obviously day
lives.

live

with

every

day

believe

really

helps people

more

effective

and

productive

Anyway ERIC
ready

all

told

great quarter

lots

and

lots

of progress.

And

its

been go

pleasure

to

talk

to

you about
questions

it.

SCHM
hear
the

Thank

you very much

Sergey.

Why

dont we

straight

to

everybodys

so

are

we

Lets

first

question.

Questions

and

Answers

OPERATOR IMRAN
year
basis

OPERATOR INSTRUCTIONS
lIP

Imran Khan

iF Morgan.
at that
is

KHAN ANALYST
rate

MORGAN
was
the

know
trying

if

look

UK
it

growth rate
of law

it

seems of large

like

on

year-overare

growth
specific

decelerated thats

10 points. dragging
to the

to

understand

because

numbers

you

seeing

any

weakness
question think from
that

growth down
Search.

there

And

the

second

is

related the

Mobile
will

know
the

Sergey

you talked about
and
as

the
--

Mobile Search what kind
from of impact

opportunity. also do

Do you

mobile

search

expand
that

search also

volume
if

well

as

you expect yet

on

the

revenue

per

queries with

And

you have

seen

any

impact

Apple

iPhone

ERIC SCHMIDT

Jonathan

do

you want

to

go ahead

and

answer

the

UK

question think

JONATHAN
the typical

ROSENBERG
If like travel.

Q2

seasonality.

you look back
think think
the in

SVP PRODUCT at Q1

MANAGEMENT
that of course

GOOGLE
big.

basically

we
in the

are call

just in

seeing

was very
that

think

we

talked

Q1 about UK.

some

of the

verticals

other point

would

be

we

have
at
is

very

very high market
the

share

in the

So
have

as

our market been

share

grows
of the

past quarters

when you

looked seeing

seasonality
just the

gains in market appropriate

share

may

masking
speakers

some

seasonality.

And now what were

typical

Q2

seasonality.

multiple

negligible.

ERIC SCHMIDT

Sergey on Mobile
your
that certainly

SERGEY BRIN Yes
are

expect

to

see

an

uptick

in

Search
to

volume

due

to

Mobile

because

you
the

obviously

not always

at

desktop
will

but you pretty from market
to

much

always

want
it

know
also

something. vary
as

And
develop

with

respect to

revenues

per query programs
in

think
for

vary

market.

think

will

we

more specialized

monetization

mobile

phones.

You know
hand become
both
the

some

respects

you cant

fit

as

much
be

advertising
right

obviously next to that

on
pizza
for

really

small
that

screen. to

On

the

other

queries customer

are

very
or

localized.

You
that.

might

standing theres

place

wants

entice

you

to

something going
to

like

So

think

an

opportunity

much more

fine-grained

targeting.

And

of those

things

are

balance

out.

With
certainly

respect to the
the

iPhone
as

dont have
mentioned
that

data
also

off

the

top of

my head
Japan and
the

with

respect to the

latest

iPhone

3G

launch.

But

iPhone
like the

much

the for

maturity people
to

of the search
just

market these
then

better results

devices
--

devices

with have

great browsers

iPhone

make
other

it

easy

view
of--

the

they definitely

much

higher
that

usage

per device
as

than

kinds

of devices.

And
be

kind

on the user as

rough

order
to

of magnitude conventional
cell

imagine phone.

by 30 times

many

searches

per user might

done

by an iPhone

compared

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0007 So and input think
as

you

see

more iPhones youre going Banc

out there
to see

as

you

see

more

other

phones

that

also

start to

have

capable

browsers

methods

think Brian

tremendous

growth

there.

OPERATOR

Pitz

of America

Securities.

BRIAN PITZ ANALYST BANC OF
coverage. ad
quality. to

AIvIERICA

SECURITIES
on

We

have over

couple
the last

of questions couple

around
to

ad improve

Clearly

you have
give

intentionally

reduced
for

coverage

Google.com

of quarters

Would you
more

us
this

sense
quarter.

how

far see

you

are as

in this

process And
driver

on
of

related

match

advertisers

Do you
great.

this

significant

coverage

note you expanded forward And any going

other comments

on coverage

would

be

Thanks.

ERIC SCHMIDT

Jonathan
Sure. at

JONATHAN
been
focus
if

ROSENBERG
Its pretty

So

basically

coverage
relative to

--

coverage
last

think
quarters.

from Thats

quarter-to-quarter basically

basis

has

going

down.

much
see

an

all-time

low

the

few

our continued

on
just

quality.

dont
one

really the

that

changing
ad.

significantly.

think
that

in the

limit Larry
is

often change

says that much.

wed

be

best off

we

showed

ad

perfect

So

really

dont think

coverage

going

to

The second

question
Just

was
to

BRIAN PITZ JONATHAN
expanded
coverage
efforts to it

pertaining

auto

match

traction

there.

Do you

see

this

potentially

as

driver

of coverage so

ROSENBERG
to slightly
it

Yes
bigger

sure.

We

only just

started this will the

expanding
quarter.

Automatch.

It

was

in

beta

we

only

think

group

of advertisers
that

Certainly

Automatch
going
to

can apply

help increase
the

because
the

helps find

more keywords So overall
impact

query
that

trigger

on. in

But were
terms

same

quality

output
greater.

of Automatch. do think
the

think

net result be
positive.

of total

coverage

would

not be

significantly

on revenue

would

BRIAN PITZ Any
could help with

sense

on what percentage

of advertisers

arent

really

optimizing

their

budgets

that

Automatch

JONATHAN

ROSENBERG
think
bit its

Wow
really

multiple too early

speakers

large

number. should do

ERIC SCHMIDT
you want
to

to

give

you

--

the

answer

is

it

apply to

everybody.

Sergey

add

little

about

coverage wanted
in to talk
little

SERGEY BRIN
probably 50
try
little

Yes.

just

bit

about than

that.

There ought

is

some
have

evidence been.
to

that

think

weve been
this

bit that

more aggressive when

decreasing

coverage
in

we

to

Historically
the

weve had
if

50-

rough
to

notion

we

have

an

improvement
as

advertising the

targeting

we

try

split

benefit
the

you

will.

We

reduce

our coverage because

at the

same time
to

improving
ads.

monetization.

But clearly thats not

ideal

strategy

indefinitely

we
quality

dont want
point source perhaps

end

up with no

In fact
are just

from

of view

we now

find

our ads are

significant

addition

quality-wise

to

our page.
there

They some

very

important
that

of information.

So weve
overly

been

actually
in

re-examining

some of

that

and

was

evidence

internally

we were
Goldman

little

aggressive

decreasing

coverage

in this

past

quarter.

OPERATOR
JAIvIES year
in

James

Mitchell

Sachs.

MITCHELL
major sector

ANALYST GOLDMAN SACHS
but erratic do within subsectors generally case
for advertisers
is

Hal example

think
in

you mentioned
finance
the as

that

queries to are

were up year-onautos. If

every

auto

opposed
that

queries
so

are

down
can

in

particular

subsector

respond budgets

by bidding
go

up

keywords

available

they

fully

spend

their

budgets

Or

that

not the

that

unspent
are to lot this

HAL VARIAN
for that

Sometimes we

see

that

happening
do spring
in see

where
price there to

advertisers

competing slackening offered

more and more aggressively
in the to to

smaller even
in

set

of consumers.
for

So we

typically in the

response

sector
off

and
the
is

weve
lot

seen
the that

automotive were

example
quite

when
all

were
try to

of deals

get cars buy.

and
effect

automakers

advertising

aggressively

media

convince

consumers

So this

an

we

sometimes

encounter.

OPERATOR

Justin

Post Merrill Lynch.

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0008

JTJST POST ANALYST MERRILL LYNCH
seeing things

Eric

on

the

press release

you chose
that

to

highlight

that

you

are

some

economic
little

weakness.
bit further

dont think
than

the

Company was
quarter

talking

much

about give

deteriorate

where we were
just

ago Can you
are at

Are you seeing some color on that
last quarter.

And then on
where youre
at

the

YouTube
versus

acquisition your
to deal

wondering
at this point.

where you

with

some press comments

out recently

on

that

model
Hal

ERIC SCHMIDT
because evidence think of
all

Im

going

have

actually

talk

little

bit

about

just

sort

of the
to

nature
well.

of

the
is

environment obviously
that

of us have
in the in

anecdotal

evidence

but in fact

Google

has continued every worse.
day.

do

There
to

slowdown

US
such

and

Europe

you read
and

it

in the
if

paper
it

We

continue

believe

we

are

very very

well-positioned reason
that

slowdown
--

especially

gets

And
economics against
it.

the

is

people

theres

flight
if

to

quality

and

in

particular
for

flight

to

measurability.

So our
to

are

more driven
Hal can

by

for

example
that

people
bit

stop searching than
can.

something

we

might

not be

able

do

ads

Maybe

articulate

little

better

On

the

YouTube
than

side

we
do

are

enormously

happy with
revenue
the

YouTube.

YouTube

is

cultural

and

end

user success

that

is

far far greater products. brought

we

ever

expected.

On

the that

side

we

are

working
for

on revenue

scenarios

and

new
yet.

revenue

And

personally
little

not believe

perfect

ad product

YouTube
to talk

has been about

invented

Weve

just

out some
talk
little

in-video about

ads looks

very good.

Hal maybe

you want

economics

and maybe

Omid

you

can

bit

YouTube
the

sales.

HAL VARLAN
furnishings online
in are

Sure.

On

consumer side
well.

already

mentioned
at

that

some

durables people
little

like are

consumer appliances
still

and

holding

up

pretty

In
part

fact

if

you

look

apparel
is

and
as

shopping
times get count think

spending

money

pretty are

strong way.
to

think

of whats and be
try

happening
to

that

uncertain

price-sensitive

consumers doing
effect

going online

shop

more

carefully

make

every

dollar

and

that

means
little

theyre
bit

going

to

be

research going

and
as

they are

going

to

doing
are

shopping
to

online. their

So

we And

have
in

of the

Wal-Mart
doing

on that
online.

times get tough

people

going

watch

dollars.

many

cases that

means

more shopping

OMID KORDESTANI
about

SVP GLOBAL SALES
are sales

OPERATIONS GOOGLE
internally

wanted
to

to

add

to

Erics

comments

YouTube.

think

we
the

spending process of the
as

lot

of time
as just

on understanding
activity.

how Were

streamline

and

integrate

DoubleClick
usual

improve
to

well

pure

customer

having

great success.

Again

as

Id

like

highlight
--

some
are for

advertising

names

from

Lenovo
really

Footlocker did not have

Lions Gate
access
is

Oreo
proper

Kraft Foods types of

IKEA
media
network and

Lipton

Tea

these

the

kinds
as

of advertisers

that

we

or the

advertising

opportunities

before

much

as

we

do

now.

The Footlocker
search
ads. the

example content can
set

particularly

good
the

one

as

the

they use
also

on Google
to

was

extremely gadget

broad ads

from

YouTube
audio

network
just

and

within
that

content
force

access

MySpace
are

print

ads and
set

So you broader

see the

way
and

our sales

our product

teams

working with

broader

of advertisers

of offerings

very

much

integrated

platform

approach. search has taken
lot

And we
are

long time

for

us to develop
right

and

it

still

takes

lot

of time for us and display
advertising.

lot

of hard

work.

And

putting

of

energy

on

getting

the

approach
Partners.

on

YouTube

and

OPERATOR
CHRISTA
First
indicate

Christa

Quarles

Thomas

Weisel

QUARLES
if

ANALYST THOMAS

WEISEL

PARTNERS
it

Just

couple
in the

questions
quarter.

on DoubleClick. Second
about
if

was wondering
if

youre seeing But
are

within licensing you could outline there. any macroeconomic impact
if

how much
Obviously
for

contributed

you could

youve

made

some comments
third just
the

search

specifically.

was wondering
changing
the

you could
process

highlight around

it

DoubleClick. guess

And then
see

maybe

some comments coming
in

about

how you
over
the

buying

display

where you

fimovations

display

next year or two.

ERIC SCHMIDT And
the to

We

are

not going with
it.

to
It

break

out DoubleClick
like
it

and

our comments decision

are

not

--

basically
to so

its

early.

so far

we

are

very pleased looks
line the

looks

was

very very sharp
once
the acquisition large

on our

part

integration.

The team
broad product
all

very strong.
that

The strategy
the large

was

approved

and
the

go ahead forth and

and
so

get

on was

develop

went

from

customer
advertiser

advertiser

which

was

traditional integrate
all

DoubleClick
offering.

customer
This
is

public

way down to the weve said information

very
this

small
for the

through

AdWords
the

and

essentially

the

previous

year during

regulatory

strategy

and indeed

Page

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0009 thats happening with thats now. one So the theory here
is

that

an

advertiser

will

be

able

to

advertise

across

all

of the

different

size

publishers

mechanism.

And

the

goal.

We

think

we
the

can

achieve

that

and

it

will

be

fairly

soon

some number

of months

not years.

CHRISTA ERIC
to

QUARLES
No

And

macro
change
in the

SCHM
any

particular

macro

environment.

DoubleClick

is

doing

well.

Omid

do

you want

emphasize

of this

OvIID
act see

KORDESTAThll
you know up
again
the

agree think

with

Eric.

think

we
by

have
the to

anecdotal

experiences and

customers
stop the

some customers
spending.

that

erratically that

really

affected

maybe
its

macro environments
judge
this.

But then

we
can

pick
on.

following

month.

So

very hard

dont think

we

have

any trends that

we

comment

HAL VARLAN
terms of the
the attract sell

guess
for

the the

one next

thing couple

some
of

of the

iimovation

has already cant

started.

We
see

have

an internal

roadmap
quarter sites

in

fimovations

years

which

obviously
target in test

go through
and

here.

But just

this

we

launched

AdPlaimer which
for

basically

lets

advertisers

designate

audiences

exactly
free

which
tool that the

they

want

to

an

audience.
deliver

Weve
and

got the measure
features

Google
their to
let

AdManager

which
think

is

basically

helps

publishers serving So thats

schedule
also

inventoiy. advertisers

Sergey
select

mentioned
sites

in his

script

third-party

and

weve

got some

new

target

and

keywords. highly
so.

all

of that focus

think

is

really

addressing
that

the

big problem
see

in

display out in the

which

is

the

fragmented

market.

And

the

of most of the

fimovations

youll

coming

next year or

OPERATOR

Doug

Anmuth Lehman

Brothers.

DOUG
quite yet. interest

ANtvIUTH On the interest

ANALYST LEHMAN BROTHERS
income you detailed
think four
little

Question pieces
bit

for

George
that

were

not letting
to the

you

off

the in the

hook

actually
color that

contributed

decrease should over

income
that

quarter-to-quarter.

Could you provide
one-quarter effect
or

more

there In particular how were
likely to see

we
the

think next

about couple

going

forward

Is this

is

it

something

continue

of quarters

GEORGE REYES
we
used have been
investing really

So
in
--

think

what were
been seen
is

trying

to

portray

here and

is

that
the

in

fact

we

have

very healthy balances
result

business
is

and

weve

investing thus far

in the

business

lower

yields

on our cash
balances
as

what has
cash
is

brought
first.

down what youve
then DoubleClick

And

also

all the way through consumer of that as well.

the

average

cash

that

DOUG
are less

ANtvf

And
for

in

terms

of the
this

marketable quarter

securities

and

the

FX hedging

are

you implying

that

those

two

significant

factors

the

impact

GEORGE REYES
say more than
that.

No.

Were

actually

in the

process

of building

our internal

portfolio

here

so

its

hard

for

me

to

OPERATOR

Ben

Schachter

LIES.

BEN SCHACHTER
that

ANALYST
you comfortable
In the
first

LIES
are

The headcount
comfortable

growth was
with

really

among

its

lowest

levels are

in

long time.
still

Is to

500 new net employees
and

number you

on

quarterly

basis And where

you

looking

add

what

areas

are

with

headcount number going
massive forward. people
in

ERIC
large there quality

SCHM
Weve
we

place
its

we wont
and

suggest need

The Company
large

is

now
that

reasonably

company
before.

by comparison
largely

to

peers

we dont

new

communities dependent

were not
kind of

built

out

good

management

structure

globally.

So

its

really

upon

the

of people

can

hire.

Youll remember

few

quarters bit

ago

we

actually

allowed

the

hiring

engine done
so.

to

get ahead think grow.

of things

and
see

we
going

said

that

we would
is

focus

on

that

little

more carefully

and we have
is

indeed going

So
to lot

what youll

forward

prudent

be

of headcount The Company growth. management number going forward but the important point specific
sure that

to

continue

This number
to

may

or

may

not
to

is

we

are

paying

of attention

headcount.

We

want

make

we

maintain

the

quality.

And
want
to

of course

also

as

larger talents

company
as

we need

to

make

sure

that

we

can

use the

resource

effectively.

We

never

misuse

somebodys

an

employee.

Page

10

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-00

10

BEN SCHACHTER
the that

If

could

just at

follow

up on
can

question

on mobile
to see

Sergey

you had discussed
separate

the

evolution
for

of ads

marketplace.

was wondering
its

some point

we
Or

expect
will
it

completely
to

marketplace of the
current

mobile

comes

with

own

auction

inaudible

etcetera do allow

continue

be

an

extension

model
see

SERGEY BRIN Yes
converging
like will

so currently

we
once

advertisers

to

place phones

separate
that

ads for mobile.
fully

In

fact

them
things sense

more
then

in the

future

because

you
for

start to

get

these

have
as
that.

capable

browsers phones add
in

and

that have

theres

not that

much
the

reason desktop

disparity.

Now
as

at the

same time
things
like

mentioned

some

new
the

capabilities

that

doesnt
that

such

location

Some may

some

capability

beyond But mobile

basic

desktop
will

advertising

capability

we

have. terms

think

it

be
rather

more
than

fluid trying

experience
to

for

advertisers

in

of you know

you can

select

please

run on

too

or

dont

have

completely
to

separate

worlds.

JONATHAN
example
fact that

ROSENBERG
of the

Just that

adding be

Sergeys

comments
the

agree phones.
to

with

him. Id just

like for

to

give

you an
about
the
if

of one

dynamics on
the

will

different are

on

mobile
likely

Weve
interested the

been
in

talking

awhile

when

you

are

mobile winners
called

phone
of the

you

much more
applications

be

consummating

transaction

you

run

search. that

One of

1700

submitted
it

for

Android Developer
user to do can
is

Challenge
picture

was
of product

product with can from

was

developed

Android Scan. And basically what
research can
actually the

allows browser.
or

take
price

bar-code.
figure online.

And

then

they can
that

product
sell that

on

their

mobile might

They
could

do

comparisons. out

They
to

out

how

far

store

browser

be

they

actually

figure

who

buy

it

Imagine
differ in

the

value

of an ad
efforts that

in that

kind
to

of
scale

scenario. to

So the

bidding
to

mechanisms But
in

for

some

of the

local

ads will be

terms

of the

we

have

get them

on

Mobile.

many

ways

they could

much

much more

valuable.

OPERATOR

Mark

Mahaney

Citi.

MARK MAHANEY
any one-time

ANALYST
costs

CITI
in that

integration-related

GA

On

the

GA
line

line

it

seemed

little

bit

ahead

of expectations.

Was

there

And
Could
to

then
talk

back

to

YouTube
what
the

Eric

you made
challenge

comment
is

about
is

not having
it

yet found
right

maybe
or

the
is
it

ideal

ad solution. out

you

about

teclmical
to

there Or
the real

finding the of video

format

figuring

way

best target

ads against-- trying

figure

out what

content

is
and in-video

ERIC SCHMIDT
roll

On

the

YouTube

side having
inside

we

basically

are

innovators

in advertising

weve

tried

post-roll the

pre

in-the-chrome
in the

kind bottom

of ads. and

Were

great deal of the
video.

of success That

now

with

these
pretty

ads where
right

ads are

essentially

embedded

looks

like

good

whmer
to

there.

Weve
because

also

had some you
to

significant
tell

success

with

gadget

ads and

gadget

video

ads are

likely

be particularly

effective

they allow

story.

If

you look
differently.

the

advertisers

that typical

we

are

working with
is

and

the

content

that

were

working with was announced

are

also

using the

format Gate our

There
people content
are

as

example
the

that

the

Lions Gate Lions Gate

deal

which
that

yesterday

Lions them using
busy sue

works

with

who

upload and

segments

of the

movies
them.

they like heres
to

and

they capture

ware
copies

product

then

they can and

run ads against

So again good

community say
rather

thats than

making
those content

that

not authorized
lets

of content that

Lions Gate
an ad
against

has the

judgment
even

go and
our

customers and

instead

go capture

show

them and

get them

more excited about

our other content. those kinds of models think
sustainable

So we think
significant

are its

and
that to

scalable

on

the

Internet

and

are

tn
lilely

be

Very very
of video
that will

sources
vill

of revenue.

axiomatic old forms

new

form and
There
will

view
be

YouTube

as

new

form

entertainment
the

not ultimately use the

monetize.

new

monetization

torms

go

For

new
That

enierialnment

form
Grail.

and

thats

what were
find
it

seeking.

is

the

Holy

When

we

or the

combination

of it

its

likely

to

be

very very

large

because

of the

scale

and

scope

of YouTube.

On

the

GA

line

want
So the

to

make main
as

sure

we

answer due
also

that

question.

GEORGE REYES
fees.

increase

was

to

legal

and professional

and outsourcing

services

as

well

as

So thats your answer.

So

you know

we

dont give guidance.

Page

11

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-0011

MARK MAHANEY
GEORGE REYES
ERIC SCHMIDT
economy.

One-time-ish

or

generally No.

sustainable

Generally

sustainable

mean--no.
is

Unfortunately

the

legal

stuff

because

we

have

suits

its

welcome

to

the

information

OPERATOR
JEETIL

Jeetil

Patel

Deutsche

Bank.

PATEL ANALYST DEUTSCHE
down
you
talk
little

BANK
evolution

First

of all
is

you talked
be
little

earlier bit

about

basically

your

ad

coverage

may
the better

have

come
ad.

too

much
in

and

guess

Larrys

idea or

to

more

targeting far

oriented
are

so serving
in trying to

right

Can

about

terms
intent

of that of the

phase
the

of the
entire

business

how
and

along

you

optimize

the

ads against the

consumer
content
side

across

network

platform

today
it

And
into for

then

second

on

the

AdSense

for

the

of the look

business
to

how

difficult

or that

easy would
display

be

to

convert

it

display content
--

ad network do those

Is this

something

that

you would
or

do And how

does

ad

around

AdSense

two things many
Great
questions. for

up nicely
Let

not
in

SERGEY BRIN
content

me

take

them
for

reverse
today.

order.

With

respect to
--

display
its

in

AdSense

for that

we

actually

allow choose. than and

display
in

in

AdSense
cases

content
are

Thats then

something

publishers

setting

publishers
their are

need
is

to

And
the text

those

where they
can

chosen

we

will

run display
that

ads
are

to

the

extent that today and

yield looking

higher

ads that

we

run in that
about.

space.

So thats something

we

doing

we

to

grow
let

were
take

certainly

excited back.
the

In general
initial

me

just

step

Looking
ad team
the able are

at

the

evolution
the

of our overall
that

search

text to

ads system from generate
off the

its

starts

when we
ads

could
to

barely

feed

pizza with road
to

iteration attraction to

of their of the

several

iterations

down

over
set

we were money number of years and through
good
campaigns
to attract for

able

first

the

maturation
its

and

the

advertiser

base

and

them being
obviously

up

really to

them

multi-year process
to

get to where and

we

are

now.

And we

continuing

improve

new

advertisers

improve

the

targeting

so forth.
that

So now
base
for to

we

have But
all

the

advertiser

base we
to create

dont

necessarily

need

to

wait

quite

as

long to attract
things

the

advertiser

begin

with.

for the

advertisers

new

types of ads for new formats and systems search
pace.

medias
might

what not these
best also

do

take

time

us to go

through going

experimentation

of what

work
feel

takes

time.

And

just

me
ads

looking content

back

from and

98 99
what not made

2000
are

where we were then with
progressing
the
at

ads

some of these areas

YouTube

ads display

actually

faster

JEETIL
coverage
or

PATEL You
and
the

point ad

earlier--just relevance.

last

question--but
basically
little

that that

you may have
its affecting Is that

gone
the

too far on the of

ad

side

advertisements

search

frequency
if

because
dial
it

you may have up
the

Are you seeing dialed down ad coverage

frequency
the in

usage

too

much

where
across

impact terms

you
of

are

seeing And
frequency

you

back

bit you
entire

may

see

greater

usage

from

consumer

standpoint

of searching

across

network
think that without
first

SERGEY BRIN Yes
time
that

great question.

of all

we
all.

certainly

run plenty
that

of experiments. our ads add

Were

all

the

running

experiments.

We

run them.

some people

any ads at

And we know

value so we know

were

happy about dont know

having
its that the

Now
know
really that

case

that

were
if

necessarily

sort

of decreased
the

them past below
that

the in

optimal
place.

point.

But

we
to
if

will

do

in the

near

future

we

continue
it

with

system
to

we

have
to

had

Thats
for the

what weve
optimal

had

have

second
will.

thoughts thats

about.

What-trying

makes
figure

more sense
out exactly

coverage

you

And

what were

to

me just how to do

ask

some

now.

OPERATOR

David

Joseph Morgan

Stanley.

DAVID JOSEPH
you
have

ANALYST MORGAN STANLEY
it

Just the

quick
quarter.

question

on universal wondering
is

search

--

it

seems

like

been ramping
universal
text

up

or

you ramped
is

it

up more during what maybe

Im

just

what percentage
seen with

of total search

search versus

results

search

today.

And

also

different

unit

user behavior

universal

traditional

search.

And
improved

also
pretty

George
nicely

guess

one

of the and

last

questions

for

you
do

is

that

it

looks

like

the

incremental
easier

margin

for

Google
year-

sequentially

year-over-year.

We

know

that

you had

an

comparison

with

the

Page

12

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-00 ago period but

12

Im

wondering

if

you

also

have

been
are

implementing
actually starting

or to

some work
effort

of the now.

programs

that

you have

been

implementing

for

increased

financial

discipline

GEORGE REYES
business so thats theme

Yes we
that

have

actually

made

very concerted

to

drive

more accountability

into

the

will

carry

forward.

ERIC SCHMIDT

Sergey

do

you want
search.

to

answer

the

universal

question
third in the

SERGEY BRIN Yes
universal search

universal
in

So weve
this
is is

got--

bit

under

of

all

queries
it

now

have

some kind
like tenth. this

of

components

them.

And

just by comparison
that this
--

first

quarter

was more

So
--

its

big big improvements.
this
is

And yes

our feeling
for

definitely

and experiments

by

the

way

also

justify

but

significant

improved
to

information

our

end

users.

And
of queries

its
--

amazing
people
calls.

me

just

if

look often

at the

video
--

for

example
that

video

universal
expect. to

which

alone

is

at

about

10% now
maybe
kind
it

have But

videos

for

very

for

things
like in

you wouldnt
of disks
particular

mentioned
stuff on. Its

before not the in

was

on one

of these

was looking
have
is

to

buy
about
it

RAID
it.

an

array the
is

store

of query

you would
put together fact
that

expect

might

good

videos take

But

fact
this

RAID
the

was
drive

interested

somebody
things.

had

video.

This

how you
that

out of the

box

how you swap

on

it

all

those

And

in

compelled think
that

me
youll be bring

to

buy
find

particular

RAID.
in that

So
particularly query.

increasing because

universal
the to

coverage

you wouldnt expect
click

and
video
tab

source
in that

would
have
to

user would
the user.

not have

thought

to

on

the

separate

We

that

information

Thats

what were
bit to

doing.

DAVID JOSEPH
present
or
little

So are
different

bit that

of

rates little you seeing click-through model for search where youre going

less

on
able

universal
to

search
video

And

does

this

actually

be

monetize

little

bit

differently

images

for

matter Where
its less

SERGEY BRIN DAVID JOSEPH
ERIC SCHMIDT
multiple speakers.

than

universal

search
golden triangle
in

multiple

speakers

thats

where people
is

are

more focused-where you
are

No

think

--

again

its

--

the

system

aggregate

actually

seeing

more

SERGEY BRIN Oh
when
rates

see. its

You

are

saying

--

how would
to

it

affect.

We
that

monitor might thats

these

things

pretty the

closely

point

we
or

launch
not.

them But

and
in

not that
total the

were

unwilling
that

launch

things

adversely
negative.

affect

ad

click-through

what

sum

launches

weve done

dont think

think

its

positive.

OPERATOR
JEFFREY
strategy

Jeffrey

Lindsay

Sanford

Bernstein.

LINDSAY
just

ANALYST SANFORD
how you
on
intend
the to to participate

BERNSTEIN
in

Could
in the

you give

us more detail next four to

about
five

your

wireless

and

indicate

wireless
are

US

over

the

years And then
could

could us

you give us any updates
of-- do

android share

alliance

When

android

devices
to

expected
get Google strategy

And
onto

then
the

an indication

you have Sergey
do

revenues

with

Apple

and/or

ATT

you give

iPhone
the
--

ERIC SCHMIDT
multiple

you want

to

start

on wireless

overall

wireless

and

then

some of

speakers
overall as

SERGEY BRIN Yes
available for that.

wireless

is

very simple. markets

We
as

want

our products

and

the

Internet

and

Web

as

whole

on

as

First
or

many devices in we write our apps we
put them
--

many
try

different to

possible

so very easy.
different

And we
platforms devices

have
like
all

twofold
the

approach
that

and

make

them

available

on many
on

iPhone

you

mentioned Google

on Symbian

devices

on BlackBerrys

Windows

mobile

those.

We

have

Apps

And weve
to

also
location the

because data

weve had some
to

challenge
really

sometimes well
or

getting like

things that

out

like

necessarily
this that

easily

being

able

get access

to

make
from

Maps work
carriers

things

weve

developed

android

platform.

And weve
be
able to the

had

same
things

calling

from so

handset

makers and other application
very excited about
android.

makers
are
still

they just

want

to

get these end of the

out more easily. ship with Jonathan do

And

we

are

We

expecting

phones

before

year to

ERIC SCHMIDT

And

you want

to

talk

little

bit

about

some

of the

partnerships

Page

13

Q2 2008

Google

Earnings

Conference

Call

Final

FD Fair Disclosure

Wire

July

17

2008

Thursday

136-00

13 in the

JONATHAN
handset with
that alliance.

ROSENBERG
So we
the that are

guess
pretty

the

main data point
there and
are

in

terms

of android
to are the

there

are

34

companies ran and think
the

open
there

doing

well

already alluded
others that

contest that excited weather
city

we

results

example of
application

android
will

scan

barcode.

There

we

very severe

about.

theres

Weather
to

Chaimel aware
adjusts

alert

people

and wake
called

them up when
that

theres

alert that tours

they need

be
it

of
to

There your

are

some

fantastic

ones one
points

helps people

take

dynamically
efforts

and on

location

and

shows

of interest. launches

So theres already very very
later this year.

significant

going

in the

developer

community

in anticipation

of the

ERIC
everybody

SCHM
for

So lets so

finish

up.

Thank
us.

you very much

Jonathan
to talking

and
to

everybody

else.

want
and

to

thank have

spending

much

time with

We

look

forward

you next quarter

please

good

summer. Thank

you very much.

OPERATOR
discoimect.

And

that

concludes

todays

conference.

We

thank

you

for

your

participation.

You may now

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