Google courts controversy
For Google, 2005 was a pivotal year.
The search company went from being an IPO and tech darling to being feared by rivals, including Microsoft, and challenged in court for its aggressive hiring tactics and its controversial moves to put library books online.
Speculation abounded about Google's future plans, as the company dipped its toes in wireless and video, and launched a project some are guessing will become a massive repository of classified ads. Meanwhile, founders Sergey Brin and Larry Page became billionaires, as Google's stock rose 130 percent after its initial public offering.
The year started out with the public release of U.S. Securities and Exchange Commission documents that revealed that Google's stock grant awards helped create an estimated 1,000 employee millionaires. As the stock rose from $85, when the company went public in August 2004, to as high as $430 in late 2005, more than a dozen Google executives and directors pocketed a combined $4.3 billion, according to Thomson Financial. Several analysts predicted that shares would even hit $500.
February marked the first of the year's bad public relations for Google. The company was criticized for firing an employee over his blog postings, which included criticisms of the company. Later, another employee sued Google, claiming that she was wrongfully terminated before being rehired and then demoted after the company learned that she was pregnant.
Google also was challenged in court by adult Web site Perfect 10 over the search company's use of photos in its image search database, and Google agreed to change the name of its Gmail service to Google Mail in the United Kingdom after being threatened with a copyright lawsuit there.
Even more noteworthy were lawsuits against Google filed over its library book-scanning project and its hiring of a former Microsoft manager. In their lawsuits, the Association of American Publishers and the Authors Guild alleged that Google's plan to scan and digitize major library collections would violate copyright law. Google defended its plan by saying it won't expose more than snippets of in-copyright books without the copyright holder's permission.
Microsoft, meanwhile, sued Google for hiring away top Chinese manager Kai-Fu Lee. Google announced in July its plans to hire Lee to head up its China research lab, which prompted Microsoft to sue in Washington state, alleging that Lee was violating a one-year noncompete agreement that was part of his contract with Microsoft. A settlement in the case was announced Thursday.
Google and Sun announced in October that they would collaborate on work on Sun Microsystems' OpenOffice.org, Java and OpenSolaris, and on Google's Toolbar, disappointing observers who were expecting a bigger announcement.
Among the noteworthy product and service launches from Google were: Google Video; Google Mini, a budget enterprise search appliance; Google Earth with its wow-factor 3D satellite image technology; Google blog search; an RSS reader; Google Talk, a voice-enabled instant-messaging program; and Google Base, a repository for any type of information that people want to be Web-searchable and a project many observers were convinced was an attempt to get into the lucrative online-classifieds market. The company also experimented with selling print ads to its AdWords customers.
Google, known for its secrecy, had observers speculating about its master plan all year. Questions were raised over Google's interest in unused fiber-optic cable, also known as "dark fiber," to build its own global or national network, and its investment in power-over-broadband company Current Communications Group. Google also was given permission to offer free wireless Internet in its hometown of Mountain View, Calif., while San Francisco was considering a bid for the same.
Following the outcry among privacy advocates over Gmail, which was introduced last year, several new Google products stirred similar concerns, namely Web Accelerator and My Search History.
Google also grew at an alarmingly fast rate, hiring 800 new employees in the third quarter alone, with an estimated 1,000 positions still open at the time. High-profile hires included Internet pioneer Vint Cerf and Firefox programmer Ben Goodger.
The company ended the year flush with cash, as a secondary stock offering in September netted more than $4 billion, bringing its bank account balance to about $7 billion. Google also had three blow-out fiscal quarters, including record revenues that nearly doubled in the third quarter to $1.58 billion. Meanwhile, with a stock price at about $425, Google's market capitalization was $120 billion, more than those of Amazon.com and eBay combined.
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