Google 2008 Annual Report Download - page 37

number of ways. For example, current or potential customers such as advertisers may delay or decrease spending
with us or may not pay us or may delay paying us for previously purchased products and services. In addition, if
consumer spending continues to decrease, this may result in fewer clicks on our advertisers’ ads displayed on our
web sites and our Google Network members’ web sites. Finally, if the banking system or the financial markets
continue to deteriorate or remain volatile, our investment portfolio may be impacted and the values and liquidity of
our investments could be adversely affected.
We rely on our Google Network members for a significant portion of our revenues, and we benefit from
our association with them. The loss of these members could adversely affect our business.
We provide advertising, web search and other services to our Google Network members, which accounted for
35% of our revenues in 2007 and 31% of our revenues in 2008. Some of the participants in this network may
compete with us in one or more areas. They may decide in the future to terminate their agreements with us. If our
Google Network members decide to use a competitor’s or their own web search or advertising services, our
revenues would decline. Our agreements with a few of the largest Google Network members account for a
significant portion of revenues derived from our AdSense program. If our relationship with one or more large
Google Network members were terminated or renegotiated on terms less favorable to us, our business could be
adversely affected.
Also, certain of our key Google Network members operate high-profile web sites, and we derive tangible and
intangible benefits from this affiliation. If one or more of these key relationships is terminated or not renewed, and
is not replaced with a comparable relationship, our business would be adversely affected.
Our business and operations are experiencing rapid growth. If we fail to effectively manage our
growth, our business and operating results could be harmed.
We have experienced rapid growth in our headcount and operations, which has placed, and will continue to
place, significant demands on our management, operational and financial infrastructure. If we do not effectively
manage our growth, the quality of our products and services could suffer, which could negatively affect our brand
and operating results. Our expansion and growth in international markets heightens these risks as a result of the
particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures,
customs, legal systems, alternative dispute systems, regulatory systems and commercial infrastructures. To
effectively manage this growth, we will need to continue to improve our operational, financial and management
controls and our reporting systems and procedures. These systems enhancements and improvements will require
significant capital expenditures and management resources. Failure to implement these improvements could hurt
our ability to manage our growth and our financial position.
Our business depends on a strong brand, and failing to maintain and enhance our brand would hurt
our ability to expand our base of users, advertisers and Google Network members.
The brand identity that we have developed has significantly contributed to the success of our business.
Maintaining and enhancing the “Google” brand is critical to expanding our base of users, advertisers, Google
Network members, and other partners. We believe that the importance of brand recognition will increase due to the
relatively low barriers to entry in the internet market. If we fail to maintain and enhance the “Google” brand, or if we
incur excessive expenses in this effort, our business, operating results and financial condition will be materially and
adversely affected. Maintaining and enhancing our brand will depend largely on our ability to be a technology
leader and continue to provide high-quality products and services, which we may not do successfully.
Acquisitions could result in operating difficulties, dilution and other harmful consequences.
We do not have a great deal of experience acquiring companies, and the companies we have acquired have
typically been small. However, recently, we have closed a number of larger acquisitions, including our acquisitions
of DoubleClick and Postini, and are in the process of integrating these businesses into our own. We also expect to
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