Google is preparing for an IPO - Algo Explanation

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Excerpt from JimWorld Newsletter:

 Google is preparing for an IPO.  There's bigtime money at stake here.
 The success of the IPO, and the long term success of is
directly tied to the stability and profitability of AdWords, AdSense,
contextual ads, and other ventures such as "Froogle".   As important
as the financial success of their commercial ventures, the continued
success of their organic search is vital in retaining searcher
loyalty, industry-wide respect, and as the "engine" that drives their
commercial endeavors.
4. The IPO can only happen if Google is a "clean" company.  This means
they must have nothing derogatory on the financial side, and that they
must be a self-contained (proprietary) system, with no outside control
over structure, code, systems, personnel, etc.  In other words, if
they owed a billion dollars to someone, that would have to be cleared
first. Similarly, if a major portion of their infrastructure was
legally owned by a 3rd party, they would have to assume ownership and
control over those systems.  And therein just might lie the rub.
5. That link will
take you to the US Patent Website, specifically to patent number
6,285,999.  This is the patent on "Page Rank", a major part of the
algorithm that made Google the most dominant search engine in the
world.  You'll notice a couple of things right off the bat.  First,
the Patent is granted to Stanford University (which as we all know is
where Google has its initial roots).  Secondly, as our own Chris Logan
pointed out, "This invention was supported in part by the National
Science Foundation grant number IRI-9411306-4. The Government has
certain rights in the invention." This document nullifies one of the
requirements of the IPO (#3 above), as there are 2 outside claims to
the Intellectual Property that makes Google what it is (was), and
therefore could potentially eliminate their chances of having the IPO
at all.   Google does acknowledge that Stanford holds the patent, but
they made it clear that "although Stanford is the named owner, Google
as a company absolutely owns all of the rights contained within."
This makes the case that they are under a legal obligation to
circumvent the patent a moot point, however the financial obligations
may still be an issue.  I have spoken with a respected Seattle Patent,
Trademark and Intellectual Property attorney about this, and they were
able to shed some light on the subject.    Legally speaking, both
Stanford and the US Government have ownership on the patent.  Stanford
is the primary, but because the code was developed using a US Grant,
the Government retains the right to throw a legal hammer onto the mix
if they so choose, as granted by the Bah-Dole Act of 1908: .  The Government has never
used the hammer, which exists mainly as a threat, but it is there.  
Legally speaking, Google can exist outside of the Stanford patent
under one of 2 scenarios:
a. If the license that exists between Google and Stanford explicitly
permits it.
According to Google, they "Own the rights" to use the patented
technology.  Based on that statement there must be a license agreement
between the two parties, which obviously is not going to be part of
the public record.  Very often, these types of licenses, especially
when a university is involved contain some "poison pills" which make
it financially or commercially impossible to use the granted work in
commerce.  Obviously, we're not privy to their negotiations or the
specifics of the contract, but one would assume that there's something
significant in there that is making Google "blink".
b. If Google develops around the patent.  
This is the assumption that this article is making.   Big and obvious
algorithmic changes, that extend beyond minor tweaks, are certainly
being made.  One has to assume that either Google and their users were
totally unhappy with the previous results and relevance or that they
are attempting to exist beyond the grasp and logic of "Page Rank".  
Our patent attorney agrees ... this is a perfectly ethical and legal
practice, and one that is employed countless times.  "If Google can
achieve the same quality/relevance of results by an alternate means
that does not infringe on the specifics of the existing patent, it is
perfectly within their legal rights to do so".
Note that Google can also exist (and IPO) within the confines of the
patent, depending on the specific financial and legal obligations that
are contained within their license agreement with Stanford.   Is there
a poison pill in there that's at the root of this discussion?
Take a step back and do some simple addition, folks.  With that patent
in existence, Google cannot IPO unless ownership of it is either
explicitly and fully transferred to them, they cut a deal for profit
sharing with Stanford, or until their organic search is rewritten in
such a way that Google can exist separately from that patent.  (With
the patent as is, Stanford stands to claim a large portion of
potential earnings.)  Is the reason for the shift in algorithms and
the apparent irrelevance of Google organic results starting to make
sense now?  If it is, let me know, because I'm getting more and more
confused as I go here ....
Google may have put themselves in a position where they must reinvent
the wheel (or at least the part of the wheel that's owned by Stanford)
before they can move forward.  Logical analysis of the information
above makes us wonder if there isn't a very simple conclusion to this
puzzle.  The organic results at are not changing as the
result of a conspiracy to increase adwords revenues, nor is Google
showing favoritism to their advertisers.  Similarly, they're not
"monkeying" with the results to try and screw specific people or
specific industries.  There's nothing sinister going on.  The simple
fact is that Google might just need to make lightning strike twice.  
If that's the case, you can bet your hindquarters that they're
investing countless dollars and man-hours on it, as there are
countless dollars at stake when this all comes to it's final
With things of such magnitude as the worlds largest search engine
preparing for the worlds largest and most eagerly awaited IPO, there's
 probably hundreds of other things going on that are impacting
Google's decisions to change the algorithms, to deflect discussion
away from organic search, and to go live with what appears to be
untested algorithmic changes.  Google says, quite emphatically, that
they "Test, test, and test again before sending updates live.  We
certainly can't divulge the process, of course, but each update is run
through the many stages of both internal and external testing".   That
said, it's my belief that the algorithm changes we're seeing are being
done for reasons both altruistic as well as financial.  I believe that
Google strives to provide the most relevant results possible.  It's in
their best interest from a viability standpoint to continue to do
that, obviously.  From a financial standpoint, it's my opinion that
part of the impetus to change things so drastically is driven in some
ways by the Patent/IPO bugaboo.   We may be looking at a double edged
sword here.   The existing patent may be a small hiccup on the way to
the big IPO: just a little financial obligation.  It may also be
something more of a concern either from a technology or financial
standpoint that is forcing Google to make some tough decisions.
Regardless of the real reason, we have some decisions to make both as
searchers and as optimizers.
Rather than invoke theories of conspiracy and cry foul every time your
site (or a client site) drops for no explicable reason in Google
results, let's do more to work with Google on improving things.  As
stated earlier, the success of their organic search is directly tied
to it's relevance to the searcher and it's reliability for the SEO.
Let's see what we can do within JimWorld to communicate to Google, in
a constructive way, what we're seeing, what we expect to see, and
offer some real world suggestions, input and grass roots know-how.  If
Google wants to continue testing algorithm tweaks in a real-life beta
test, let's test with them, and see if as a group we can help them
shape Google for the future.

Entire Article

Tim /

Re: Google is preparing for an IPO - Algo Explanation

Tim Arnold wrote:
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This is the most sensible writing on the subject of why
google is so screwed up during the Holiday buying season
that i have seen. It makes perfect sense to me (maybe
because my grandfather was a copyright lawyer), and it
explains everything -- and i mean EVERYTHING about what is
going on here. The shifting results are the result of
desperate last minute attempts to circumvent the patent on
the eve of the IPO, which, if i recall correctly, was touted
first for January and then for March.

My advice -- send LOTS of feedback through google's "help us
improve" form and let the world know that this is NO WAY TO
RUN A COMPANY -- because, seriously -- and i speak as one
who was not affected by the algo change, so i have no axe to
grind -- the SERPs suck at this time so badly that except
for very obscure multi-word phrases in quote marks, they are
near useless to me.

cat yronwode

Herb and Root Magic ---

Re: Google is preparing for an IPO - Algo Explanation

catherine yronwode wrote:
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   What kind of searches do you usually do? The SERPs look fine to me.
And, I post this as someone who also wasn't personally affected by the
changes. I have no axe to grind.

Re: Google is preparing for an IPO - Algo Explanation

I tend to agree that this makes the most sense to me too about Google
publically beta testing their search engine that is. I don't know if I
agree with the IPO part of it.

I personally feel Google won't go public and offer stock options when it
comes down to it and will find some other way to make themselves
profitable. I think google likes being totally independant and got too
used to it over the years.

There are other things going on in the background right now that google
has more insight into than most people do such as the new windows os dur
out next year with msn search wrapped around it, the new
search engine being developed, and the new yahoo search engine probably
also due out sometime next year. This is the first time in years google
is forced to make changes to keep it competitive way above the others
and they actually don't have much time left to do it. They probably
should have started this much earlier during the past year. Hence
probably the reason they are forced now to beta test this publically.

Personally I don't think they ever had anything to worry about even
before 11/16 with all the irrlevent sites and site spamming that has
been going on the past year. It's a no brainer that the windows os, and new yahoo search engine will be PPC or some form of paid
inclusion. If it comes down to paid inclusion v/s free listings google
will win big time hands down with the viewing public and of course
commercial webmasters too. Even with spammy and irrlevent results google
still has PPC type search engines beat by a million miles. Paid
inclusion can only bring very boring, empty, meaningless, irrelevant and
spammy but paid for my spammy results and no one is interested in
looking at that and never will.

If google decided to go out of bussiness and take up bee keeping in
Sussex instead and only the other search engines were left I think the
entire internet would be joining them soon. When there's nothing to
search for on the internet you might as well just stay in windows and
save the isp fee. If internet search ever goes all paid inclusion the
internet will die a rather quick death too I might add.

Re: Google is preparing for an IPO - Algo Explanation

Whatever they have done it has hurt a lot of businesses. In Asia we
see so many local good content sites have gone from Top 20 to the 200+
for no reason at all, and in their place we see
results from Sweden, Germany, plus of course USA. Our business has
been severely damaged. There were some junk sites before I agree but
they have been replaced with other irrelevant sites. When you search
for Asia information you rarely get good content local sites even when
using the local Goole Pages. At a time when we were about to start
paying for Adwords we now plan to spend that money promoting with Asia
based operators. Is it so difficult to provide a search result that
actually produces the right answers?

Re: Google is preparing for an IPO - Algo Explanation

i think we are reaching here too much now...

think about it... i don't think they would rush into changing their
algorithm so drastically and risking crash and burn just to get a quick
IPO... and if they had to change it, they would change it first and announce
any IPO plans only after such a successfull major change...(and they
certainly wouldn't make it live until they've tested it very thoroughly)
i've heard many theories of the florida and it seems that most are reaching
further and further as they their previous theories aren't holding up...

in my opinion google is still google and nothing has changed except the
addition of stemming and more agressive filtering which has unfortunatelly
taken some 'friendlies' out too... *agressive* filtering is more than enough
to cause such results... this explains why sites are oblivion-dropped...
almost like a penalty that drops u from the major keywords.. and it seems
that if u are penalized for a significant keyword u'll be penalized for
other significant keywords... and remember that what is significant depends
only on what google thinks is significant (doesn't mean u can determine what
is significant on your own...high traffic doesn't automatically make it
significant)... i'm pretty sure the agressive filtering and stemming are
related and it's the reason you were dropped (in case u were)...

and here's some proof that it's almost like a penalty... of the sites that
were not dropped, they didn't budge (significant budge) at all... if they
were reworking the algo on such a significant criteria as pagerank it would
affect ALL sites with no exception since pagerank is the heart of google...
furthermore it explains that the ones that were oblivion dropped where
dropped for other significant keywords as well... and if you came back u
came back for maybe 80% of the significant keywords almost instantly...and
will naturally get back to where u were (since the penalty isn't there

public enemy #1 for google is spam...and this is what they work against more
 than 50% of the time

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Re: Google is preparing for an IPO - Algo Explanation

What does the abbrevation IPO stand for?

Re: Google is preparing for an IPO - Algo Explanation

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Initial Public Offering - When a private company goes public (starts
selling shares to the general public)

Edward Alfert - /
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