The One Bit of Info Google Withholds: How It Works

MOUNTAIN VIEW, Calif. — Google Inc. evolved from a tiny start-up to the shining star of American enterprise in less than a decade by bringing knowledge to billions of people.

There's still one thing almost no one knows: How Google works.

"It's somewhat of a paradox," said Jordan Rohan, a financial analyst at RBC Capital Markets. "Google's whole purpose is to make information easier to access -- unless, of course, you want to know information about Google."

The Internet giant's business model sounds simple. It attracts audiences through search and other Web services, displays targeted ads and charges marketers only when their ads are clicked on.

All that depends on imponderably complex mathematical formulas, a sophisticated accounting system, an aloof corporate culture and a growth strategy secret to all but the upper echelon of the company -- making Google one of the most mysterious companies of this century or last.

Although Google playfully reveals how much chicken and coffee its engineers consume every month, as it did during Google Press Day last year, the company won't disclose much potentially helpful information about its core business, such as how many search queries it returns, how many companies advertise through Google and whether ad prices are increasing or decreasing.

Google's unwillingness to disclose little more than the legally required basics of how it does what it does -- and where it's headed -- has left advertisers puzzled, partners confused, competitors nervous and investors frustrated. Even seasoned Wall Street analysts are left scratching their heads at precisely how Google posted $6.1 billion in revenue last year.

So far, Google's secrecy doesn't appear to have put too much of a damper on the leading search engine's financial or investment prospects. Google in March performed 49% of all U.S. Web searches, up from 47% the previous year and more than double its nearest competitor, Yahoo Inc., according to research firm Nielsen/NetRatings. Marketers continue to increase their ad spending, as evidenced by Google's 93% year-over-year revenue growth in 2005. And, even after a bit of a slump in the last month, its shares have risen 53% in the last year.

But pressure is mounting on Google to be more forthcoming. The very secrecy that helped the company vault to the top of the media-industry pyramid -- its $112-billion market value is almost as much as those of Time Warner Inc. and Yahoo combined -- could backfire if advertisers and technology partners begin to support its rivals.