Mountain View (CA) – For the past ten years, there have been very few companies that outspent Google. Hiring their employees by the thousands, and giving out employee benefits among which were thing three free meals a day, ski trips, personal trainers, free physicians and on site laundry facilities. Engineers were allowed to spend 20% of their time working on own ideas, projects and concepts. The main goal of the company was product development so that ultimately it would no longer have to rely on Internet ad revenue. However, the declining economy is likely to change the overall environment at Google as well.
The economic crisis is affecting Google’s revenue as well and it seems that the company’s popular streams of income like Google Checkout, and Google TV Ads are not bringing home the bacon. Google online ads still represent 97% of the firm’s income. In an effort to combat the current economy and the recession Google plans to cut its spending and it will be cutting certain projects, reports suggest. Apparently, Google has plans to start cutting projects that do not matter, are not exciting, have not been a big hit in beta tests and have no opportunity of revenues.
For example, last month along Google pulled the plug on a customizable search site that was designed to experiment with different methods of search result organization. This month will bring an end to Google’s “virtual world” Lively, which launched over the summer, allowing users to create avatars that roam from room to room in a virtual hangout.
Additionally, Google is no longer going to provide Web services sans ads in an attempt to generate more income. On November 17, the company started running ads on Google Finance, its financial news site.
Executives at Google claim they have begun preparing for slower rates of growth over a year ago. However, the current state of the economy seems to be forcing them to make more drastic changes now. Over the past few weeks, CEO Eric Schmidt reportedly held meetings with top Google execs to figure out where they need to focus their time and efforts. The top priorities of the company include the display of ads, mobile phone advertising and online business software.
In the fall, Google announced plans to cut almost 10,000 contract workers from its workforce, which are or have been employed in jobs ranging anywhere from engineering to food services. The timing of the layoffs has not been disclosed.
Perks at Google have also started to diminish. In the last few months, the company reduced its free cafeteria service hours and suspended the traditional afternoon tea in the New York office.
Google’s efforts could potentially be paying off already. In October, when other companies such as Yahoo and Ebay were forced to let employees go after the announcement of poor third quarter results, Google beat analyst’s expectations.