Year in Review: Google Sets the Pace

For the folks at Google, 2005 will be remembered as the year which it transformed itself from a tech darling into an Internet powerhouse. Its moves were watched closely by the media and customers began to develop distrust in the search company. But will Google become the next Microsoft?

The year started out rocky for Google as researchers discovered a flaw in its popular Gmail service that could expose user data to attackers, including passwords. The search giant quickly responded, however, and the problem was fixed within days.

Later in January Google cozied up with upstart browser Firefox, hiring its lead engineer Ben Goodger. And it would surface several days later that fellow developer Darin Fisher had also joined the company. The news spurred rumors that Google might be working on a Web browser, or Gbrowser, but such a project has yet to materialize.

With February came the beta launch of Google's Local Search product, which had previously been relegated to the company's Labs. The new service would spark a "local" race with competitors, as AOL, Microsoft and Yahoo rushed similar services to market.

Google followed with the launch of Google Maps several days later, which arguably kick-started the AJAX movement that would eventually lead Microsoft to unveil Windows Live.

The month of February also brought the first inklings of problems with Google's book searching plans after the National Library of France took issue with the project. Library president Jean-Noel Jeanneney criticized the effort, claiming that Google would reflect an American-centric worldview.

March arrived with the first of two high-profile hirings of former Microsoft employees. Marc Lucovsky joined the company on March 3. Google Desktop Search went final shortly thereafter, but the AFP news wire sued the company over the use of its images on Google News.

Showing its competitors that being young and nimble has its advantages, Gmail storage was upped to 2GB on April 1, leading many to wonder if they were the fool. But Gmail storage continued to creep up beyond 2GB and rivals MSN and Yahoo would be forced to respond.

Making a great product even better, Google took advantage of its Keyhole purchase and satellite imagery was added to Google Maps several days later. MSN and Yahoo would eventually follow suit with satellite mapping services of their own.

Not all of Google's products would win such praise, however. In May, the company released Google Accelerator to speed up the loading of Web pages by loading them through its Web servers. But the program drew the ire of developers who said it could do more harm than good due to the way it follows links and caches pages. Google removed the download to work out the kinks.

Before long, Google announced that it would be officially expanding into China with a research and development center, a story that would later dominate the news coverage surrounding the company.

May ended with more controversy, as a group of academic publishers accused Google Print, the company's book indexing project, of "systematic copyright infringement on a massive scale." Google would soon take even more fire for the endeavor.

Summer began quietly at the GooglePlex, although in June Google CEO Eric Schmidt confirmed rumors that the company was working on an electronic payment system. However, he denied that the service -- later named Google Purchases -- was intended to compete with eBay-owned PayPal.

One of the biggest stories of the year began in the month of July, as Google attempted to hire former Microsoft executive Kai-Fu Lee. Microsoft immediately objected to the hiring, and filed suit in court to stop it. The move would set off a game of legal cat and mouse between the two rivals that would last until the end of the year.

August saw Google put its library project on hold, citing complaints from the publishing community. The company gave publishers until November to decide if they wanted to participate. Still, before the end of the year Google would expand the service by 10,000 titles.

Before Labor Day, the search giant changed clothes and debuted Google Talk, its own instant messaging client. The service received high marks from both users and pundits, and was hailed for its simplicity. Gmail was opened to the public the very next day -- at least to anyone with a mobile phone.

In September, Internet pioneer Vint Cerf joined Google to serve as its Chief Internet Evangelist. But Google Print again met troubles as the Author's Guild filed suit against the company, accusing it of massive copyright infringement.

At the end of the month, the company shook hands with NASA, leading some to wonder if Google was expanding too fast. The two agreed to collaborate on research projects, as well as build a new one million square foot office complex at the NASA Ames Research Center.

In what was likely the most hyped press conference beforehand and the most derided after, Google and Sun joined forces in early October, inking a deal to distribute each other's software. Analysts said that Sun is fighting a battle to stay relevant as the tech world passes it by. Another partnership proved much more promising: sources claimed Google was planning to make an investment in AOL with cable provider Comcast.

Lead Gaim developer Sean Egan also joined Google before the month was out, and said he would work on making other IM clients compatible with Google's voice calling feature and other Google Talk-related projects.

November may have brought chilly weather across the United States, but Google's share price would remain hot. The company's stock eclipsed $400 during the month, and would later surge past $430.

Expanding its search to more types of content, Google upped the ante with eBay and Craigslist by launching Google Base, a database that hosts all types of items, and renamed Google Print to Google Book Search. The company then donated $3 million to create digital copies of rare documents.

Taking the unusual step of becoming a follower rather than innovator, Google added widgets to its homepage in December. The move followed Microsoft's own "Gadget" technology being added to its Live.com homepage, the front door to Windows Live.

Music search was also added to Google's search pages during the month, making it easier for users to find information on artists, album titles and song lyrics. Google Music additionally provides links to download songs if they are available from the major digital music services like iTunes.

For Christmas, Google left a big present under America Online's tree. On December 16 it was announced that the search company would pay Time Warner's AOL subsidiary $1 billion in exchange for a 5 percent stake. The deal covered advertising and promotion of AOL content, leading to concern and speculation.

Closing out the year on a positive note, Google ended its five-month legal battle with Microsoft over Kai-Fu Lee's hiring. Although details of the deal were not disclosed, both companies said they were happy with the terms.

The ball may be dropping soon in Times Square, but 2006 could see Google's valuation soar even higher before investors get scared. Google has firmly established itself as a major player in the online space -- not just as a search engine, but also as a content provider and application developer. The only question is whether Google will keep the growth it has enjoyed so far, or lose ground to its rivals who have finally begun to mobilize on the Web.