When the 2008 recession hit, Google watchers were shocked to learn that the company would be laying off up to 10,000 employees, nearly half its workforce. Almost all of those at risk to go were contract workers. "There is no question the number of workers is too high," said Brin.[]

Eric Schmidt described the company's reaction to the economy as dealing with dark matter. Still, Google was in an excellent position to benefit from the global economic slump for several reasons:

  • During such times, weaker companies disappear, and the strong, surviving companies either acquire the failing companies or seize their market share.

  • Google had a large amount of cash on hand.

  • According to some experts, online advertising may not be as strong as expected, but it will continue to grow. The marketing-research firm eMarketers predicted that Internet advertising would grow by 8.9 percent in 2008, as compared with the original prediction of 14.5 percent.

  • Google can take the opportunity to fine-tune its product line, cherry picking the strong and potentially profitable projects and deleting those less likely to add significantly to the bottom line. Google immediately announced that it would drop its Lively-3D Avatars and Rooms, a virtual world, and Search Mash, an experimental search engine.

With a strong revenue stream and plenty of room to trim down, Google could emerge from economic hard times stronger and wiser.

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