How exactly does Google make money?

Many friends, either older or younger, have asked me: how does Google make money? Or, how much has it made? It’s very simple to understand how Google makes its profits. Google is a public company; you just need to look at its financial statements. Here is Google's Q3 2008 financial report that was released on October 16 (original report), and we will analyze the key parts.

Google Q3 Revenue and Expenditure Overview:

1. Total Revenue

In Q3 2008, Google's operating revenue was $5.54 billion, which did not deduct traffic acquisition costs (TAC). This represents a 3% increase from the previous quarter and a 31% increase year-over-year.

2. Net Income

$1.29 billion, with earnings per share (EPS) of $4.06.