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Research and Development

The following table presents our research and development expenses, and research and development expenses as a percentage of our revenues for the periods presented (dollars in millions):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

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Research and development expenses increased $49.8 million from 2008 to 2009. This increase was primarily due to an increase in labor related costs of $138.3 million largely as a result of a 14% increase in research and development headcount, partially offset by a decrease in professional services costs of $73.8 million, the majority of which were related to consulting costs, and a decrease in amortization of intangible assets of $22.6 million as certain intangible assets have been fully amortized.

Research and development expenses increased $673.2 million from 2007 to 2008. This increase was primarily due to an increase in labor and facilities related costs of $387.1 million as a result of a 25% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $162.6 million.

We expect that research and development expenses will increase in dollar amount and may increase as a percentage of revenues in 2010 and future periods because we expect to continue to invest in building the necessary employee and systems infrastructures required to support the development of new, and improve existing, products and services.

Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses decreased $31.5 million from the three months ended March 31, 2008 to the three months ended March 31, 2009. This decrease was primarily due to a decrease in stock-based compensation expense of $25.2 million as a result of certain acquisition related equity awards which fully vested during the second quarter of 2008.

Research and development expenses decreased $91.7 million from the three months ended December 31, 2008 to the three months ended March 31, 2009. This decrease was primarily due to lower annual bonus expense recognized in the three months ended March 31, 2009 compared to the three months ended December 31, 2008.

We expect that research and development expenses may increase in dollar amount and as a percentage of revenues in 2009 and future periods because we expect to continue to invest in building the necessary employee and systems infrastructures required to support the development of new, and improve existing, products and services.

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Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of our revenues for the periods presented (dollars in millions):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased $28.7 million from the three months ended September 30, 2008 to the three months ended December 31, 2008. This increase was primarily due to an increase in certain labor and facilities related costs of $23.4 million and an increase in stock-based compensation expense of $12.8 million. These increases were partially offset by a decrease in consulting costs of $14.7 million.

Research and development expenses increased $673.2 million from the year ended December 31, 2007 to the year ended December 31, 2008. This increase was primarily due to an increase in labor and facilities related costs of $387.1 million as a result of a 25% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $162.6 million.

Research and development expenses increased $891.4 million from the year ended December 31, 2006 to the year ended December 31, 2007. This increase was primarily due to an increase in labor and facilities related costs of $708.0 million as a result of a 57% increase in research and development headcount, including an increase in stock-based compensation expense of $282.3 million. In addition, there was an increase in depreciation and related expenses of $72.3 million due to our increased capital expenditures.

We expect that research and development expenses will continue to increase in dollar amount and may increase as a percentage of revenues in 2009 and future periods because we expect to employ more research and development personnel on average compared to prior periods and build the infrastructure required to support the development of new, and improve existing, products and services.

Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased $22.4 million from the three months ended June 30, 2008 to the three months ended September 30, 2008. This increase was primarily due to an increase in labor and facilities related costs of $40.6 million as a result of a 6% increase in research and development headcount. This increase was partially offset by a decrease in stock-based compensation expense of $18.0 million, primarily driven by certain equity awards which fully vested during the three months ended June 30, 2008.

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Research and development expenses increased $155.9 million from the three months ended September 30, 2007 to the three months ended September 30, 2008. This increase was primarily due to an increase in labor and facilities related costs of $93.1 million as a result of a 32% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $38.6 million.

Research and development expenses increased $570.7 million from the nine months ended September, 2007 to the nine months ended September 30, 2008. This increase was primarily due to an increase in labor and facilities related costs of $316.8 million as a result of a 32% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $141.9 million and an increase in fees for professional services of $49.6 million, the majority of which were related to consulting costs.

We anticipate that research and development expenses will continue to increase in dollar amount and may increase as a percentage of revenues in 2008 and future periods because we expect to employ more research and development personnel compared to prior periods and build the infrastructure required to support the development of new, and improve existing, products and services.

Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased $9.1 million from the three months ended March 31, 2008 to the three months ended June 30, 2008.

Research and development expenses increased $150.1 million from the three months ended June 30, 2007 to the three months ended June 30, 2008. This increase was primarily due to an increase in labor and facilities related costs of $74.5 million as a result of a 43% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $30.3 million, an increase in fees for professional services of $16.0 million and an increase in depreciation and related expenses of $14.3 million due to our increased capital expenditures.

Research and development expenses increased $414.8 million from the six months ended June 30, 2007 to the six months ended June 30, 2008. This increase was primarily due to an increase in labor and facilities related costs of $223.8 million as a result of a 43% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $103.3 million, an increase in fees for professional services of $38.7 million, and an increase in depreciation and related expenses of $25.7 million due to our increased capital expenditures.

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We anticipate that research and development expenses will increase in dollar amount and may increase as a percentage of revenues in 2008 and future periods because we expect to hire more research and development personnel and build the infrastructure required to support the development of new, and improve existing, products and services.

Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased $42.3 million from the three months ended December 31, 2007 to the three months ended March 31, 2008. This increase was primarily due to an increase in stock-based compensation of $32.4 million. In addition, labor and facilities related costs increased $20.7 million as a result of a 13% increase in research and development headcount which also includes the increased headcount resulting from our acquisition of DoubleClick.

Research and development expenses increased $264.7 million from the three months ended March 31, 2007 to the three months ended March 31, 2008. This increase was primarily due to an increase in labor and facilities related costs of $149.2 million as a result of a 60% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $73.0 million, an increase in fees for professional services of $22.7 million and an increase in depreciation and related expenses of $11.4 million due to our increased capital expenditures.

We anticipate that research and development expenses will increase in dollar amount and may increase as a percentage of revenues in 2008 and future periods because we expect to hire more research and development personnel and build the infrastructure required to support the development of new, and improve existing, products and services.

Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased $16.6 million from the three months ended June 30, 2007 to the three months ended September 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $22.0 million as a result of a 15% increase in research and development headcount, an increase in depreciation and related expenses of $10.9 million due to our increased capital expenditures, an increase in professional services of $6.3 million and an increase in travel and entertainment expenses of $5.2 million. Theses increases were partially offset by a decrease in stock-based compensation expense of $26.3 million (see discussion below).

Research and development expenses increased $236.1 million from the three months ended September 30, 2006 to the three months ended September 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $117.4 million as a result of a 60% increase in research and development headcount and an increase in accrued expense related to our annual bonus plan. In addition, there was an increase in stock-based compensation expense of $68.9 million (see discussion below), an increase in professional services of $22.0 million and an increase in depreciation and related expenses of $18.6 million due to our increased capital expenditures.

Research and development expenses increased $647.4 million from the nine months ended September 30, 2006 to the nine months ended September 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $316.5 million as a result of a 60% increase in research and development headcount as well as an increase in accrued expense

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related to our annual bonus plan. In addition, there was an increase in stock-based compensation expense of $203.1 million (see discussion below), an increase in depreciation and related expenses of $47.8 million due to our increased capital expenditures and an increase in professional services of $44.8 million.

We anticipate that research and development expenses will increase in dollar amount and may increase as a percentage of revenues in 2007 and future periods because we expect to hire more research and development personnel and build the infrastructure required to support the development of new, and improve existing, products and services. In addition, we expect greater stock-based compensation expenses as a result of the launch of our employee TSO program (see discussion below).

Research and Development.

The following table presents our research and development expenses, and research and development expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased $123.7 million from the three months ended March 31, 2007 to the three months ended June 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $63.2 million as a result of an increase in accrued expense related to our annual bonus plan and a 15% increase in research and development headcount. In addition, there was an increase in stock-based compensation expense of $36.2 million (see discussion below).

Research and development expenses increased $249.5 million from the three months ended June 30, 2006 to the three months ended June 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $116.1 million as a result of a 60% increase in research and development headcount and an increase in accrued expense related to our annual bonus plan. In addition, there was an increase in stock-based compensation expense of $86.4 million (see discussion below) and an increase in depreciation and related expenses of $14.5 million primarily as a result of an increase in our capital expenditures.

Research and development expenses increased by $411.3 million from the six months ended June 30, 2006 to the six months ended June 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $199.0 million as a result of a 61% increase in research and development headcount as well as an increase in accrued expense related to our annual bonus plan. In addition, there was an increase in stock-based compensation expense of $134.1 million (see discussion below), an increase in depreciation and related expenses of $29.1 million primarily as a result of an increase in our capital expenditures, as well as an increase in professional services of $22.8 million.

We anticipate that research and development expenses will increase in dollar amount and may increase as a percentage of revenues in 2007 and future periods compared to 2006 because we expect to hire more research and development personnel and build the infrastructure required to support the development of new, and improve existing, products and services. In addition, we expect greater stock-based compensation expenses as a result of the launch of our employee TSO program (see discussion below).

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