Yes, it is true. You don't pay anything but Google still manages to cash in 27 cents per every search you enter in the search box. The average revenue per searcher is $7. Google market cap is more than 100 billion dollars which makes it one of the 20 largest companies in the world.
Read more in $94, er, $106 Billion by John Battelle, the author of The Search, a textbook about the search industry.
What is the secret of their success?
Sergey Brin, a Google founder: "If the executives controlled what projects were pushed forward at Google, most of the products that have made Google successful would have never been passed."
This is a perfect example of how important is to have an open mind for new ideas.
Google employees devote 20 % of their work time to personal projects. Adsense/Adwords, which provide the majority of the company's revenue, was started that way, also Gmail and Google News.