Google Inc. closed its unusual auction and initial shares of the company were priced late yesterday at $85 each – the low end of estimates that the company revised downward hours earlier.

Despite the lowered price and reducing the number of shares to be sold to 19.6 million from 25.7 million, the offering is one of the biggest and highly anticipated for an Internet company, surpassing the hot issues of the dotcom boom.

Investors who bid above the selling price will only pay the per-share IPO price. If there’s demand for more than the company’s 19.6 million shares, successful bidders may get just a percentage of what they requested.

One of the last unknowns in Google’s four-month initial public offering saga, the final IPO price, established in an unusual auction involving would-be investors, sets the stage for public trading of the company’s stock, under the ticker symbol “GOOG,” for as early as today on the Nasdaq stock market.

Earlier yesterday, Google dramatically lowered its estimated per-share price range to between $85 and $95, down from the previous range of from $108 to $135.

At the final price, the offering will raise $1.67 billion and give the world’s most popular search engine a market capitalization of $23.1 billion. If the stock had debuted at the high end of the original estimate, it would have raised as much as $3.6 billion and given Google a market cap of as high as $36 billion.

The bumpy IPO process has created several clouds over the company, which has been criticized for being too idealistic, arrogant, and reckless since it began the IPO process four months ago.

Its prospectus indicates that Google still faces regulatory questions. In one case, it said the SEC “has requested additional information concerning the publication” of an interview of Google founders Sergey Brin and Larry Page that appeared in September’s issue of Playboy magazine.

That was a potential violation of the SEC’s rules against talking publicly before an IPO about information that is not included in the prospectus.

Google also has admitted that the agency has launched an informal inquiry into its issuance of millions of pre-IPO shares and options without registering them.

The auction – another source of controversy – was supposed to democratize the IPO process, which is usually limited to investors connected to investment banks. Still, many analysts questioned whether Google’s projected price was affordable to average investors.

Before the surprise announcement early yesterday, first announced in an email to potential investors, some observers had questioned whether Google’s triple-digit price estimate was realistic, given the rocky stock market conditions in recent weeks. Several companies, in fact, have delayed or abandoned plans to go public.

A lawyer with Germany’s DSW private investor association, Thomas Hechtfischer, said that the move “confirms the tendency of previous offerings, that the investors won’t jump at everything.”

Andre Kuttner, manager of the Unisector: High Tech fund at Union Investment in Frankfurt, which is registered for the auction, said even the new bottom end of the price range, $85, was still “relatively expensive.”

“It means the demand simply wasn’t strong enough at the given price,” he said.

But Google, until yesterday, surprised many by bucking the market trends for so long. In fact, it’s repeatedly been a source of surprises since it announced its public stock offering in April.

It eschewed Wall Street tradition and decided that the final IPO price would be set by an auction. Its founders wrote an idealistic letter in its prospectus, outlining the company’s “Don’t Be Evil” mantra and plan to avoid the trappings of traditional companies.

Google also has been embroiled in controversies. It revealed that millions of its pre-IPO shares and options were issued to employees and contractors without being registered, prompting a SEC inquiry.

John Tinker, an analyst at ThinkEquity Partners, said he wasn’t surprised about the lowered price range, citing how the auction process has been slop py and complicated, and further exacerbated by Google’s Playboy interview.

“The stock market has also been off, and Google has got to be affected by that,” he said.

The initial price range was overvalued, Mr. Tinker said, and “investors are probably now saying the stock price will go higher as the market figures it out.”

Despite the missteps, few deny that Google is both very popular and prosperous.

Since it was founded in 1998 by Stanford University students Messrs. Page and Brin, it has always been something of an oddball. Its design has no flashy ads but a simple, quick-loading layout. Its search algorithm out-powers rivals. Its name became synonymous with Internet search.

The Mountain View, Calif.-based company, which makes money by selling unintrusive text advertising, managed to prosper as a private company even while other dot-coms were collapsing. Now, as the technology industry is just recovering, Google stands to prosper even more.

In the second quarter of this year, for instance, Google earned $79.1 million, or 30 cents a share, compared with $32.2 million, or 12 cents a share, in the same period last year. Sales more than doubled, to $700 million in the latest period from $311 million last year.

Messrs. Page and Brin, employees, and other early investors stand to profit handsomely in the IPO – even with a lower anticipated range.

In earlier filings, the company said the co-founders will each sell about 1 million of their shares, which would have generated $117 million for each based on the midpoint of the old range.

Now, according to yesterday’s filing, the two will each offer about 480,000 shares, which will be worth $43.2 million based on a final IPO price of $90, the midpoint of the new range. They each will hold enough other shares to make them billionaire, at least on paper, if the IPO is successful.

Venture capitalists won’t be offering any of their shares initially, canceling major payouts. Google board member, John Doerr of Kleiner Perkins Caufield & Byers, was to have sold 2.1 million of 21 million shares; Michael Moritz, another board member and a partner at Sequoia Capital, was to shed 2.4 million of his 23.9 million shares.

But Yahoo Inc. and America Online Inc., which were early investors in Google, still plan to sell.

Yahoo, now one of Google’s biggest rivals, is selling 1,610,758 shares; AOL will unload 743,745, according to the filing. At $90 per share, Yahoo would collect $145 million, while AOL, part of Time Warner Inc., would reap $66.9 million.

According to Google’s e-mail, pre-IPO shareholders expect to sell 5.5 million shares, less than half the 11.6 million originally planned. The company itself will sell 14.1 million shares, which is unchanged from previous filings.