By Michael J. Martinez
The Associated Press

NEW YORK - Google's initial public stock offering has become a lot of work for relatively little return for Wall Street's brokerage houses, leaving many of them grumbling about an IPO which they still feel they must participate in because of the prestige at stake.

The $2.7 billion offering for online search engine Google Inc. promises to make the biggest IPO splash yet in the post-dot-com era, and 30 brokerage houses have teamed up to facilitate the online public auction the company plans to set its offering price.

The auction system, a rare occurrence on Wall Street, is considered more egalitarian than the traditional IPO, which is heavily managed by brokerage firms and favors larger investors. It's also much less lucrative for the big brokerage firms, which can make tens or hundreds of millions of dollars from a traditional IPO.

The online auction system, while not involving new technologies, does require a great deal of work to link the 30 underwriters to each other and to Google's central order book. While the firms are not commenting on the work, or the costs involved, some in the industry say the costs far outstrip those of a traditional IPO, while the fees and investment returns will be far less.

Indeed, Merrill Lynch has pulled out of the underwriting consortium.

Investment firms have been quietly complaining about the poor margins on the deal. The firms will not officially comment on the IPO because of Google's strict nondisclosure agreement.

"It's hard to tell how much the underwriters are going to be beating down on the underwriting spreads, but they will take a hit somewhat," said Jeremy Dickens, an attorney with Weil, Gotshal & Manges in London who has advised numerous companies on IPOs.

The technology involved in the auction system has been a particular sore point for many firms, especially the smaller investment houses that have had to upgrade their computer systems to meet Google's stringent security and technology requirements.

Many of the complaints result from the timetable Google has demanded. With a target date of July 16 for full system testing, the 30 underwriters who will be allowing bids on Google stock must get the computer systems up and running in a short period of time.