This is probably the closest thing to a rant that I've written as an answer on Quora. I can't help but read a massive sense of entitlement into the answers written below by the Anonymouses, so feel compelled to provide an answer outlining a different experience. :-)

I started at Google as a contractor (technically, I was a temporary employee -- on the payroll of a company named Workforce Logic). After about 9 months I was offered an opportunity to go through Google's conversion process to become a Google FTE, was successful and was extended an offer, and accepted it. I remained a Google employee for another 7.5 years after that. During my time as an employee I hired and/or managed somewhere around 100 contractors, and personally took well over a dozen through conversion.

I *loved* being a contractor at Google. Compared to all of the other places I had previously worked as a contractor (or even as a FTE!), Google was amazing.

• Yes, your badge is a different color -- it's red instead of white (employees), green (interns), blue (vendors?), or brown (Google lore - don't ask).
• Contractors still get to eat all the free food Google is notorious for, use the gym, ride the bus, get massages on campus, attend speaker events (I'm pretty certain I was still a contractor when I got to meet John Legend and not-yet-President Obama), etc.
• Sure, some of those things aren't subsidized for Contractors as much as they are for Employees, but most other companies don't even offer all of those conveniences -- at any price. (Now-FTE-Anonymous: "As a contractor, you have to pay for the shuttle rides to work. $1.50 each way." Really, you're complaining about $1.50? Do you not recognize that the fully loaded cost to Google for each rider is probably 5x that, and that the administrative cost to Google to even track and process your bill really wasn't even worth the amount you paid?).
• Contractors indeed aren't invited to company ski trips, the company Holiday Party, and other such company-funded social events. But that's not because of any 2nd-class citizen ideology or to scrimp on spending money on contractors -- it's to avoid co-employment misclassification that can have severe, negative legal, tax, and other financial implications on the company. (Now-FTE-Anonymous: "but good luck trying to go to one of those awesome company wide parties." Actually, it was super easy to go to those parties. Other than the trips, Googler's typically are allowed to bring a "date", and Contractors now know 10's if not 100's of employees. One of the employees on my team invited me as their +1, and another employee -- who I actually didn't even know -- had my girlfriend-at-the time come as theirs.)
• Pay: My hourly rate as a Contractor, annualized, was actually higher than my base salary when I converted and first became an employee. More than 50% higher. Of course, I didn't receive Google's performance bonus or equity, which ended up being far more valuable. (Other-Anonymous: "how much the agency is taking from you. A contractor is generally giving 15-50% of their base pay to the contracting agency (Adecco, Advantage, Accenture, etc.) that negotiated their pay". Since you don't seem to actually have a clue how it actually works: The contracting agency is who took years landing their contract and establishing the relationship with Google, finds the temp candidates, carries the labor burden, is liable for the acts and performance of their contract employees, and who Google actually pays. You're just the person that the agency plugged in to fill their contract with Google. The agency isn't taking anything from you -- they're giving part of *their* revenue to you as pay so that you will provide your services to *their* client.)
• I also didn't receive Google's medical/dental/vision/401K/vacation benefits, but Google did require its contracted employment partners (as part of their master services agreement) to provide their contractors with some amount of paid vacation, as well as offer subsidized group health insurance -- things that contractors elsewhere generally weren't receiving.

The single most notable, related thing to me at Google though, was that company's culture seems to spawn an internal sense of social equity and justice. During my years there I observed an endless number of mailing list threads, TGIF questions, and direct interactions where Google employees lambasted fellow Google employees (or managers) if ever they had felt those people weren't treating contractors as equals. Cafe staff and massage therapists were the ones most commonly defended against their "management" by employees on mailing list threads and via TGIF questions, but I also witnessed first-hand a junior engineer getting up in the face of a long-time senior engineer who had made a comment about a temp that had jokingly included the phrase "he's just a red-badge". Ended up that the temp was actually the senior engineer's nephew and that it was said all in fun -- but the senior engineer quickly recognized his unconscious bias and apologized.

Me, personally? I never once felt like a 2nd class citizen at Google because I was a contractor.

A few other differences between Contractors and FTEs that I didn't see mentioned in other answers:

• Contractors can't attend weekly TGIF and other meetings where company-confidential topics are discussed with employees. They can, however, attend the typically-around-once-monthly "Social TGIF".
• Contractors don't go through Perf, Google's annual performance review process. While there's the downside that Contractors doesn't receive the same feedback as employees do, the plus side is that they also don't have to spend endless hours *writing* peer feedback for others in the manner that employees do. Contractors - consider this a perk. :-)
• Contractors are generally paid hourly, and receive 1.5x overtime pay for hours in excess of 40/week and 2x for hours in excess of 48?/week. Most employees are salaried, tend to work in excess of 40 hours per week, and don't receive any premium directly for doing so.

Lastly, "Conversion is close to impossible" simply isn't accurate. For example, nearly all members of Google's US staffing organization (i.e. Recruiters, Sourcers, and Recruiting Coordinators) all start as Contractors. The conversion process is highly selective; simply being able to do the job isn't the conversion selection criteria (as it shouldn't be -- getting hired directly into Google as an employee isn't easy so why should a backdoor route be?). Only about the top 10% of performers successfully make it through -- but the vast majority of employees today in the staffing org (I'd estimate 80+% of them) are all converted contractors.

(Other-Anonymous: "You are only allowed to apply to a full-time position once you are 6 months out of your contract completion date (which is generally 3, 6, or 12 months long). If Google opts to convert you, they will pay a hefty price to do so, somewhere in the tens of thousands." The 1st part of your assertion is actually unenforceable under CA Labor Law, and the 2nd part just isn't true. I converted at least a dozen contractors, Google never paid a fee, and when I actually asked about it -- was told by the agencies involved that Google's master contract for its employment partners required that they be willing to release their contractors for conversion at any time without a conversion fee being required.