Google did auction blocks of shares. They ended up getting less for the shares than they were expecting to sell them for, and the price still rose by 18% later in the day.
On paper the Vickrey auction method still makes far more sense, but bankers don't like it because they can't give preferential treatment to their favoured clients.
The modest 18% increase is likely due to the fact that demand for Google's shares increased since they held the dutch auction. Compare this to Netscape which jumped well over 200% on its first day.
The 18% increase was a result of the auction designs's flaws. Buyers of course have a demand curve but for this auction they were required to pick a single demand point. So, googles IPO price was $85. If I was a big buyer who actually bid 100,000 shares at $120 for the auction, I would have received my 100,000 shares at $85. But my demand is a curve - I would probably be willing to buy 125,000 shares at $100 or 175,000 shares at $85.
So, the price increase on the first day was more due to bidders filling their demand at the IPO price.
On paper the Vickrey auction method still makes far more sense, but bankers don't like it because they can't give preferential treatment to their favoured clients.