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Unfortunately this is too slow to be usable even on a very fast internet connection.

Interesting, thanks for the link!

Google implementation of an office suite is very popular at middle, high school, and online universities (even though most of them offer the free Office365).

how it works? looks like a VNC .

All remote application access technologies are similar to a certain extent. It is similar to VNC in the way image of application is captured, but does much more than simply showing content of the frame buffer on the client.