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The biggest tech companies in the world — Amazon, Google, Facebook, Microsoft and Apple — are equal parts fascinating, terrifying, and mystifying. These companies touch billions of lives every day; they change the way we think, feel, and act. And their consolidating economic power is becoming the dominant business story of our time.
For all of their commonalities, it seems that there is less of a mold for how these tech giants end up generating cashflow. But before we get to how Big Tech makes its money, let’s start by looking at the financials at a higher level. The following data comes from the 2018 10-K reports filed last year.
These tech giants also have a consumer-facing aspect to their business that is front and center. With billions of people using their platforms globally, these companies leverage user data to tighten their grip even more on market share. At the same time, this data is a double-edged sword, as these same companies often find themselves in the crosshairs for mishandling personal information.
Together, the Big tech giants combined for just over $800 billion of revenue in 2018, which would be among the world’s 20 largest countries in terms of GDP. Meanwhile, they generated a total of $139 billion of net income for their shareholders, good for a 17.3% profit margin.
Apple, Amazon, Facebook, Alphabet and Microsoft rake in a total of around $800 billion in revenues every year, but according to these graphs from Visual Capitalist, their revenue sources are surprisingly different.
From the graph below, you can see that the leading revenue stream at Apple is currently iPhones. It made up 62.8% of Apple’s revenues in 2018, while Mac and iPads contributed to 9.6 and 7.1%, respectively.
In the case of Amazon, online stores might have constituted more than half of the retail giant’s revenues, but Visual Capitalist points out that one of the fastest-growing sectors of Amazon is actually sales from its physical stores.
Alphabet, the parent company of Google, and Facebook are more similar in the sense that both companies rely on ads as their top source of revenue. Advertising from various Google properties, which include YouTube, forms 70.4% of Google’s revenues, while at Facebook it’s a staggering 98.5%.
Microsoft, which probably has the most diversified revenue streams among the Big Five. It No. 1 revenue source is Office products, but it also makes money from various avenues, including its search engine Bing.
Finally, all of these companies have a similar origin story: they were founded or incubated on the fertile digital grounds of the West Coast. The company that has the weakest claim to such origins would be Facebook, but even it has been based in Silicon Valley since June 2004.