How do tech giants make billions of dollars?

The five American tech giants Amazon, Apple, Facebook (Meta), Microsoft and Alphabet had a combined revenue of approximately $1.38 trillion in 2021 (pre-pandemic). It was $900 billion in 2019). Compared to the GDP of the world’s countries, this equates to roughly between Spain ($1.4 trillion) and Brazil ($1.3 trillion). Visual Capitalist has created an interesting infographic showing the income sources of these five companies.

As the article states, these companies mainly make money in two ways:

• either by selling you products,
• or by selling you as a product to advertisers.

Apple, Microsoft and Amazon are mostly in the first group. Apple generates more than half of its revenue from iPhone, Microsoft most (almost a third) from cloud services and Amazon almost half from e-commerce.

Revenues have risen year on year

On the other hand, Meta and Alphabet do things a little differently. Instead of selling a real product, these two tech giants make most of their money by selling their users’ interests. About 98% of Meta’s revenue comes from Facebook ads. 81% of Google’s revenue comes from advertisements in various Google products.

However, despite their different sales methods, these companies all have one thing in common: revenue increases in recent years. In fiscal 2019, the total revenue of the five companies increased by 12% year-on-year, 19% in 2020 and 27% in 2021. You can find more details below.

Amazon

Revenue: $469.8 billion
Profit: $33.4 billion

• 47.3% – Online stores
• 22% – Third-party services (commissions, shipping fees, etc.) to vendors
• 13.2% – Cloud services (Amazon Web Services)
• 6.8% – Subscriptions (Amazon Prime )
• 6.6% – Advertising services
• 3.6% – Physical stores
• 0.5% – Other

Apple

Revenue: $365.8 billion
Profit: $94.7 billion

• 52.5% – iPhone sales
• 18.7% – Services (digital content and services, AppleCare, ApplePay, licenses, etc.)
• 10.5% Wearables
• 9.6% – Mac
• 8.7% – iPad

Alphabet

Revenue: $257.6 billion
Profit: $76 billion

• 69% – Ads (Google, YouTube, Play Store, Gmail, Google Maps)
• 12.3% – Google Ads
• 0.4% – Experimental projects (Waymo, Nest, Wing et al)
• 18.3% – Other

Microsoft

Revenue: $168.1 billion
Profit: $61.3 billion

• 31.3% – Server products and cloud services (Microsoft Azure)
• 23.7% – Office software products and cloud services (MS Office)
• 13.8% – Windows (980710)
• 9.1% – Games
• 6.1% – LinkedIn
• 5.1% – Bing search ads
• 4.1% – Business services
• 4% – Devices (Microsoft Surface)
• 2.7% – Other (980710)

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Meta (Facebook)

Revenue: $117.9 billion
Profit: $39.4 billion

• 97.5% – Advertisement
• 2.5% – Other