How Tech Companies Make Their Money From You

Google, Apple, Amazon, Microsoft and Facebook are the giants of the digital world you live in today and set the tone for consumer behavior. They are part of the Big Tech group – that is, digital giants that shape the world around them according to their own interests and less for the real benefit of users.

For this reason, the numbers are staggering.

To get an idea of how big these companies are, you need to know that Microsoft, Google, Apple, Amazon and Facebook are worth a total of no less than $7,000 billion. Here is the market value of each company:

1. Microsoft: $1.550 billion
2. Google: $1.060 billion
3. Apple: $2 trillion
4. Amazon: $1.610 billion
5. Facebook: $800 billion

In terms of how these companies make their money from you, we can certainly say that in addition to the excellent products and incredible services they offer, they certainly benefit from a very efficient and well-developed distribution strategy.

1. Microsoft has a diversified business model based on products, services and advertising. Of Microsoft’s total sales, 28% is represented by the Microsoft Office system, while 24% comes from server products and tools. The rest of the sales come from the sale of Xbox (10%), Windows PC operating system (10%), advertising (8%), consulting and product support services (7%), and devices (5%). The last 8 percents come from LinkedIn and other related products or services.

2. Google has an advertising business model. This means that Google claims 86% of its total revenue strictly through advertising. The rest comes from apps, Google cloud and hardware.

3. Apple has a product based business model. It’s probably no surprise that almost 61% of Apple’s revenue comes from selling iPhones. The rest of the money comes from services they sell to you (13%), from the sale of laptops and Mac personal computers (11%), from the sale of iPads (8%), and the remaining 7% comes from the sale of other products such as Apple TV, Apple Watch or iPad touch.

4. Amazon has a diversified business model based on products, services and subscription-based services. Therefore, Amazon earns 60% of its revenue from online stores, and only 3% from physical stores. Third-party seller services provide Amazon with 18% of its revenue, while the rest come from subscription services (6%), AWS (10%) and others.

5. Facebook has an advertising business model, tapping into the value of its billion users. Almost 98% of its revenue comes from advertising (Facebook and Instagram), while the remaining almost 2% comes from payments and other fees.

It seems that these big companies have known how to take advantage of the growing need for technology in our busy and always connected lives. Experience and current data can only suggest that these companies will grow even more, probably monopolizing other several markets and types of products, thus strengthening their power and influence.