In this article we will look at how the Big-Tech giants made their billions as well as how much they’ve grown in recent years.
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Apple, Amazon, Google (Alphabet), Meta, and Microsoft, the Big Five tech behemoths, generated $1.4 trillion in revenue in 2021.
As the big IT companies prepare to report earnings this week, it’s important to know where the money comes from and how it’s distributed.
Below, Visual Capitalist visualize the main ways that these IT behemoths earn money, as well as how much they’ve grown in recent years.
Breaking Down Big Tech’s Revenue Streams
Big IT corporations make money in two ways:
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- They either sell you a product
- Or sell you as the product to advertisers
Apple, Microsoft, and Amazon fall into the first category, offering customers a physical (or digital) product in exchange for money, as do most traditional businesses. iPhone sales account for nearly half of Apple’s revenue, Azure cloud services account for nearly a third of Microsoft’s total revenue, and Amazon’s online stores account for nearly half of the company’s revenue.
Meta and Alphabet, on the other hand, take a slightly different approach. Rather than selling a physical product, these two tech behemoths generate the majority of their money by selling the attention of their audience. Facebook ads account for about 98 percent of Meta’s revenue, whereas advertising on various Google products accounts for 81 percent of Google’s revenue.
Regardless of how they generate sales, these businesses all have one thing in common: their revenues have risen dramatically in recent years.
The Pandemic Has Sped Up Growth
Despite rising unemployment and pandemic-induced chaos, the Big Five saw a large increase in revenue.
Big tech’s combined revenue increased by 12% in 2019 (pre-pandemic). Despite the onset of the global pandemic and the severe economic obstacles that accompanied it, big tech boosted its combined revenue by 19% the next year.
Big tech’s aggregate revenue increased by 27 % year over year in the fiscal year 2021.
How did these companies remain profitable in the face of economic uncertainty and global unrest? It was made possible because COVID-19-induced societal shifts resulted in increased demand for big tech’s products and services.
Lockdown limitations, for example, compelled consumers to shop online, resulting in a surge in e-commerce sales. As offices closed and firms shifted to totally virtual workspaces, demand for laptops and cloud-based services soared.
Is Growth Here to Stay?
COVID-19 restrictions have been eased in most countries, and the world has returned to normalcy.
That isn’t to say that big tech won’t continue to grow. In reality, the pandemic-induced changes to our work and shopping patterns are likely to continue, implying that the increased demand for big tech’s services is likely to persist.
A global survey found that two-thirds of employees believe their employer will make remote work a permanent option. And, over the next few years, worldwide e-commerce revenues are predicted to expand rapidly, reaching $7 trillion by 2025.