Sell users for advertising
There are two main ways that big techs generate revenue: either they sell you a product or service, or they sell you to advertisers.
Apple, Microsoft, and Amazon belong to the first category. Like a brick-and-mortar business, these companies offer products to consumers, whether physical or digital, in exchange for money. More than half of Apple’s revenue comes from iPhone sales, while Microsoft’s Azure cloud network contributes to a quarter of the company’s sales. Amazon’s e-commerce arm, the company’s main business, brings in 50% of the profits for Jeff Bezos’ pet.
In the opposite direction, we have businesses like Meta and Alphabet. Instead of selling products, these two tech giants make most of their money from “attention trading”. 98% of Meta revenue comes from Facebook ads, while Google generates 81% from advertising across many of its online products.
While they differ on how they make their money, all of these giants have seen strong revenue growth over the past year.
Pandemic accelerates growth:
Amid escalating unemployment due to the pandemic, these five companies still saw strong revenue growth.
If in 2019, the total revenue of the five companies grew by 12%, in 2020, this number has increased to 19%. By the end of 2021, the company’s total revenue had a growth rate of more than 2 times in 2019, at 27%.
This is possible because the pandemic has caused many people to switch to the services of 5 big tech. For example, the social distancing order led to a sharp increase in e-commerce sales, and the closure of offices caused an increase in the demand for cloud services.
Will this number continue to climb?
In many countries, the relaxation of the order has helped the world gradually return to normal. That, however, does not mean that the growth of big tech will decrease. According to Visual Capitalist, the changes caused by the pandemic have changed consumer behavior, and the habits of using big tech’s products will probably still increase in the future.
For example, a study by the Globalization Partners institute on a global scale shows that three-quarters of employees surveyed have prioritized remote working since the pandemic. The e-commerce industry is also estimated to grow steadily, reaching $7 trillion in 2025, according to Emarket.
at Blogtuan.info – Source: genk.vn – Read the original article here
