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How Big Tech Makes Their Billions

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Check out the 2022 edition of how Big Tech makes their billions for the latest update.

How Big Tech Makes Their Billions in 2020

How Big Tech Makes Their Billions

Check out the 2022 edition of how Big Tech makes their billions for the latest update.

The world’s largest companies are all in technology, and four out of five of those “Big Tech” companies have grown to trillion-dollar market capitalizations.

Despite their similarities, each of the five technology companies (Amazon, Apple, Facebook, Microsoft, and Alphabet) have very different cashflow breakdowns and growth trajectories. Some have a diversified mix of applications and cloud services, products, and data accumulation, while others have a more singular focus.

But through growth in almost all segments, Big Tech has eclipsed Big Oil and other major industry groups to comprise the most valuable publicly-traded companies in the world. By continuing to grow, these companies have strengthened the financial position of their billionaire founders and led the tech-heavy NASDAQ to new record highs.

Unfortunately, with growth comes difficulty. Data-use, diversity, and treatment of workers have all become hot-button issues on a global scale, putting Big Tech on the defensive with advertisers and governments alike.

Still, even this hasn’t stopped the tech giants from (almost) all posting massive revenue growth.

Revenues for Big Tech Keep Increasing

Across the board, greater technological adoption is the biggest driver of increased revenues.

Amazon earned the most in total revenue compared with last year’s figures, with leaps in almost all of the company’s operations. Revenue from online sales and third-party seller services increased by almost $30 billion, while Amazon Web Services and Amazon Prime saw increased revenues of $15 billion combined.

The only chunk of the Amazon pie that didn’t increase were physical store sales, which have stagnated after previously being the fastest growing segment.

Big Tech Revenues (2019 vs. 2018)

CompanyRevenue (2018)Revenue (2019)Growth (YoY)
Apple$265.6 billion$260.2 billion-2.03%
Amazon$232.9 billion$280.5 billion20.44%
Alphabet$136.8 billion$161.9 billion18.35%
Microsoft$110.4 billion$125.8 billion13.95%
Facebook$55.8 billion$70.8 billion26.88%
Combined$801.5 billion$899.2 billion12.19%

Services and ads drove increased revenues for the rest of Big Tech as well. Alphabet’s ad revenue from Google properties and networks increased by $20 billion. Meanwhile, Google Cloud has seen continued adoption and grown into its own $8.9 billion segment.

For Microsoft, growth in cloud computing and services led to stronger revenue in almost all segments. Most interestingly, growth for Azure services outpaced that of Office and Windows to become the company’s largest share of revenue.

And greater adoption of services and ad integration were a big boost for ad-driven Facebook. Largely due to continued increases in average revenue per user, Facebook generated an additional $20 billion in revenue.

Comparing the Tech Giants

The one company that didn’t post massive revenue increases was Apple, though it did see gains in some revenue segments.

iPhone revenue, still the cornerstone of the business, dropped by almost $25 billion. That offset an almost $10 billion increase in revenue from services and about $3 billion from iPad sales.

However, with net income of $55.2 billion, Apple leads Big Tech in both net income and market capitalization.

Big Tech: The Full Picture

CompanyRevenue (2019)Net Income (2019)Market Cap (July 2020)
Apple$260.2 billion$55.2 billion$1.58 trillion
Amazon$280.5 billion$11.6 billion$1.44 trillion
Alphabet$161.9 billion$34.3 billion$1.02 trillion
Microsoft$125.8 billion$39.2 billion$1.56 trillion
Facebook$70.8 billion$18.5 billion$665.04 billion
Combined$899.2 billion$158.8 billion$6.24 trillion

Bigger Than Countries

They might have different revenue streams and margins, but together the tech giants have grown from Silicon Valley upstarts to global forces.

The tech giants combined for almost $900 billion in revenues in 2019, greater than the GDP of four of the G20 nations. By comparison, Big Tech’s earnings would make it the #18 largest country by GDP, ahead of Saudi Arabia and just behind the Netherlands.

Big Tech earns billions by capitalizing on their platforms and growing user databases. Through increased growth and adoption of software, cloud computing, and ad proliferation, those billions should continue to increase.

As technology use has increased in 2020, and is only forecast to continue growing, how much more will Big Tech be able to earn in the future?

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Real Estate

Charted: U.S. Median House Prices vs. Income

We chart the ever-widening gap between median incomes and the median price of houses in America, using data from the Federal Reserve from 1984 to 2022.

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A cropped chart with the ever-widening gap between median house prices vs. income in America, using data from the Federal Reserve from 1984 to 2022.

Houses in America Now Cost Six Times the Median Income

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

As of 2023, an American household hoping to buy a median-priced home, needs to make at least $100,000 a year. In some cities, they need to make nearly 3–4x that amount.

The median household income in the country is currently well below that $100,000 threshold. To look at the trends between median incomes and median house prices through the years, we charted their movement using the following datasets data from the Federal Reserve:

Importantly this graphic does not make allowances for actual household disposable income, nor how monthly mortgage payments change depending on the interest rates at the time. Finally, both datasets are in current U.S. dollars, meaning they are not adjusted for inflation.

Timeline: Median House Prices vs. Income in America

In 1984, the median annual income for an American household stood at $22,420, and the median house sales price for the first quarter of the year came in at $78,200. The house sales price-to-income ratio stood at 3.49.

By pure arithmetic, this is the most affordable houses have been in the U.S. since the Federal Reserve began tracking this data, as seen in the table below.

A hidden caveat of course, was inflation: running rampant towards the end of the 70s and the start of the 80s. While it fell significantly in the next five years, in 1984 the 30-year fixed rate was close to 14%, meaning a significant chunk of household income went to interest payments.

DateMedian House
Sales Price
Median Household
Income
Price-to-Income Ratio
1984-01-01$78,200$22,4203.49
1985-01-01$82,800$23,6203.51
1986-01-01$88,000$24,9003.53
1987-01-01$97,900$26,0603.76
1988-01-01$110,000$27,2304.04
1989-01-01$118,000$28,9104.08
1990-01-01$123,900$29,9404.14
1991-01-01$120,000$30,1303.98
1992-01-01$119,500$30,6403.90
1993-01-01$125,000$31,2404.00
1994-01-01$130,000$32,2604.03
1995-01-01$130,000$34,0803.81
1996-01-01$137,000$35,4903.86
1997-01-01$145,000$37,0103.92
1998-01-01$152,200$38,8903.91
1999-01-01$157,400$40,7003.87
2000-01-01$165,300$41,9903.94
2001-01-01$169,800$42,2304.02
2002-01-01$188,700$42,4104.45
2003-01-01$186,000$43,3204.29
2004-01-01$212,700$44,3304.80
2005-01-01$232,500$46,3305.02
2006-01-01$247,700$48,2005.14
2007-01-01$257,400$50,2305.12
2008-01-01$233,900$50,3004.65
2009-01-01$208,400$49,7804.19
2010-01-01$222,900$49,2804.52
2011-01-01$226,900$50,0504.53
2012-01-01$238,400$51,0204.67
2013-01-01$258,400$53,5904.82
2014-01-01$275,200$53,6605.13
2015-01-01$289,200$56,5205.12
2016-01-01$299,800$59,0405.08
2017-01-01$313,100$61,1405.12
2018-01-01$331,800$63,1805.25
2019-01-01$313,000$68,7004.56
2020-01-01$329,000$68,0104.84
2021-01-01$369,800$70,7805.22
2022-01-01$433,100$74,5805.81

Note: The median house sale price listed in this table and in the chart is from the first quarter of each year. As a result the ratio can vary between quarters of each year.

The mid-2000s witnessed an explosive surge in home prices, eventually culminating in a housing bubble and subsequent crash—an influential factor in the 2008 recession. Subprime mortgages played a pivotal role in this scenario, as they were issued to buyers with poor credit and then bundled into seemingly more attractive securities for financial institutions. However, these loans eventually faltered as economic circumstances changed.

In response to the recession and to stimulate economic demand, the Federal Reserve reduced interest rates, consequently lowering mortgage rates.

While this measure aimed to make homeownership more accessible, it also contributed to a significant increase in housing prices in the following years. Additionally, a new generation entering the home-buying market heightened demand. Simultaneously, a scarcity of new construction and a surge in investors and corporations converting housing units into rental properties led to a shortage in supply, exerting upward pressure on prices.

As a result, median house prices are now nearly 6x the median household income in America.

How Does Unaffordable Housing Affect the U.S. Economy?

When housing costs exceed a significant portion of household income, families are forced to cut back on other essential expenditures, dampening consumer spending. Given how expanding housing supply helped drive U.S. economic growth in the 20th century, the current constraints in the country are especially ironic.

Unaffordable housing also stifles mobility, as individuals may be reluctant to relocate for better job opportunities due to housing constraints. On the flip side, many cities are seeing severe labor shortages as many lower-wage workers simply cannot afford to live in the city. Both phenomena affect market efficiency and productivity growth.

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