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How Big Tech Makes Their Billions

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How Big Tech Makes Their Billions in 2020

How Big Tech Makes Their Billions

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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Mapped: A Snapshot of the Airbnb Landscape in Three Megacities

How expansive has the Airbnb landscape become? Here’s a look at every active Airbnb listing in New York, London, and Paris in Sept 2022.

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Visualizing the Airbnb Landscape in Three Megacities

Since its inception in 2008, Airbnb has grown into one of the most popular travel and short-term accommodation apps on the market.

In 2021 alone, there were more than 300 million bookings (for both accommodation and experiences) made through the app.

To visualize just how massive the Airbnb landscape has become in major cities, this graphic by Preyash Shah shows every single listing in New York, London, and Paris.

About the Data

To make this graphic, Shah used September 2022 data from insideairbnb.com, a website that pulls data directly from the Airbnb app. Once collected, the raw data was then cleaned to include active listings only fitting a few key parameters:

  • Any listing that did not have a review in 2022 was removed
  • The most expensive listings were individually checked to ensure the listing price matched the actual historical price and removed if there was a major discrepancy. This is due to inactive listings that are extremely marked up instead of de-listed

After scrubbing the data, each city’s immediate metro area was left with roughly 20,000 listings.

As the data shows, a majority of these listings were for entire apartments. Paris had the biggest share, with about 85% of listings for entire apartments rather than private or shared rooms.

This is especially interesting considering that Paris has extremely strict regulations around short-term rentals and Airbnb usage, one being that an Airbnb rental must be someone’s primary residence.

Airbnb’s Beginnings

Two co-founders of Airbnb include Brian Chesky and Joe Gebbia, two roommates in San Francisco.

In an act of desperation, they decided to set up and rent out a few air mattresses on the floor of their apartment to help pay their rent. Free breakfast was included with the stay, and after getting $80 a night for each mattress, Chesky and Gebbia knew they were onto something.

Yet, while Airbnb has shown great success over the last decade, it’s received its fair share of criticism from skeptics. Because of concerns over housing supply and price gouging, many cities have put restrictions around the use of Airbnb, or even outright banned the platform.

Like other technology companies, Airbnb has had a challenging year in the stock market. Once valued at $113 billion in 2021, the company is currently sitting closer to a $60 billion market capitalization today.

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Visualizing the World’s Top Social Media and Messaging Apps

From Twitter to TikTok, this infographic compares the universe of social media and messaging platforms by number of monthly active users.

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The Social Media Universe in 2022

For a time, life in the social media universe was mostly uneventful. Consider these spicy (at the time) headlines:

In hindsight, the years leading up to 2016 were downright sleepy in comparison with what would follow. Donald Trump’s meteoric, tweet-powered rise to the presidency. The Cambridge Analytica scandal. Congressional hearings on privacy and bias. TikTok at the center of souring U.S.–China relations. Each new day brought a fresh wave of controversy the shores of once infallible social media platforms.

Today, the honeymoon phase is long over and the messiness of running a global social platform is now on full display. Nowhere is this more evident than Twitter during the current Elon Musk transitional period—but more details on that later.

For now, let’s explore the social media universe in 2022.

Mapping the Social Media and Messaging Universe

In 2022, the social universe is looking more crowded than in previous years.

The scale of Meta’s platforms still dominate thanks to their global reach, but there are a number of smaller networks fighting for market share. Here’s a look at popular platforms, organized from largest to smallest active userbase:

Visualisation showing the largest social media platforms by monthly active users

Meanwhile, here are the top 10 social media and messaging platforms by publicly-available monthly active users:

RankPlatform NameParent CompanyPrimary FunctionMonthly Active Users
#1FacebookMeta PlatformsSocial network2.9 billion
#2YouTubeAlphabetVideo content2.3 billion
#3WhatsAppMeta PlatformsMessaging2.0 billion
#4MessengerMeta PlatformsMessaging1.3 billion
#5InstagramMeta PlatformsVideo content1.2 billion
#6WeChat TencentMessaging1.2 billion
#7TikTokByteDanceVideo content732 million
#8Telegramn/aMessaging700 million
#9DouyinByteDanceVideo content600 million
#10QQTencentMessaging 595 million

YouTube is the only true competition for Meta’s scale and reach. Alphabet’s video content hub with social features boasts more than two billion monthly active users. YouTube’s embrace of the creator economy is nudging the platform further into pure social media territory with the introduction of “handles”.

As seen in the visualization above, China has its own ecosystem of large social and messaging platforms—the largest of these being WeChat.

The only platform in the top 20 that is not based in either the U.S. or China is the privacy-focused messaging app, Telegram. The Dubai-based company has a unique backstory. It was created after the founders of Russian social network VK left the country after resisting government pressure to release data on the social network’s users in Ukraine.

Today, there are also a number of smaller, special interest platforms. OnlyFans, for example, is focused on adult content creators. Parler and Truth Social appeal to users who want fewer constraints on the content they post and consume. BeReal aims to create more authentic moments by prompting users to post a photo at a random time each day.

Below, we dig into a few of these platforms into more depth.

zuckerberg meta 2022

Big Trouble in Little Metaverse

Having a figurehead CEO is a double-edged sword. When things are going well, the market rallies around the successful leader. Case in point, Mark Zuckerberg was named Time’s Person of the Year in 2010. Even as recently as 2016, Glassdoor named the Facebook founder the “most admired tech CEO”.

On the flip side, when the tide turns, it turns fast. After a series of controversies, Zuckerberg took a multi-billion-dollar gamble by renaming his entire company Meta and pivoting its focus to the burgeoning idea of a metaverse. Meta’s New Horizons platform is rumored to have plateaued at about 200,000 active users, which is underwhelming for a company that still reaches a sizable slice of humanity with its other services.

Part of Meta’s near-term success hinges on VR headsets being a hot gift this holiday season. Meta’s cheapest headset is $400, which could be a tough sell in today’s economic environment.

Chart showing falling consumer sentiment in the united states in 2022

Of course, it’s too early to know whether Zuckerberg’s gamble will pay off. As always, all is forgiven once a business unit takes off and becomes profitable.

elon musk twitter 2022

Microblogging with Macro Expectations

Twitter has a complicated history.

The company was launched in the shadow of Facebook’s massive growth, and was saddled with expectations that were tough to meet. Although Twitter has an engaged and influential audience, it hasn’t managed to monetize them at the level of Meta’s platforms (for better or worse). The introduction of Twitter Blue in 2021 did not resonate with users at the scale the company hoped, and “fleets” were essentially written off as a failed experiment.

In addition, Twitter is a magnet for criticism and debate around free speech, in part because of its central place in political discourse.

These issues are directly related to the company’s recent sale to Elon Musk. At the time of this article, Twitter finds itself in the midst of a painful, and very public, internal restructuring.

If reports of an exodus of talent and advertising dollars are to be believed, then the future of one of world’s most influential social media platforms could be at risk.

social media TikTok Douyin 2022

TikTok

Social media has always been dominated by Facebook and its related apps. When a new challenger came along, Facebook either acquired it (Instagram, WhatsApp), or “acquired” their features (Snapchat). TikTok is the first challenger to keep its momentum and growth, even as Instagram rolled out very similar features.

TikTok is also a rare case of a Chinese tech product crossing over into Western markets. The ascendancy of TikTok was not without controversy though. Suspicion over Chinese access to user data continues to be an issue both in the U.S., and in other large markets around the world. TikTok has been banned in India since 2020.

Despite these headwinds, TikTok remains wildly popular. The short-form video platform was the number one downloaded app on the planet, and it remains a favorite of the all-important Gen Z demographic.

nextdoor neighbors citizen 2022

We Shall Surveil

In recent years, neighborhood-based social networks have sprung up and gained traction. NextDoor used physical letters sent to adjacent addresses to supercharge its growth, while Neighbors piggybacked off the popularity of Ring’s doorbell cameras. Although members post about more benign topics such as lost cats and where to find a good plumber, crime is an increasingly common theme as well.

Apps like Neighbors and Citizen have a more overt focus on crime and safety. While the growth of these apps reflects an obvious interest preventing crime, critics point out that the ubiquity of personal surveillance equipment and forums built purely around public safety promote a culture of suspicion in communities.

This type of social network is still quite new, so it remains to be seen if they remain niche communities, or grow into something bigger.

Chaos and Opportunity

It was Sun Tzu who famously said, “In the midst of chaos, there is also opportunity”.

This is the risk and opportunity in the social media universe today. With their massive networks and high switching costs (e.g. personalization, library of existing posts), the largest platforms have created moats that make life hard for upstart brands looking to replace established platforms. On the other hand, controversy on platforms like Twitter and Facebook may cause some users to consider new options.

The multi-billion-dollar question—is dissatisfaction with major platforms temporary, or will emerging networks like Mastodon or BeReal hit critical mass and become new staples for people connecting online. Time will tell.

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