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This Chart Reveals Google’s True Dominance Over the Web

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This Chart Shows Google's True Dominance on the Web

This Chart Reveals Google’s True Dominance Over the Web

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Yes, we all know that Google is dominant in the realm of search.

But at the same time, the internet is also a huge place – and building a decent searching algorithm can’t be that hard, right?

This week’s chart is a bit mind-boggling, because it makes the case that Google is even more dominant than you may have guessed. Between all Google features and the search giant’s YouTube subsidiary, more than 90% of all internet searches are taking place through the company.

The Hard Data

According to Jumpshot (via SparkToro), a marketing analytics firm that licenses anonymous ClickStream data from hundreds of millions of users, about 62.6% of all searches online are through Google’s core function.

But that’s just the beginning, as that number doesn’t include other Google functions like image search or Google Maps, or properties such as YouTube:

Search Platform% of Searches
Google62.6%
Google (image)22.6%
YouTube4.3%
Google Maps1.3%
Google Total90.8%

Together, Google holds onto an impressive 90.8% market share of web, mobile, and in-app searches – though it should be noted that the above source does not include iPhone data at scale yet.

The Google-opoly

How does Google keep up such a massive market share, and why can’t a real competitor in search emerge?

The answer has to do with platforms and apps. Google’s strategy is to go where the users are, and to ensure that wherever they go, a Google search is not hard to do.

Over a decade ago, this meant being the home page on every internet browser – but more recently, it’s taken the form of internet browser market share (Chrome), mobile OS market share (Android), owning the dominant video platform (YouTube), and even venturing into your dwelling with Google Home.

As a result of these efforts, whenever users are searching, Google has never been far away.

Low Bids from Competition

There are competitors that dare to pluck away at Google’s market share in search and ad revenue.

Microsoft’s Bing is the most known one, and it has the advantage of being integrated into Microsoft products all over the globe. Meanwhile, DuckDuckGo is another name worth mentioning – the privacy-focused search engine doesn’t have anywhere near the same kind of financial backing as Microsoft, but it does differentiate its product considerably.

Yet, here’s a picture of U.S. search ad revenues. Bing is small, but others are smaller. DuckDuckGo doesn’t even register.

Search revenue in U.S.

Why can no one match Google?

Part of the reason lies in the math. Google operates at an insane level, processing 3.5 billion searches per day. To get millions of people to try a different search algorithm is expensive – and to get them to keep that behavior permanently is even more expensive.

The only way such change becomes feasible is if a product comes out that is 10x better than Google, and at this point, such an event seems unlikely – at least in the current ecosystem.

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How the Tech Giants Make Their Billions

Collectively, the Big Five tech giants combine for revenues of $802 billion, which is bigger than Saudi Arabia’s economy. Here’s how it breaks down.

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How the Tech Giants Make Their Billions

At a glance, it may seem like the world’s biggest technology companies have a lot in common.

For starters, all five of the Big Tech companies (Amazon, Apple, Facebook, Microsoft, and Alphabet) have emerged as some of the most valuable publicly-traded companies in the world, with founders such as Jeff Bezos or Bill Gates sitting atop the global billionaire list.

These tech giants also have a consumer-facing aspect to their business that is front and center. With billions of people using their platforms globally, these companies leverage user data to tighten their grip even more on market share. At the same time, this data is a double-edged sword, as these same companies often find themselves in the crosshairs for mishandling personal information.

Finally, all of these companies have a similar origin story: they were founded or incubated on the fertile digital grounds of the West Coast. The company that has the weakest claim to such origins would be Facebook, but even it has been based in Silicon Valley since June 2004.

Sizing Up the Tech Giants

For all of their commonalities, it seems that there is less of a mold for how these tech giants end up generating cashflow.

But before we get to how Big Tech makes its money, let’s start by looking at the financials at a higher level. The following data comes from the 2018 10-K reports filed last year.

CompanyRevenue (2018)Net Income (2018)Margin
Combined$801.5 billion$139.0 billion17.3%
Apple$265.6 billion$59.5 billion22.4%
Amazon$232.9 billion$10.1 billion4.3%
Alphabet$136.8 billion$30.7 billion22.4%
Microsoft$110.4 billion$16.6 billion15.0%
Facebook$55.8 billion$22.1 billion39.6%

Together, the Big Five tech giants combined for just over $800 billion of revenue in 2018, which would be among the world’s 20 largest countries in terms of GDP. More precisely, they would just edge out Saudi Arabia ($684 billion GDP) in terms of size.

Meanwhile, they generated a total of $139 billion of net income for their shareholders, good for a 17.3% profit margin.

How Big Tech Makes Money

Let’s dig deeper, and see the differences in how these companies generate their revenue.

You are the Customer

In the broadest sense, three of the tech giants make money in the same way: you pay them money, and they give you a product or service.

Apple (Revenue in 2018: $265.6 billion)

  • Apple generates a staggering 62.8% of its revenue from the iPhone
  • The iPad and Mac are good for 7.1% and 9.6% of revenues, respectively
  • All other products and services – including Apple TV, Apple Watch, Beats products, Apple Pay, AppleCare, etc. – combine to just 20.6% of revenues

Amazon (Revenue in 2018: $232.9 billion)

  • Amazon gets the most from its online stores (52.8%) as well as third-party seller services (18.4%)
  • Amazon’s fastest-growing segment is offline sales in physical stores
  • Offline sales generate $17.2 billion in current revenue, growing 197% year-over-year
  • Amazon Web Services (AWS) is well-known for being Amazon’s most profitable segment, and it counts for 11.0% of revenue
  • Amazon’s “Other” segment is also rising fast – it mainly includes ad sales

Microsoft (Revenue in 2018: $110.4 billion)

  • Microsoft has the most diversified revenue of any of the tech giants
  • This is part of the reason it currently has the largest market capitalization ($901 billion) of the Big Five
  • Microsoft has eight different segments that generate ~5% or more of revenue
  • The biggest three are “Office products and cloud services” (25.7%), “Server products and cloud services” (23.7%), and Windows (17.7%)

The remaining tech giants charge you nothing as a consumer, so how are they worth so much?

You are the Product

Both Alphabet and Facebook also generate billions of dollars of revenue, but they make this money from advertising. Their platforms allow advertisers to target you at scale with incredible precision, which is why they dominate the online ad industry.

Here’s how their revenues break down:

Alphabet (Revenue in 2018: $136.8 billion)

  • Despite having a wider umbrella name, ad revenue (via Google, YouTube, Google Maps, Google Ads, etc.) still drives 85% of revenue for the company
  • Other Google products and services, like Google Play or the Google Pixel phone, help to generate 14.5% of total revenue
  • Other Bets count to 0.4% of revenue – these are Alphabet’s moonshot attempts to find the “next Google” for its shareholders

Facebook (Revenue in 2018: $55.8 billion)

  • Facebook generates almost all revenue (98.5%) from ads
  • Meanwhile, 1.5% comes from payments and other fees
  • Despite Facebook being a free service for users, the company generated more revenue per user than Netflix, which charges for its service
  • In 2018 Q4, for example, Facebook made $35 per user. Netflix made $30.

So while the tech giants may have many similarities, how they generate their billions can vary considerably.

Some are marketing products to you, while others are marketing you as the product.

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Animation: The Top 15 Global Brands (2000-2018)

This stunning animation shows a dramatic change in the world’s most valuable global brands. Watch tech companies like Apple shoot up the rankings in style.

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Animation: The Top 15 Global Brands (2000-2018)

Time travel back to the early-2000s, and a list of the world’s most respected brands might be surprising.

Tobacco company Marlboro is still one of the top 15 global brands with a value of $22 billion, while companies like Nokia and AT&T also help to round out the group.

Aside from Microsoft, the tech companies at the time were mostly focused on hardware and services. HP was considered a top global brand at the time, and even IBM was still making PCs until the year 2005.

The Platform Revolution

How times have changed.

In today’s animation from TheRankings, you can see how the list of the top 15 global brands has evolved over the last two decades or so.

The visible shift: as soon as Google hits the rankings in 2008 (2:21 in video), it becomes clear that the money is on the software side – particularly in coding software that ends up as a dominant consumer platform.

Shortly after, companies like Apple, Facebook, and Amazon enter the fold, quickly climbing to the top. Here are the final numbers for 2018 in terms of brand value, with data coming from Interbrand:

Top 15 Global Brands in 2018

The Problem with Hardware

What’s the difference between the big hardware firms of old, and the successful ones that dot the list today?

From a business perspective, hardware companies need to have a bold and accurate vision of the future, constantly taking innovative strides to beat competitors to that vision. If they can only make incremental improvements, the reality is that their competitors can enter the fold to create cheaper, similar hardware.

Samsung, which finished 2018 as the world’s sixth most valued brand, is a good example of this in practice. The company has had the top-selling smartphone for every year between 2012-2018 – an impressive feat in staying on top of consumer trends and technology.

Despite Samsung’s success, it remains stuck behind four other tech brands on the list – all companies almost exclusively focused on platforms: Microsoft, Amazon, Google, and Apple.

Why are Platforms so Dominant?

Constant innovation is a good barrier to entry if you can keep doing it – but the platforms have an even more bulletproof strategy: being everywhere at once.

Facebook uses the powerful network effect from billions of people as a moat, and then it buys up-and-comers (Instagram, WhatsApp) to cover even more ground. As a result, competing with Facebook is a nightmare – even if you could theoretically acquire new users at $1 per user at a ridiculous scale, it would require a marketing investment of billions of dollars to make inroads on the company’s audience.

Microsoft owns various platforms (Windows, Xbox, LinkedIn, Azure, etc.) that help insulate from competition, while Google’s strategy is to be everywhere you need to search, even if it’s in your living room.

Because platforms have massive scale and are ubiquitous with consumers, it gives them the ultimate pricing power. In turn, at least so far, they have been able to establish the world’s most powerful consumer brands.

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