Illustration: Maura Losch/Axios The best way to understand the ways that Big Tech companies do and don’t compete with one another is to use the old Watergate adage: Follow the money.
Why it matters: How Apple, Google, Facebook, Amazon and Microsoft make their revenue today shapes the battles they will fight tomorrow.
The big picture : For years, the largest tech companies each had their own fiefdom where they garnered the lion’s share of revenue and profits. While tech companies competed at the edges, the market was big enough that each had plenty of green fields to expand into. They might step on each other’s toes, but they took pains — and sometimes struck deals — to steer clear of the others’ core businesses.
Yes, but: As they have each become enormous, their search for growth has begun leading them onto one another’s turf. Amazon and Apple, for example, are getting more revenue than ever from advertising — the heart of Google’s and Facebook’s business.
Google is investing heavily to catch Amazon and Microsoft in cloud computing.
Microsoft, Google and Facebook each have their feet in different parts of the gaming market, with Apple and Amazon dabbling too.
Amazon, Apple and Google each operate major subscription streaming services.
All five are investing heavily in AR/VR hardware and systems.
And all of them see AI as central to their future.
Be smart: Like wealthy families that have run a town for decades, these companies share a vast web of dependencies and grudges — as in the recent privacy war between Facebook and Apple, or Apple’s slow and steady effort to wrest the mobile maps market out of Google’s control.
Here’s what you find when you “follow the money” for each of tech’s Big 5: Apple
Hardware — mostly phones and computers — still generates the bulk of Apple’s sales and makes the company’s other businesses possible. But the company has significantly diversified its revenue in recent years. By the numbers : Apple reported $365 billion in revenue during its past fiscal year, which ended in October. Of that, more than half ($191 billion) came from iPhone sales, while the Mac, iPad and Apple’s accessories business each generated more than $30 billion in revenue. Services — which for Apple means everything from extended warranties to music and TV subscriptions — accounted for $68.4 billion, up 27% from the prior year.
Core business: Hardware
Emerging businesses: Advertising and services, including financial services (Apple Pay)
Competitive concerns: Apple sets the terms for the iPhone and yet it is also a competitor in areas ranging from subscription music to consumer cloud storage. It also has some enormous deals with rivals, such as the agreement that makes Google the default search engine on iPhones and Macs — and generates billions for Apple .
For all its talk of the metaverse, the social networking giant still gets nearly all its revenue from ads on Facebook and Instagram. Those cash cows have proven vulnerable thanks to the constraints of the operating systems they run on — most importantly, when changes Apple made to tracking significantly dented Facebook’s mobile revenue. By the numbers: Meta reported nearly $118 billion in revenue for the 12 months ending Dec. 31. Of that, almost $115 billion was ad revenue related to its core apps. It had about $700 million in non-advertising revenue for its family of apps and $2.2 billion in revenue from Reality Labs, which includes its Oculus VR unit.
Core business : Digital advertising, social media
Emerging businesses : VR hardware, digital goods
Competitive concerns : With Facebook, Instagram and WhatsApp, Meta controls a huge chunk of the social networking market and, with it, a big slice of overall online advertising. Google (Alphabet) Google is rightly described as “the search giant,” but its ambitions extend into the kinds of cloud computing offered by Amazon and Microsoft. And, while it doesn’t charge directly for Android, it generates a significant amount of its ad revenue from mobile devices. By the numbers : Parent company Alphabet reported $161 billion in revenue for the year ended Dec. 31. Nearly all of that came from what the company lumps into Google Services — chiefly search and display advertising, as well as smaller revenue sources, such as hardware. Also within Google Services: YouTube, which generated $28.8 billion in ad revenue ; Google Cloud, with about $8.9 billion revenue; “other bets,” such as autonomous vehicle division Waymo, that bring in a few hundred million dollars.. […]
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