Lifting the silicon veil

The secrets of big tech

We dig inside the finances of Apple, Amazon and others

America’s tech giants make ungodly amounts of money. In 2021 the combined revenue of Alphabet, Amazon, Apple, Meta and Microsoft reached $1.4trn. These riches come from a wide and constantly expanding set of sources, from phones and pharmaceuticals to video-streaming and virtual assistants. Analysts expect the tech quintet’s combined sales to surpass $340bn in the first three months of 2022, around 7% more than in the same period last year.

In a quarterly ritual that kicked off on April 26th, when the big five started reporting their latest earnings, the staggering headline numbers again hit headlines. Alphabet unveiled revenues of $68bn, up by 23% compared with a year ago, though slowing advertising growth saw net profit dip to $16.4bn. On the same day Microsoft announced revenues of $49.4bn, up by 18%, and net profits of $16.7bn. A day later Meta revealed sales of $27.9bn with net profits of $7.5bn. Amazon and Apple reported after The Economist was published.

Big tech firms are understandably eager to trumpet these impressive figures, as well as their diverse offerings. They are considerably more coy about how much many of their products and services actually make. Annual reports and other public disclosures tend to lump large revenue streams together and describe them in the vaguest terms. Last year, for example, the five giants’ sales were split out into 32 business segments in total. That compares with 56 segments for America’s five highest-earning non-tech firms.

Apple breaks its sales into five slices; Meta into only three (see chart 1). The category that Alphabet labels as "Google Other’' made $28bn in revenue last year. It includes Google’s app store, sales of its smartphones and other devices, and subscriptions from YouTube, a subsidiary. Last year YouTube’s advertising revenue, which Alphabet first revealed only in 2020, reached $29bn. That means that in 2021 Google Other and YouTube’s ad business each generated more money than four-fifths of the companies in the S&P 500 index of the biggest American firms.