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How Does Google Make Money (Business and Revenue Model)

The Google business model

How Does Google Make Money?
Here’s what you should know:
  • What is Google, and how does Google work?
  • How does Google make money?
  • Google Search
  • YouTube Ads
  • Google Network Members’ properties
  • Google Cloud
  • Other revenues
  • Google’s Subsidiaries, Acquisitions, and Exits
  • Google’s profit and revenue
  • What is the Google business and revenue model?
  • Google’s funding and market cap

How does Google make money if it’s free to use? Here is a full, in-depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Google business model, their year-over-year revenue, and how Google works.

What is Google, and how does Google work?

Google is a multinational tech company that specializes in Internet-related services and products like Google.com, YouTube.com, Gmail, Google Drive, Google Play, and many more.

How Google works is: For the most part, all of Google’s products and offerings are free to use and do not require users to create an account. Although some services allow users to create accounts, which gives access to more features within said product and service.

Founded in 1998 by Larry Page and Sergey Brin, Google (Alphabet Inc) is the 21st largest company by revenue in the world with $182.5 billion in revenue in 2020. Generating more than 100 billion searches per month between products of theirs like Google.com and YouTube.com.

Some of Google’s competitors include Yahoo!, Microsoft, and other multinational tech companies.

Google App in Apple App Store | Google Business Model | How Does Google Make Money?
Source: Apple App Store

How does Google make money?

According to Statista, Google and YouTube attract more than a combined 100 billion searches per month. So how does Google make money off of all that traffic?

Below is a breakdown of how much money Google makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 5 ways of how Google makes money (in 2021):

Google has a revenue model that makes money in five (5) ways – Google Search, YouTube Ads, Network Members’ properties, Google Cloud, and other revenues.

Google makes the majority of its money from Google Search. In fact, $104.06 billion, or 57% of Google’s total revenue came from Google Search in 2020.

Google’s search engine, Google.com, is the most visited and most popular website on the internet with over 209 billion searches and 86.9 billion visitors per month, according to a Statista chart.

Google Search Bar
Source: Google.com

Note: 57% of Google’s total revenue came from Google Search in 2020.

#2. YouTube Ads

Another way Google makes money from advertising is from YouTube.

Acquired by Google in 2006 for $1.7 billion, YouTube is now estimated to be worth over $160 billion and attracts more than 22.8 billion users per month, according to a Statista, which generated $19.77 billion in ad revenue for Google in 2020.

Note: Google.com and YouTube.com, combined, garner more than 100 billion users per month.

[ Related Article: How Does YouTube Make Money? ]

#3. Google Network Members’ properties

Lastly, the third source of Google’s advertising revenue comes from its Network Members’ properties. Google describes “Network Members’ properties” revenue as revenues generated on Google Network Members’ properties participating in AdMob, AdSense, and Google Ad Manager.

Between the three (3) properties, these Network Members’ added earned $23.09 billion of ad revenue for Google in 2020.

Google Search, YouTube Ads, and Google Network Members’ properties accounted for a combined total of $146.92 billion in advertising revenue, or 80.5% of Google’s total revenues in 2020.

#4. Google Cloud

Google Cloud is a service that launched in 2008 and resulted in $13.06 billion of revenue, or 7.2% of Google’s total revenues in 2020.

Google makes money from its Cloud service by “fees received for Google Cloud Platform services and Google Workspace collaboration tools,” as stated on page 7 of Google’s 2020 Form-10K.

These platform services and collaboration tools are things like Gmail, Meet, Drive, Google Workspace (formerly known as G Suite), and more.

Google Cloud | Google Business Model | How Does Google Make Money?
Source. Google

#5. Other revenues

The rest of Google’s revenue comes from “other revenues.” A term Google uses on page 35 of Google’s 2020 Form 10-K to describe other Google revenues as revenues primarily driven from Google Play, hardware, and YouTube non-advertising.

  • Google Play revenues include sales of apps, in-app purchases, and digital content sold in the Google Play store.
  • Hardware revenues come from Google Nest home products, Pixelbooks, Pixel phones, and other devices.
  • YouTube non-advertising revenues consist of YouTube Premium and YouTube TV subscriptions.

Note: When combined, these products generated a total of $21.71 billion of Google’s total revenues in 2020.

Google’s Subsidiaries, Acquisitions, and Exits

To date, Alphabet, Inc. (Google) has made a total of 248 acquisitions, 142 investments, 66 lead investments, and 35 successful exits.

Source: Crunchbase

Google’s profit and revenue

In 2020, Google reported $182.5 billion in revenue.

Note: Because Alphabet Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Alphabet’s publicly released financial reports, including annual reports, through  Alphabet’s investor section on their website.

What is the Google business and revenue model?

Google makes money through a few revenue models that they combine within their company, they are:

  • Advertising business model
  • Subscription based business model
  • Freemium (upselling) revenue model
  • Mergers & acquisitions (M&A) business model
  • Infrastructure as a service (IaaS) business model
  • B2B2C (partnerships) business model

Google’s funding and market cap

According to Google’s Crunchbase profile, Google has raised $36.1 million over 5 rounds and has a market cap of $1.92 trillion as of August 2021.