Google Business Model: Google, a major subsidiary of Alphabet Inc., is one of the most profitable companies in the world. Initially launched as a search engine for exploring information on the internet, Google has now evolved into a tech giant with a diverse range of products and services.
Today, can you imagine studying, managing business, enjoying entertainment without Google? Versatile services, including Google Chrome, Gmail, Google Photos, and Google Maps, are available with just one click, and they are free. So, how is Google able to offer all these services for free? Let’s explore Google’s Business Model to find out.
Google History: How it all began?
In 1998, while working on a project, Larry Page and Sergey Brin introduced a search engine that relied on the links between websites. Initially they named it “BackRub” due to its processing system, but later the name was changed to “Google”, resembling the term “Googol”, which refers the digit one followed by 100 zeroes, reflecting the company’s mission to organise vast amount of information and make it accessible universally. To understand Google’s journey completely, it is necessary to know current leadership that guides the company’s strategy and vision.
Who is Google’s owner?
The founders of Google and Alphabet Larry Page and Sergey Brin presently hold the position of Executive Chairman and Co-Founder respectively. These are the top positions in the company. Sundar Pichai is the CEO of Google and Alphabet, he is responsible for the management of day to day operations. He reports to the Executive Chairman (Larry Page). With such strong leaders in place, let’s explore how Alphabet Inc. (primarily Google) actually generates its revenue and maintains its market dominance.
How Does Google Earn Money?
Now let’s explore in detail about Google’s business model, through which it has become a dominant force in the tech industry.
Key Income Source: Google Search & Advertisement
The search engine is the core business of Google. When Google was introduced by Larry Page and Sergey Brin, their objective was to organise information and make it universally accessible. Today, Google processes almost 3.5 billion searches per day.
Advertising amidst Google search results is a major source of revenue for Google. More than 80% of Alphabet’s revenue comes from Google Ads. This business model is based on three components:
- Google Ads (formerly Adwords): This system operates on a pay-per-click model where Google receives a fee from the advertiser, each time a user clicks on their ads.
- AdSense: Google has collaborated with various websites, allowing them to display Google Ads on their websites.
- YouTube Advertising: Since the time Google acquired Youtube, it has become a significant source of revenue for Google.
With advertising as the major source of revenue for Google, the company has managed to build various other revenue sources as well for growth and profitability.
Exploring Google Business Model Beyond Advertisement
In addition to advertising, Google increasingly generates revenue from products and services, including the following:
- Consumer Subscriptions: These are subscription services offered to clients in a package. For example YouTube services, such as YouTube TV, YouTube Music, Premium, Google One, and so on.
- Platforms: This primarily includes revenue from Google Play through the sales of apps and in-app purchases.
- Google Cloud: This is one of the rapidly growing segments of Google’s business. It provides cloud computing services, data storage, and artificial intelligence to the user.
With so many options for revenue generation for Google and to understand Google’s financial health, let’s explore the company’s revenue and costs figures to know how each segment contributes to its financial growth.
Also Read: Pollution And Its Impact On Our Health
Alphabet Net Worth (Primarily Google)
The financials of Alphabet Inc., comprising financials of Google majorly comprises revenue and cost incurred. Breakdown of both the parameters is given in the following sub headings.
Google Revenue Breakdown
Alphabet Inc.’s (primarily Google) revenue for the year 2023 was over $307.39 billion. Let’s breakdown the revenue by specific major sources, bracket mentions the change in the revenue from 2022 to 2023 for each source:
- Google Search Engine: $175.04 billion, or 56.93% of total revenue (increased by $12.6 billion USD).
- YouTube Ads: $31.51 billion, or 10.26% of total revenue (increased by $2.3 billion USD).
- Google Network: $31.312 billion, or 10.20% of total revenue (decreased by $1.5 billion USD).
- Google Subscriptions, Platforms, and Devices: $34.68 billion, or 11.26% of total revenue (increased by $5.6 billion USD).
- Google Cloud: $33.08 billion, or 10.75% of total revenue (increased by $6.8 billion USD)
Along with studying the aspect of revenue generation, it is necessary to take a look at the cost structure as well to understand the entire financial health of the company completely.
Cost & Expenses
There is always a cost behind generating mammoth revenues. Breakdown of the cost for Alphabet Inc. (primarily Google) is detailed below (detailed change in the cost for every segment is from 2022 to 2023 by default):
- Cost of Revenues: Cost of Revenues comprises cost from TAC (increased by $1.9 billion USD) and other costs (increased by $5.2 billion USD) (overall cost of revenues increased by $7.1 billion USD).
- Research and Development (R&D): The expenses for Research and Development increased by $5.9 billion USD.
- Sales and Marketing: The expenses for Sales and Marketing increased by $1.4 billion USD.
- General and Administrative: The expenses for General and Administrative segments increased by $701 million USD.
Net Income
- Alphabet’s Net Worth for the year 2023 after cutting down all its costs and expenses and tax deductions was approximately $73,795 million USD.
- This net worth increased by $13,823 million USD from the year 2022.
- A comparative figure from the financial records of Alphabet Inc. is shown in the table below from the previous years as well in terms of Net income or Net Profit.
Despite generating enormous profits, Google’s success journey has witnessed a lot of failures as well. Let us look at some of the products of Google that failed, in the following section.
Google Failed Products
Failure is the mother of success. Google, a tech giant, has achieved immense success but has multiple failures. Some of these failures were due to ambitious projects that didn’t work as planned.
Various products like Google+, Google Hangouts, Google Nexus, and Google Glass were shut down, leading to significant costs and loss of revenue for Google. Despite these setbacks, Google continued to invest heavily in R&D and marketing to stay ahead in the competitive tech industry.
The Spiritual Reconnect Amidst Financial Triumphs
While chasing financial achievements, it is essential to stay connected with spirituality as well. Amidst our pursuits of material goals and progress, the prime purpose of this life is often overlooked. The primary goal of human life is to worship Supreme God Kabir and attain salvation. This ensures that we are not reborn as animals.
By taking the refuge of a Tatvdarshi Sant, Who is presently Sant Rampal Ji Maharaj, and understanding the true essence of our sacred texts, one can make the most of this human birth. Therefore, it is not just the matter of this life; rather, it can be considered as a deal-in-innumerable-lifetimes, as the chances of finding a Tatvdarshi Sant is rare.
As the saying goes ‘a word to the wise is sufficient’, make the most of this time and take the right step to seek refuge under Sant Rampal Ji Maharaj. To learn more, visit www.jagatgururampalji.org or you can visit ‘Sant Rampal Ji Maharaj’ YouTube channel.
