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 have surpassed $340bn in the first three months of 2022, up by 7% compared with the same period last year.
Annoyingly for Mr Jassy and his fellow tech barons, the veil of secrecy is getting thinner. Regulators, lawmakers and investors see it as a problem, and are calling for more transparency about everything from how big tech’s payments platforms work to the amount of carbon emissions the companies belch out.
The app stores are booming. Revenues from related commissions for Google and Apple has roughly doubled between 2017 and 2020, according to the Competition and Markets Authority , Britain’s trustbusting agency. In 2020 Google’s store had 800,000-900,000 developers offering 2.5m-3m apps. That made it slightly bigger than Apple’s, which was home to 500,000-600,000 developers and 1.8m apps.
All this makes for plenty of deep profit pools. Look closer, though, and they also turn out to be surprisingly narrow. In Apple’s app store, for example, games account for 70% of all revenues, according to documents uncovered during the Epic court battle. Most of this comes from in-app purchases, such as wacky accessories for avatars or virtual currencies. In 2017, 6% of app-store game customers accounted for 88% of the store’s game sales.
Besides a heavy reliance on a few big profit generators, another undisclosed weakness is customer churn. Tech giants’ customers are often assumed to be devoted to their products and services—or even hooked. The companies do not challenge this assumption in public, since it conveys the sense of captive markets, which are beloved of investors. In fact, their markets may not be quite so captive.
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