How Does Google Earn Money? Know 5 Aspects of Google’s Mighty Business Model

Who doesn’t know about Google today? In this era of internet, no one is untouched by Google. In this era of Android phones, even a common man searches something or the other on Google throughout the day. Do you know that more than 8.5 billion searches are done on Google every day? It is such that every person living in the whole world searches something or the other on Google in a day. This is a big thing in itself and what is even more amazing is that it is completely free.

And not just Google search, every product of Google is free to use, like you can use Google Maps absolutely free, create your Gmail account for free and watch videos on YouTube for free. Google is giving so many things for free, but despite this, Google’s market capital is more than 2 trillion. How is it possible that Google does not take any money from us but still became the richest company ? And question is remain same how does google earn their money? We will learn about this in this article.

In today’s era, searching the internet has come to mean Google. Google was started in the year 1998 by Larry Page and Sergey Brin. Their mission was to organize the world’s information and make it accessible and useful. The word Google itself has no meaning, but it is inspired by the word googol. Googol is the name of a number. For example, if there are three zeros after 1, then we call it hundred. After adding four zeros, it becomes thousand. Similarly, after adding 100 zeros, it is called googol. This company indicates that we will find and bring all the information available on the internet.

In the year 2000, Google took its first big step and launched the Google AdWords system, which is today called Google Ads, through which businesses could pay money to display their ads in Google search results. But over the years, Google started many services and products. In 2004, Gmail was introduced. In 2005, Google Maps was launched, which made it famous at the world level. After this, Google bought YouTube in 2006. After this, in 2008, Google launched Android. This is the same mobile operating system which is installed in most of the mobile phones nowadays. In the same year, Google also launched its web browser, Google Chrome, which is the most popular web browser in the world today. Later, Google also started making its hardware products like Google smart phones, laptops and smart home devices. Google is also expanding itself in AI world called Gemini.

Knowing this, you must be thinking that Google kept on launching one product after another and all of them were successful, but it is not so. All the products and services that you have come to know about till now were the names of successful products. There are many things that Google tried but failed in them. For example, Google Plus was launched by Google on the lines of Facebook, a social media platform, but it could not succeed. Apart from this, Google Hangout is a chatting facility which was quite popular at one time, but Google shut it down in 2022. Apart from this, there are many such products and services that Google launched but did not work. In fact, the unsuccessful things are much more than the successful things that Google has done.

Keeping all these successful and unsuccessful things in mind, you will be surprised to know that how does Google earn the most money today? Yes from its oldest business model Google Search Ads. To understand this, let us see Google’s revenue breakdown for the year 2022, from where and how much money did Google earn. Google earned a total profit of $280 billion this year, out of which 58% i.e. $162.45 billion comes from the ads shown on Google search. After this, Google earned the maximum 11.7% from Google Network Ads, the ads running on different websites which partner with Google. Google earns 32.78 billion from here. After this, YouTube Ads are at the third place, from here Google earns 10.5% i.e. $29.4 billion. After this, Google also earns from the Play Store. When a creator sells his app through the Google Play Store, Google earns 10.4% or $29 billion from it. After this, the last major source of income is Google Cloud. From this, Google earns 9.4% or $26 billion.

There are reasons behind how Google earns so much by giving so many things for free. First of all these free things are not completely free. Only the base level products are free. If you want premium services then you will have to pay for it. This is a very common business strategy that many companies use. Like recently since Elon Musk owned Twitter, its base level is free but for premium use you have to pay. Like you can use Gmail for free but its storage limit is 15 GB. For more storage than this you have to pay. Similarly, Google Drive costs money after 100 GB of storage. And you are also charged for removing ads while watching videos on YouTube. This model is a very successful model because it gives you the opportunity to try before buying. But in Google’s case it is very interesting. 95% people do not take their paid services. Like only 5% people take the premium version of Gmail, Google Drive and YouTube. But still Google earns its majority revenue from its free services.

Now let’s talk about our second reason which is data collection. The more free things we use, the more data is available on Google. Everything that we search on Google, the videos that we watch on YouTube, all this data is collected and used for targeted advertising. You must have noticed this yourself, whatever you search on Google or watch a video on YouTube, you get to see ads related to that on Google. If you have looked for a shoe for yourself on Google, then ads of several shoe brands will be shown to you when you search on Google. Google uses advanced machine learning to show targeted ads.

Your age group, which city and country you live in, are you male or female, what things you often search for, what do you like, based on all these things your profile is created and conversely an advertiser can select all these things, suppose you have a small business of selling clothes or shoes and you want your ads to be visible to people between 18 to 30 years of age, then you can take the keyword of clothes by selecting all these things, now Google’s job is to match an advertiser with a user, if you have recently searched about shoes on Google, then Google will show you the same ads which have been set by the advertiser.

We told you that in the year 2022, Google’s total revenue was $280 billion, out of which $237 billion dollars of revenue came only through these ads.