It’s no secret that tech companies such as Google amass eye-watering profits each year. But, what people might not realise is just how much money Google makes out of its users’ data. In this article, we will dive into how Google collects, stores and uses user data to make a profit.
As we have demonstrated in our previous article, Google similarly to Meta relies on advertising as its main income stream, meaning that the core of the business model revolves around using user data.
When you search for something on Google, you are firstly providing valuable information about your interests and needs and offering advertisers a platform to bid for your attention.
Google makes money every time someone clicks on an ad that appears in the search results. The amount that Google makes per click evidently varies (depending on the keywords being targeted and the competition for those keywords) but generally, the cost per click will be between $2-$4.
To understand just how ingenious Google’s business model is, you need to understand that Google search is visited around 90 billion times a month. Now, the average click-through rate (i.e. the chance that a Google Search user clicks on a Google Ad) is 2%. This means that, per month, an average of 1.8 billion users will click on a Google Ad, with Google making $2-$4 per click. And just to be clear, this is just one of Google’s revenue streams.
In addition to this, Google currently does not have any real competition. Google Search currently has a 91.9% share of the search engine market and to maintain this dominance, Google pays significant amounts of money per year to remain the default browser on the world’s most popular devices. For example, Google reportedly paid Apple $20 billion in 2022 to remain Apple’s default search engine, revealing just how important Google values its monopoly in the search engine market.
It is important to remember that, when we talk about ‘Google’ we are not just talking about Google’s search engine. Google has grown its product range considerably, almost dwarfing all the other tech giants. For example, to name just a few, Google owns:
Google collects a wide variety and extensive amount of data on its users, including things like your search history, location data, videos you watch, apps you use, emails you send, the documents you share, the types of journeys you are making, and the devices you will be using. In addition, Google uses tracking technologies to collect your data across the internet once you have left the Google ecosystem.
To try and understand just how much data this amounts to, one petabyte of data is equivalent to taking over 4000 digital photos every day for the rest of your life. Google processes over 20 petabytes per day, 365 days a year.
This data is analyzed and used to create targeted advertising across Google platforms, arguably making Google the greatest advertising platform of all time.
However, there is concern that companies like Google and Meta, with their startling amount of data and their massive reach, need to be cautious of their broader societal impacts.
Please read our next article “Shaping our Minds: the Dangers of the Algorithm” which outlines the broader issue of algorithms controlling the spread of information.
