FAANG Companies: Inside FAANG Business Models

FAANG is an acronym that comprises the hottest tech companies’ stocks in 2019. Those are Facebook, Amazon, Apple, Netflix, and Alphabet’s Google. The term was coined by Jim Cramer, former hedge fund manager and host of CNBC’s Mad Money and founder of the publication TheStreet.

Who coined the term FAANG?

What’s interesting about the FAANG is how those companies together form more of an ecosystem of how people consume content, purchase things, and find information on the web. Thus, it is worth giving a look under the hood of the companies that comprise the FAANG ecosystem.

The FAANG ecosystem

When we speak about tech, in the last decades we often refer to the IT space. With the rise of the web, a new wave of tech companies has taken over the business world. Those tech companies have the ability to influence the way people behave, consume content and purchase things.

Those tech companies are considered “hot” often make the news. There are a few aspects of why those companies manage to capture so much attention:

  • In some ways, some of the FAANG companies (think of Facebook, Google, and Netflix) do make money by capturing the attention of as many people as possible (so-called attention merchant).
  • They’ve been able to become multi-billion businesses in a relatively short span of time.
  • They’ve changed the way we thought about ourselves (think of Facebook convincing us that personal branding is an end in itself).
  • They’ve changed the way we think about our societies (think of the Netflix series have the ability to form cults).
  • They’ve changed the way we think about entrepreneurship (Steve Jobs’ “Stay Hungry, Stay Foolish” has become a mantra among millions of entrepreneurs and aspiring businessmen).

FAANG businesses dissected


FAANG companies have been able to become multi-billion dollar businesses relatively quickly. For instance, in 2017 Facebook passed the $40 billion revenue mark. While Google passed the $110 billion revenue mark. Apple by far was the tech company with the highest revenue at almost $230 billion.

faang-net-incomeIt is critical to notice that FAANG companies run different business models. And that is also why they carry a different level of profitability. In some cases, lower profitability might be driven by the industry in which one of the FAANG operations but also from strategic choices. For instance, even though Amazon is the one with the highest revenues, right after Apple, it is the company with the lowest net income, after Netflix.

I’ve explained many times how Amazon runs a cash machine business wherewith extremely low profits it is able to generate massive cash flows.

RelatedHow Amazon Makes Money: Amazon Business Model in a Nutshell

Instead, if we look at Apple, the company has high revenues and high margins. This is in part due to its razor and blade strategy and also thanks to Apple’s to keep high margins on its iPhone and related products.

FAANG business models in a nutshell


The FAANG companies are run primarily via five four main business models:

It is important to notice how most of the FAANG companies have been investing in other areas to diversify their revenue generation.

How do FAANG companies make money?

Beyond Facebook, and Netflix which primarily make money via advertising (the former) and membership fees (the latter), Amazon, Apple, and Google have a more diversified revenue generation.

Google, now Alphabet made 86% of its revenues via advertising, yet Google isn’t just about advertising anymore. Even though online stores, is still Amazon’s primary revenue generation stream, there are other segments of the business that are quite interesting and might become massive in the coming decade.

Indeed, Amazon AWS, born as an experimental business unit it has become a competitive and large business for its own sake. Amazon also started to generate a good chunk of its revenues via membership with its Amazon Prime Subscription Program.

Another interesting aspect of Amazon is its ability to generate revenues via advertising and third-party seller services. In short, the Amazon business model is like an octopus that is able to get in and be successful in many industries with several revenue streams. As Jeff Bezos would put it, it’s all about being in day one.

Apple revenues still primarily depend on the sales of its iPhone, yet considering Apple just a product company might be limiting. Apple’s strength is definitely in its brand and the unique experiences it has been able to design via its devices that integrated work extremely well together.

What’s so special about that FAANG?

In this historic period, FAANG companies managed to get most of our attention. There isn’t a single day when one of those companies makes the news. Yet what is hot today might not be so tomorrow. So the question is, would those companies still be so hot in ten, twenty years’ time?

FAANG business models infographics 

Facebook (Meta) Business Model

Facebook is an attention-based business model. As such, its algorithms condense the attention of over 2.4 billion users as of June 2019. Facebook advertising revenues accounted for $31.9 billion or 98.66% of its total revenues. Facebook Inc. has a product portfolio made of Instagram, Messenger, WhatsApp, and Oculus.

Amazon Business Model

Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services,  Amazon AWS, Subscription Services, Advertising revenues and Physical Stores.

Apple Business Model

Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.

Netflix Business Model

Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. Leveraging on a streaming platform, Netflix generated over $29.6 billion in 2021, with an operating income of over $6 billion and a net income of over $5 billion.

Google (Alphabet) Business Model

Google is a platform, and a tech media company running an attention-based business model. As of 2021, Alphabet’s Google generated over $257 billion in revenues. Over $209 billion (over 81% of the total revenues) came from Google Advertising products (Google Search, YouTube Ads, and Network Members sites). They were followed by over $28 billion in other revenues (comprising Google Play, Pixel phones, and YouTube Premium), and by Google Cloud, which generated over $19 billion in 2021.

FAANG In 2020







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