It just happens that Google and Facebook draw most of their revenue from being middlemen in the advertising industry, the same way Uber is a middleman in the transportation industry -- Uber doesn't have the fixed costs that you'd expect a large cab company to have.
Google is an ad company.
Facebook is an ad company.
Neither would Carlos Slim. Not that it means anything but at different times, each was once adjudged the wealthiest in the world.
Calling a company a "tech company" speaks primarily to its competitive advantage in printing money, not the industry it is in.
Search: ad delivery. Any innovations around search are all built for the purpose of making essentially a better billboard.
Gmail: data generation tool that feeds information into Google in order to better traffic ads.
Google analytics: a Trojan horse that trades data to web property owners in exchange for being able to use that data themselves – to better target ads.
Google Fiber: more bandwidth, the more people will be able to use their ad products.
AdWords: ad delivery AdSense: ad delivery
Chrome: owning the browser means you protect the ability to serve ads.
Google Apps for Business/Gsuite – an exeception to the above that represents a minuscule amount of revenue.
Play Store: if you make Android more attractive, you protect an ability to use Android user data in order to target people to... (drumroll please) serve ads.
All of these X/Skunkworks projects are just hobbies. Google is an ad company, plain and simple. Their entire business is based around “track and serve.” Even self-driving cars: “we noticed you visit REI a lot, how about we drive you to this <new competing store> for a 30% discount off of whatever you were buying at REI?”
Apple is a hardware company – they make software and services so you want to buy their hardware. They are to a lessor extent, a content distribution company but really even that is to support selling Apple hardware. They haven’t changed much since 1984 – make software exclusive to the Mac, so Mac is differentiated from other computers.
Facebook – not even a debate. Track and Serve.
Microsoft might be considered a “true” tech company in the sense that they are essentially a software version of what IBM used to be.
Yes, but they do a whole lot of other things, which as you noted, tie back into their main source of revenue.
I don't disagree with what you've written but I think calling them an "ad delivery" business is as accurate as using the tusks as a synecdoche for describing an elephant. Using a well-known part to describe a thing is fine in most cases, except that over time, it blinds people into ignoring the other parts that gives a thing its uniqueness.
> Microsoft might be considered a “true” tech company in the sense that they are essentially a software version of what IBM used to be.
Funny that you use Microsoft.
Among the big 5: Amazon, Apple, Facebook, Google and Microsoft, Microsoft is the most diversified, revenue wise [0].
[0] https://www.microsoft.com/investor/reports/ar16/index.html
I worked at a comparison shopping site that turned into an SEO house towards the end, after we failed to get direct traffic. The entire company slowly shifted focus improve our SEO, because that's what dragged us away from bankruptcy. Our engineers were tasked with finding ways to get indexed in Google higher, tweaking our site layout constantly. Search became about latency, since Google crawls faster sites faster. Crawling became about getting more content to mix up and show to Google. It became a rather depressing slog, all things together, after we stopped worrying about users and started worrying about SEO. It was explicit and pervasive.
If you work at Google, you only worry about ads if you work on the Ads team. If you work on search, if you work on GMail, if you work on cloud services you work on and worry exclusively about making those products the best they can be, for the users of those products. If I weren't also a user of Google products, I would almost have no idea that Google had ads; they just aren't a salient part of a workaday engineer's job.
You can still argue that from a business perspective every product is tainted, but from an engineering perspective, ads aren't a consideration at all, let alone the first consideration.
That’s absurd. Your argument appears to be “I wish people outside Google didn’t pay so much attention to what business Google is in, because it’s super fun being an engineer working at a place that has a geyser of money coming in from the ads division so engineering can ignore business pretty much completely.”
Yes, that is fun (so say all my friends who work there)! But it’s pretty irrelevant to the conversation about what business Google is in. It’s an advertising company.
Straight from the horses mouth: Mark Zuckerberg Finally Admits Facebook Is a Media Company http://fortune.com/2016/12/23/zuckerberg-media-company/
Look at it this way: Big law firms are called that because they hire a lot of lawyers (and lawyer-types); big 4 accounting firms hire a lot of accountants and big 5 tech firms hire a lot of software engineers (or CS majors if you will).
They are called that not because they don't hire HR, IT, finance or other professionals, they are called "big X" because specific professions (lawyers, accountants, software engineers) dominate their hiring.
The quality and quantity of their hires from those professions in turn determine the amount of profit they are able to extract from whichever industry they choose to focus on/dominate.
If a bunch of accountants just invested in tech companies they would be a VC fund not an accounting company.
Except that's fundamentally not true: http://tomtunguz.com/saas-spend-allocation-benchmarks/
Should we just call them "sales companies"?
This is where Google and Facebook are, and that makes them ad companies: Their business and design decisions are driven primarily by the objective of increasing ad income.
A better analogy, in my opinion, is to that of a company that makes billboards: they sell ads, delivered by billboard. They'd stop making the billboards if the ad revenue stopped coming in. Likewise Google would stop working on anything ad-related (and probably switch focus to GCE) if ad revenue dropped appreciably.
The analogy with the company that makes billboards is good if you're trying to point out the fundamental difference between an ad company (there aren't that many of them, despite many companies being funded by ads) and a non-ad company. The only purpose of a billboard company is to make billboards that people see ads on. There's no other reason to make billboards. The day to day of most employees will be about how to most effectively design and position their billboards for better ad delivery and finding advertisers to pay, while a relatively small amount of employees enjoy focusing only on the construction process. The CEO probably doesn't even care about billboards, they just found a nice way to make money.
If Google's ad revenue dropped a lot, there would definitely be a change in focus, but they wouldn't kill off search. They'd probably put some more people on trying to sell Enterprise Search. Google, being a tech company and not an ad company, has tech it can try to sell when the ad revenues go away. An ad company has nothing else. That's the big difference.