Google started as a university research project to rank web pages. Today its parent company, Alphabet, is one of the most profitable businesses in history. Here’s how it makes its money.
Google was founded in 1998 by Larry Page and Sergey Brin, who were PhD students at Stanford University. In 2015, it reorganised under a new parent company, Alphabet, which owns Google and a group of other ventures. Sundar Pichai is chief executive of both.
In 2025, Alphabet reported revenue of US$402.8 billion, up 15 per cent, and net income of US$132.2 billion.
Search and YouTube
Most of Alphabet’s money still comes from advertising. When people search on Google, businesses pay to have their ads appear alongside the results, usually paying each time someone clicks. Google Search is by far its most valuable business, bringing in US$63.1 billion in the final quarter of 2025 alone.
YouTube earns money from ads shown before and during videos, and from subscriptions such as YouTube Premium and YouTube TV. YouTube ads brought in US$11.4 billion in the final quarter of 2025.
Google also makes money from ads it places on other websites and apps, from the Google Play app store, Pixel phones and subscriptions such as Google One.
Cloud, AI and the risks
Google Cloud rents computing power, data storage and AI tools to businesses. It is the third-largest cloud provider, behind Amazon and Microsoft, but it is growing quickly. Its revenue rose 48 per cent to US$17.7 billion in the final quarter of 2025, and it is now solidly profitable.
Alphabet is investing heavily in AI, including its Gemini models and its own AI chips. It expected to spend between US$175 billion and US$185 billion on capital investments in 2026, mainly on data centres.
AI is both an opportunity and a threat. Chatbots such as ChatGPT give people a new way to find information without a traditional search, which could challenge Google’s ad business. Google has responded by adding AI-generated answers to its own search results.
Its Other Bets include Waymo, its driverless taxi business, which loses money but is seen as a long-term opportunity.
Alphabet also faces major legal challenges. U.S. courts have found that Google illegally maintained monopolies in search and in parts of the online advertising market, and regulators in Europe, Australia and elsewhere are scrutinising its power.
