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How Google's $150 billion advertising business works

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GOOGLThe Google logo is seen January 8, 2020 at the 2020 Consumer Electronics Show (CES) in Las Vegas, Nevada.ROBYN BECK /AFP

Alphabet’s market capitalization of over $1.5 trillion makes it one of the most valuable publicly traded companies in the world, trailing only Apple, Microsoft and Amazon.

Created in 2015, Alphabet is essentially a holding company for Google, which generates nearly all of its revenue and profit. Google has always portrayed itself as a tech company and has invested in many far-reaching areas of technology — such as internet search, mobile phones, artificial intelligence, self-driving cars and health technology. Its conference for software developers, Google I/O, which kicks off Tuesday, typically intersperses deep tech talk with far-reaching visions of the future.

But Google’s main business is online advertising. In 2020, Alphabet generated almost $183 billion in revenue. Of that, $147 billion — over 80% — came from Google’s ads business, according to the company’s 2020 annual report. 

Google has been the market leader in online advertising for well over a decade and is expected to command nearly a 29% share of digital ad spending globally in 2021, according to eMarketer. Number-two Facebook is expected to capture less than 24%, while Alibaba is