What is Google's Business Model & Why Is it Being Regulated?

After reporting record revenue of over $402.8 billion in 2025 — the first time annual revenues have exceeded $400 billion, Google continues to dominate the world of big tech. The tech giant has grown from strength to strength as it diversifies into new markets, invents technologies of the future and even ventures into the hardware business.

Unsurprisingly, companies of this scale are quick to receive a bad rap. Critics fear Google is an unstoppable force with an unfair advantage over the rest of the pack.

So, does Google have a monopoly in the technology sector?

Join us as we explore the ins and outs of Google and ask whether government regulations on the technology industry are necessary to promote fair business.

What Does Google Do?

While we all know and love Google as the multicoloured search engine, the trillion-dollar giant has grown arms and legs since its humble beginnings at Stanford University.

After a groundbreaking research project by Larry Page and Sergey Brin in 1996, the pair have gone on to create a tech empire which covers everything from Google Earth to the world's largest video-sharing platform.

In 2015, the Google brand was restructured under the umbrella name of Alphabet Inc. in an attempt to narrow Google's focus.

Today, Alphabet Inc. is one of the largest companies in the world with an appetite for acquiring businesses of all shapes and sizes. Whether it's controlling the temperature of our homes with Google Nest, managing our busy lives with the Android Operating System, directing us around cities with Waze or creating pioneering artificial intelligence with Gemini and DeepMind, the ever-growing Alphabet Inc. ecosystem is everywhere.

What Is Google's Business Model?

The cornerstone of Google's success is built upon one simple concept — relevancy.

Ever since Page and Brin wrote their first line of code for 'Backrub' in 1996, relevancy was their #1 focus. They wanted to filter the noise of the online space by pushing the most relevant content to the top of the Search Engine Results Page (SERP).

To this day, Google's core business model relies on what is called a 'flywheel effect' — all revolving around this steadfast obsession with relevancy.

Improved relevance brings more users; more users bring more advertisers; more advertisers bring more revenue; more revenue brings more R&D; more R&D brings improved relevance.

The flywheel effect refers to a virtuous cycle of enhanced relevancy. The improved functionality and usability of all Google products help the tech giant grow stronger and smarter over time.

Even if we look beyond Google as a search engine, relevancy plays a fundamental role in the success of the likes of Google Ads, YouTube, Google Cloud and even Google Maps.

The algorithm that powers Google's ad platform is all about relevance to ensure ad auctions are meritocratic. Companies whose ads have the highest Quality Score (a measurement of relevancy) will end up with a better ad ranking while paying less than the competition.

YouTube is a massive video library which relies on algorithms to push the best content to the top and tailor individual user experiences to recommend the most relevant videos.

Google Cloud involves storing and sorting thousands of images, documents, songs and videos into an easy-to-use repository. Users need to filter through a minefield of information to find the exact file they're looking for.

Google Maps collects data from millions of devices to plan the most efficient routes and learns from past trips to suggest the most relevant destinations for individual users.

Gmail Autofill helps users finish their sentences by learning from previous emails and analysing the way they write.

Relevancy is everything for Google. Its business model relies on collecting, analysing and interpreting data — now supercharged by AI — to provide hyper-personalised services that users become dependent on.

The Money Makers: Top Google Products

So, where exactly does Google make its money and what are the hottest services and products to watch out for?

Google Search and Advertising. Advertising remains the beating heart of Google's finances. Advertising accounts for around 74–76% of Alphabet's total revenue, with ads generating $71.3 billion of the company's $96.4 billion total quarterly revenue in Q2 2025 alone. Around 65% of businesses worldwide rely on Google Ads for their pay-per-click campaigns, and the advertising segment generated $212.4 billion in just the first three quarters of 2025. As businesses continue to compete fiercely for top spots, Google shows no signs of slowing down.

Google Cloud. Google Cloud saw a continued increase in customer demand in Q4 2025, with revenues increasing 48% to $17.7 billion, led by growth in enterprise AI infrastructure and enterprise AI solutions. Google Cloud ended 2025 at an annual run rate of over $70 billion, with its backlog growing 55% quarter-over-quarter to $240 billion. In terms of market share, AWS leads the cloud market at 30%, followed by Azure at 20%, with Google Cloud at 13% — but Google Cloud boasted the strongest growth rate of the three, with a 32% year-over-year increase in Q2 2025.

YouTube. YouTube has evolved well beyond its ad-funded roots. YouTube's annual revenues surpassed $60 billion across ads and subscriptions in 2025, with Alphabet reporting over 325 million paid subscriptions across its consumer services, led by strong adoption of Google One and YouTube Premium. The Gemini AI app, which is deeply woven into Google's ecosystem, now has over 750 million monthly active users.

Why Is Google Being Regulated?

As the flywheel gains momentum, critics believe regulation is necessary to avoid unfair dominance and to promote responsible business.

So, why does Google need regulating, and what are the key drivers behind its mind-boggling growth?

1. Market Dominance

Whether it's a coffee company using Google Ads, a television manufacturer integrating with YouTube or an app developer using the Google Play Store, business owners must comply with Google's rules to reap the benefits of their products and services.

Many fear Google holds too much control over smaller companies as growing dependence on their technology means they're forced to play by Google's rules. The concern is particularly acute in digital advertising, where 90% of Google's advertising revenues now flow to its own properties rather than through publisher partnerships — a historic milestone reached for the first time in 2025, driven partly by AI features that retain users within Google's search interface rather than directing traffic to external websites.

Market dominance and the fear of speaking out gives Google free reign to call the shots.

2. Monopolies

Don't you hate it when one member of your family accumulates an entire board of pesky plastic hotels? Monopolies occur when a single organisation dominates an entire market.

In 2025, Google's monopoly concerns moved from theory to legal fact — twice over. In August 2024, the U.S. District Court for the District of Columbia concluded that "Google is a monopolist, and it has acted as one to maintain its monopoly" in violation of the Sherman Act. Then in April 2025, the DOJ prevailed in a second monopolization case, with the U.S. District Court for the Eastern District of Virginia holding that Google violated antitrust law by monopolising open-web digital advertising markets.

In September 2025, Judge Amit Mehta issued a landmark ruling imposing significant remedies — but stopping short of ordering a breakup of the tech giant. At the heart of the court order was a ban on exclusive contracts that previously ensured Google's search engine was the default choice on nearly all desktops and mobile devices nationwide. Google has signalled it will appeal, and analysts expect the case to ultimately be determined by the Supreme Court, possibly in 2027 or 2028.

3. Competitor Acquisition

Some regulators believe Google's market dominance is a credit to their tendency to acquire smaller companies which pose a direct threat to their business. While many view the acquisition of brands like Nest and Waze as strategic investments, the ability to absorb outside competition means Google can grow with ease.

The courts have increasingly taken notice. The Texas Attorney General successfully reached a $1.375 billion settlement with Google in May 2025 over allegations of abuse of dominance in digital advertising — one of five antitrust suits filed against Google by either the federal government or state attorneys general since 2020.

Regulators on both sides of the Atlantic are also zeroing in on Google's growing AI empire. The DOJ has made clear that any remedy must prevent Google from using the same anticompetitive tactics in its AI products that it used to cement dominance in search.

4. Public Influence

As Google plays an increasingly important role in our day-to-day lives, regulators are concerned about the company's political and social power. The tech giant can already control what you read online, where you shop and even what music you listen to. In many cases, Google knows you more than you know yourself.

Not only is Google accused of dominating financial markets, but it is also criticised as a source of destabilised democracy and violations of human rights. Google has a responsibility to manage the spread of misinformation and avoid its business interests from meddling with political perspectives. This challenge has grown ever more complex in the age of AI Overviews, where Google's generative AI summaries increasingly determine what information users see — and what they don't.

But ... the "Starfish Problem"

Every time Google gains new users, the value of their products and services increase — we call this the 'network effect.'

While many regulators push for the fragmentation of big tech firms into subordinate companies, network effects mean Google's growth is hard to stunt. As one legal analyst put it, 2025 may well be remembered not as the year regulators finally figured out how to constrain Big Tech, but as the year the limitations of existing frameworks became impossible to ignore.

The left-leaning think-tank Public Knowledge refers to Google's resilience as the "Starfish Problem." Just as starfish miraculously regenerate after being torn into hundreds of tiny pieces, Google has the scope and scale to overcome fragmentation and grow into something stronger and smarter. With Gemini now woven into Search, Cloud, Android and beyond, the next chapter of that story is being written in AI — and regulators are only just beginning to catch up.