How culture and structure in big tech (GAFAM) show in their products

General | Microsoft , Technology , Company culture / May 10, 2024

When talking about big tech, we usually mean five specific companies known as the Big Five or GAFAM. Those are Google, Amazon, Facebook (now Meta), Apple, and Microsoft. These companies have shaped the technology world as we know it. They led the five big waves of disruption: personal computing, the internet, mobile, social media (web 2.0), and cloud. When we think of personal computers, we think of Microsoft and Apple. When we think of the internet, we think of Google and Amazon. Facebook is synonymous with the rise of social media, same as Apple created mobile phones as we know them today. We are now in the midst of a 6th wave: generative AI where the biggest winner so far seems to be Nvidia, a newcomer to the big tech club. But the AI wave aside, let’s talk about the traditional GAFAM bunch.

These companies seem to have different recipes for success. They all have different cultures, different role structures, emphasis on different aspects of development, and different incentives for employees. They famously have different product qualities. Apple and Meta have the best UI/UX for consumers. Google is famous for its research and computer science innovations. Microsoft seems to be the only company that understands enterprise needs.

The types of products these companies make are not by chance. Apple has amazing UX and incredible marketing because the entire org chart reflects those goals. Microsoft is great at tending enterprise needs because it has an army of program managers that have continuous interaction with their biggest customers. Google and Meta are able to produce groundbreaking algorithms because they hired all the PhD graduates in silicon valley. In this article, we dive deep into the culture and structural differences between these companies and try to understand their secret sauce and reverse-engineer their success.

1. Google

If you’re looking for a job, Google is a great company to work for by all accounts. It has great pay and benefits, works with cutting edge technologies, and hires the most talented people in the world. Even though you can say that about any of the big-tech companies, there are some cultural aspects that are unique to Google.

  1. Innovation and Creativity: Google encourages a culture of innovation, probably more so than any of the other big tech companies. Employees are given the freedom to work on projects that inspire them. Google historically had a “creative day” policy that allowed employees to spend 20% of their time on personal projects and exploring new ideas.
  2. Hiring academics: Out of all mentioned companies, Google places the most emphasis on academic credentials. It has a huge portion of PhD graduates. So much so that a lot of them work on regular software engineering projects and not research.
  3. Research: Google has the biggest research force in tech with 15%-25% of their R&D focused on pure research. They spend a fortune trying to solve futuristic problems like quantum computing, general artificial intelligence, and autonomous driving. It was Google that paved the way for ChatGPT technology with their published paper on Transformer architecture (though they lost the lead on that one, probably afraid of cannibalizing the lucrative search business).
  4. Collaboration: Google emphasizes collaboration and open communication. Teams are encouraged to work together and there’s a strong sense of community within the organization.
  5. Flat Organizational Structure: Google is known for its flat organizational structure, where employees are encouraged to voice their opinions regardless of their position in the company hierarchy.
  6. Lack of centralized control: Google is somewhat notorious for its lack of centralized control and coordination, which can appear as chaos. This might be the result of giving engineers too much freedom and a very flat organizational structure. The idea seems to be that if you hire the smartest people and give them creative freedom then centralized management is unnecessary.
  7. Promotions by an independent committee: Unlike other companies, where you are promoted by your managers, Google does things differently. In order to get a promotion, an employee has to face an independent committee and present their achievements. Even though the committee members never worked with the candidate, they are the ones who get to decide whether they should be promoted. I’m sure the motivation was noble. Perhaps to reduce advancement through bias or nepotism. In reality, this method is controversial. The committee notoriously doesn’t consider maintenance and quality upkeep work as big achievements, rather valuing innovation. The result is that maintaining existing projects is less desirable than creating new applications, tools, and frameworks.
Disclaimer: Whatever information I present in this article is based on hearsay, anecdotes, opinionated books, and online research. Moreover, each of the mentioned companies is huge and has lots of subcultures inside, so please take everything with a grain of salt.

Revenue sources

In 2023, 57% of Google’s revenue came from Search, 10% from YouTube Ads, 10% from Google’s Ad network ,11% from Google Cloud (GCP), and 11% from everything else. To be clear, that is 77% of the income coming from advertisement.

So what do we get?

Google is pretty much the only serious player in Search. It’s practically printing money in their Search Ads business. If you look at their other products, the most successful ones are complimentary: Gmail and Chrome are amazing at gathering user data. Android development is lucrative because the default browser on Android phones is Chrome, which both gathers user data and has Google as the default search engine. Google Docs is trickier to attribute to search. It’s part of the effort of making the internet great, which was Google’s mantra all along. If everything is on the internet, the internet has more users, and that means Google Search has more usage. Even though Google Docs is an amazing product, it doesn’t try to be a full competitor to Microsoft’s Office suite. For example, it doesn’t explore the option of creating desktop apps, which is crucial to many enterprises and government organizations. I believe their strategy is not to compete for enterprises but rather improving the internet and driving traffic to the core business of Search.

Having said that, the premise of this article is how culture and company structure affect their products. Google has the perfect trifecta of encouraging creativity, amazing talent, and academic know-how. This all results in the following:

  1. Groundbreaking research: Google’s been responsible for some groundbreaking advances in AI and other areas, much of it shares with the community. Some examples include the machine learning library TensorFlow , the AlphaGo AI which was the first program to defeat a human Go champion, and the recent Transormer research paper which started a snowball and eventually resulted in ChatGPT.
  2. Many innovative products that die as fast as they are created: Google has had a ton of great software over the years. They’ve tried podcast apps, social networks, instant messaging, VR, cloud gaming, and many more. Some of those attempts end up as great products, like Google Maps, the home assistant, and Google Photos. But more often than not, they are discontinued. There are even sites that memorialize killed Google products, like The Google Cemetery . I assume consumers of existing products live in constant fear that their favorite app or tool is going to get killed. I think a big part of the reason is the employee incentives. There’s a lot of incentive to innovate and create new products, but little incentive to maintain existing products. Adding a lack of centralized control results in products that shouldn’t have been created in the first place (because they’re not part of the company’s core strategy).
  3. Inability to sell to enterprise: Google has little revenue from enterprises, even though it’s Microsoft’s main competitor to Microsoft 365. Its cloud offering GCP is also behind AWS and Azure on enterprise deals, though it’s popular with startups in silicon valley. I think the problem is that Google is a consumer company in its DNA. It doesn’t know how to tend to big customers like Microsoft or Amazon does. It doesn’t tailor products to individual needs, and it doesn’t excel in areas like backwards compatibility and compliance. Going back to my previous point, employees don’t have incentives to maintain existing products.

2. Amazon

Amazon is another amazing company. It has single-handedly created and led two trillion-dollar industries: online shopping and cloud services. Without Amazon, the internet would be a different place than it is today. And yet, Amazon’s culture is very different from the one at Google. We can list some of its unique properties.

  1. Customer Obsession: Amazon prioritizes customer satisfaction above all else. That means a lot of things, but at Amazon it includes making great and polished products, prioritizing and understanding customer feedback, and a demanding work environment.
  2. Innovation: Amazon is very willing to take risks and experiment. But unlike Google, which encourages creative days, Amazon encourages 6-page pitches that go all the way to Jeff Bezos (or used to). Approved pitches can start huge moves that sometimes turn into something amazing like AWS.
  3. Data-driven: Amazon heavily relies on data to make decisions. This data-driven approach informs everything from business strategies to product recommendations.
  4. Fast-paced environment: The pace at Amazon is famously fast. Employees are expected to work hard and deliver results quickly.
  5. Frugality: Despite its size and success, Amazon maintains a culture of frugality. This means being mindful of expenses and avoiding unnecessary costs.
  6. High Standards: Amazon has a reputation for setting high standards and expecting employees to meet them. This applies to everything from product quality to employee performance.

Unlike Google’s vibe of creativity, academia, and making the internet better, Amazon feels like a well polished and efficient machine. It has big aspirations and a results-based culture that reflects them. Productivity and quality count above all else.

Revenue stream

In 2023 , Amazon got 40% of its revenue from its online marketplace, 24% from 3rd party seller services (also marketplace), 16% from AWS, 8% from advertisement, and 7% from subscription services (Amazon Prime).

So what do we get?

  1. A few big products: Amazon’s intense work environment that doesn’t encourage spare time for creativity results in few products compared to other GAFAM companies. There’s the Amazon.com marketplace, Amazon Web Services, Amazon Prime, Alexa home assistant, and Amazon Kindle. But that’s about it.
  2. Amazingly polished products: Whatever else you might say about Amazon, their core products, Amazon.com and AWS, are marvels of engineering. They do what they’re supposed to do better than anyone else and at a much bigger scale. They are a direct result of high standards, talent (Amazon has great benefits), and customer obsession.
  3. Not changing the world (anymore): Besides the initial core products of an amazing online store and cloud services, Amazon is by no means changing the world. They don’t have a big research group like Google, Microsoft, or Meta. They don’t hire many PhDs. They don’t encourage creativity days or flexible hackathons where engineers can do what they want. They don’t have a flat organizational structure that allows for innovation from the bottom. And when the next technology came, like it did with generative AI, Amazon got caught flat footed. Some great ideas used to come from the top, i.e., Jeff Bezos leading the way to major investments, but that seems to have disappeared in recent years. Sure, Amazon is trying to make big moves like getting into streaming, investing in electric cars, healthcare initiatives, and attempting to buy vacuum cleaner companies. But those don’t seem to yield world-changing results.

3. Meta (Facebook)

I’ve always been a fan of Meta, despite whatever latest controversy they’re involved in. They just produce amazing software, whether it’s Facebook, WhatsApp, or React.js. I think that given their “opening hand” with social media, they did a fantastic job of creating great products and a profitable business. So let’s talk about what actually goes on inside this company, specifically about their culture and work environment.

  1. Innovation and collaboration: Meta fosters a culture of innovation and collaboration, encouraging employees to think outside the box and come up with new ideas. Hackathons are a notable tradition where employees have the opportunity to work on passion projects and explore innovative solutions.
  2. Engineering excellence: With a strong emphasis on technology and engineering, Meta attracts some of the brightest minds in the field. The company values technical excellence and encourages engineers to push boundaries and solve complex problems.
  3. Data-driven decision-making: Data plays a significant role in decision-making at Meta. The company leverages vast amounts of user data to inform product development, personalize user experiences, and drive business decisions.
  4. Fast-paced environment: Meta operates in a fast-paced environment where agility and adaptability are crucial. The company frequently updates its products and services, responding to user feedback and market trends.
  5. Meritocracy: Meta strives to maintain a meritocratic culture where employees are recognized and rewarded based on their contributions and performance, rather than factors like tenure or hierarchy. They are famous for granting the biggest accomplishment-based yearly bonuses for exceptional results.
  6. Great compensation: Like Google, Meta is known to pay handsomely, and it attracts some of the best talent in the world.
  7. Mission-Driven: Meta’s mission to “bring the world closer together” shapes its culture and drives employees' sense of purpose.

Kind of like Google, Meta is the embodiment of silicon valley tech culture. Great pay, lots of smart people, and mission statements that include D&I and saving the world.

Revenue sources

Meta is the least diverse company of the bunch in terms of revenue. In 2023 , 97% of their revenue came from advertisement. Probably not a big surprise to anyone reading.

So what do we get?

  1. Amazingly polished products: Everything they touch, but especially the core products (Facebook, Instagram, WhatsApp) is top notch quality. Even their ads feel nicer, less intrusive, and more relevant.
  2. Innovation: Although the core product remains mostly the same, if you look a bit deeper you’ll find that Meta has pretty decent research and engineering innovations. I count React.js in that bucket, but also some of their databases, machine learning tools, and most recently Llama , an open source LLM.
  3. Can monetize social media: Meta remains the only player that seems to profit, really profit, from social media. That might be their scale, their sophisticated ad-targeting framework, or some secret sauce nobody else can replicate.
  4. Controversial: For some reason, Meta can’t stay out of the headlines. Either they’re getting teenage girls depressed, or they’re affecting elections, or they’re spreading misinformation about vaccines. It appears like their business success originates in a complete lack of morals. Every time they’re faced with a dilemma, they choose to make more money over doing the right thing.

4. Apple

If you own anything made by Apple, you must remember the first realization that this product has higher quality than anything you’ve used before. Whether it’s the packaging, the texture of the phone, the slick UI, or the satisfying click whenever you open and close an AirPods case. Yes, I’m a fan, but I have mixed feelings towards the company. While it has some of the best designed consumer products in the world, it’s not a well-behaved company. Apple created a closed system that doesn’t allow anything to happen without its consent and a sizeable fee. It doesn’t play nice with other companies and practices all sorts of malicious behavior to keep its monopoly and earn more money. And even though that last part can be said about any of the GAFAM companies, Apple seems to be somehow worse.

Let’s break down their culture and structure.

  1. Innovation: Apple has been on the forefront of innovation for decades. From the Macintosh to the iPhone, Apple products are pushing the boundaries of technology and design. The company encourages employees to think creatively and take risks.
  2. Simplicity: Apple products are known for their minimalist design aesthetics and intuitive user interfaces.
  3. Quality: Apple products are synonymous with quality and craftsmanship. The company is meticulous about every detail of its products, from the materials used to the user experience.
  4. Wholesome customer experience: From the moment customers enter an Apple Store to the amazing products and support they receive through AppleCare, the company is obsessed with delivering a top notch experience in every single aspect. That includes obligating 3rd party vendors to uphold Apple’s standards, whether it’s hardware component vendors or a farting app for the iPhone.
  5. Secrecy: Apple is notoriously secretive about its products and future plans. This culture of secrecy is designed to build anticipation and prevent competitors from copying its innovations. The secrecy is as much internal as it is external, which means development teams are mostly unaware of what the team next door is doing, even when they are working on the same product.
  6. Design is more important than engineering: Apple places the designer role as the principal role in the company, not the software engineer like in other big tech firms.
  7. Great compensation and perks: While demanding, Apple offers generous benefits to its employees such as on-site gyms, healthy food options, and long parental leave time off.
  8. Demanding: Apple employees are expected to work long hours and meet high standards, especially when approaching delivery deadlines. This can lead to burnout and stress.
  9. Competitive: The company’s competitive culture can sometimes lead to unhealthy competition and conflict between employees.
  10. Proud: Employees should own an iPhone, not an Android. Steve Jobs and Tim Cook are godlike figures, and engineers should believe that Apple does everything better than anyone else. More so than in other companies, Apple demands fanatic dedication from its employees.

Revenue sources

50% of Apple’s income comes from iPhone sales, 26% from Services, 10% from wearables like AirPods and Apple Watch, 8% from Mac sales, and 7% from iPad sales. Considering that the biggest chunk of the “Services” category is App Store revenue and iCloud, the income is very iPhone-centric. If you take away the iPhone, the Apple Watch and AirPods lose most of their appeal. Still, Apple is somewhat diverse with their Mac and iPad. Notably, we can look at what isn’t in Apple’s products. They don’t have any notable AI development, no search engines, and no cloud beyond consumer services.

So what do we get?

  1. Innovation, great quality, exceptional design: Apple keeps amazing everyone year after year with what it does. It might be the M1 chips, the AirPods, or the Apple Watch. Not to mention the earlier iPod, iPhone, and iPad that pushed Apple to become the most profitable company in the world. At least until recently. It helps that they have the ability to recruit amazing talent. Apple has the special privilege of attracting talented designers who want to work in a company that creates the best designed products in the world.
  2. Closed ecosystem: Apple’s insistence on perfection (that Steve Jobs put in place), secrecy culture, and inability to partner with others drove it to create the most closed ecosystem in the world. Part of it is the vertical integration that includes the operating system, the chips, and most of the hardware. This strategy has been paying off more often than not as proven by the amazing M-x chip series. But it also means each app has to go through the App Store, each browser has to use the Safari engine, and very little choice in general. Apple claims it’s necessary to provide better security and more privacy. But it usually means fewer options and higher prices.
  3. A natural monopoly: Due to its closed nature, Apple is a natural monopoly. It develops a platform that employs arguably malicious practices to gain huge market share (> 50% in the U.S alone) and doesn’t allow anything to run on that platform without taking a big cut of the profits. It keeps all user information and regains final say of whatever goes on the platform. If you wonder about those malicious practices I mentioned, one example is the blue message/green message in iMessage that became a social status. Once Apple gains such a huge market share, it’s easy to claim in a courtroom that they break antitrust laws. They should allow other marketplaces, open other messaging protocols, enable different payment methods, and allow other browser engines. With the current company culture, Apple is doomed to be fighting regulation in the foreseeable future.

5. Microsoft

The last letter of the GAFAM group stands for the most valued company in the world. Microsoft is also the most diverse company of the bunch, with products varying from the Windows operating system, Office productivity suite, cloud services, gaming, hardware (Surface laptops, PC accessories), the Bing search engine, and many more. But to understand Microsoft, it’s important to understand that it’s an enterprise-serving company, not a consumer company. Outside of a relatively small gaming business, the majority of the focus is selling Windows, Microsoft 365, and Azure to enterprises.

Microsoft’s culture changed a lot throughout the years, influenced by its different CEOs. If we focus on the current culture under Satya Nadella, we can break it down to these points:

  1. Enterprise focus: Microsoft prioritizes understanding and meeting customer needs. Enterprise customers first of all. That means deep relationships with individual clients and partners. Or tailoring features because a single big customer requested them. Even Microsoft’s PM role, which traditionally translates to a “Program Manager”, is not as much about being a product designer as a customer success role (not in all cases).
  2. Matrix organizational structure and collaboration culture: A matrix structure is purposely different from a hierarchical structure. Instead of a single team lead calling the shots, any individual contributor or manager has many stakeholders. Collaboration is very much encouraged. Decisions are carefully discussed and considered by many people before committing. This approach is slower, but decisions are more thoughtful and deliberate. Employees are empowered because every voice is heard. In many aspects, it’s the opposite of Amazon’s Fail Fast culture.
  3. Data-Driven decision making: Microsoft heavily relies on data and telemetry insights to make decisions. Since there’s a lot of convincing needed before committing to action, data analytics and metrics are part of the company culture. As well as direct customer feedback.
  4. Flexibility and Work-Life Balance: Microsoft offers various benefits and programs for superb work-life balance, such as hybrid work, generous parental leave policies, and on-site wellness resources.
  5. Good pay: The compensation package at Microsoft is not as lush as the one in Google, Meta, or Apple. But it’s still good and has a lot of side benefits. Historically, Microsoft has had the best health insurance in tech. Microsoft’s headquarters are located near Seattle and not silicon valley, which helps reduce employees` cost of living.
  6. Bureaucracy: As a large organization, Microsoft employees often encounter bureaucratic hurdles and red tape that can slow development and stifle innovation.

Revenue sources

Microsoft’s biggest income source is its “Intelligent Cloud” segment, which includes Azure cloud and developer tools like Visual Studio. It was responsible for about 56% of the revenue in 2023. Next comes Microsoft 365 and LinkedIn, which brought in about 33% of the total revenue. The rest 11% came from “Personal Computing”, which includes Windows, gaming (Xbox), and the Surface laptop lineup. Azure is the biggest asset and the fastest growing part of the business, but Microsoft is still the most diverse company of the bunch.

So what do we get?

  1. Enterprise power horse: What Microsoft does best is tending to Enterprise needs. This is emphasized in many ways: there’s an army of PMs that keep close contact with customers and partners. Any compliance, privacy, and security needs are top priority. Enterprises trust Microsoft to do the right thing. Instead of making the product “simple and intuitive”, Microsoft tends to make it nuanced and complicated to fit the many specific requirements of its bigger customers. That’s why around 83% of Fortune 500 enterprises use Microsoft 365, as opposed to about 40% that use Google Suite. Microsoft moves slowly, which is often an advantage in the enterprise world, and it almost never kills off products (in stark contrast to Google).
  2. Focus on engineering: If Apple’s superpower is design, Google’s superpower is research and computer science, Microsoft’s superpower is engineering. MS employees aren’t afraid to spend months on iterative small changes, “waste” weeks on bureaucracy related to a privacy incident, or make a career out of performance tweaking in a single product. Where a Google engineer seeks a new project, a Microsoft engineer thrives.
  3. Old fashioned and enterprise-y design: Microsoft isn’t focused on design and innovation in UX. It is focused on engineering, telemetry, and enterprise customer feedback. That culture doesn’t allow for huge investments in visionary products. There is no “Steve Jobs” product genius figure to drive such efforts. There are too many people to convince of any such moves, and MS chooses a course that’s driven by data and customer feedback. That means customized features and steady incremental changes to existing products. But it does create new products where the form factor has a proven record; in other words, it copies successful apps from others and makes them better with its infinite engineering resources. Microsoft Teams comes to mind (inspired by Slack, I assume), as well as the recent Microsoft Loop app (inspired by Notion). Having said that, Microsoft has a huge advantage over competitors because they can integrate their products into the Microsoft 365 suite allowing lower prices and a better customer experience. For an example of how successful that strategy can be, take a look at how Microsoft Teams overcame Slack in market share.
  4. Great partnerships: Under Satya Nadella’s leadership, Microsoft transformed from a Windows-centric malicious monopoly to a good-natured collaborator. The Office suite became available on all platforms, Windows stopped being the center of the company, and Azure started concentrating on Linux and non-Microsoft databases. Not only did this approach get Microsoft from a flat-lining market cap of $300 billion to a whopping $3 trillion in 10 years, but it also got it to be a favorable partner for other companies. When Netflix had to choose an advertisement provider, they chose Microsoft instead of advertisement powerhouses like Google or Meta. But the most notable and important partnership is that of Microsoft and OpenAI, where MS invested over $10 billion in a deal that started a new disruption wave in tech: the age of generative AI. I’m sure OpenAI could have partnered with Amazon or Oracle, for example, but they chose Microsoft.
  5. Unpopular with startups: There are many possible reasons why startups don’t love Microsoft technologies like Azure, the .NET development ecosystem, or Microsoft 365. One reason is the lack of presence in silicon valley, where so many startups are born. Microsoft might be considered old fashioned or slow to adopt new technologies. And there’s the history of Microsoft, which was considered an evil organization for many years. All this has been changing under the leadership of Satya, who initiated some amazing moves like free Azure credits for startups , acquiring GitHub, and most recently partnering with OpenAI.

Summary

I guess there’s more than one way to greatness, especially when there are such opportunities in the new age of silicon. And even though these companies are very different, they have a lot in common. They all offer great compensation, emphasize priority, make data-driven decisions, and have a sense of mission. Some more than others on all those accounts.

I do wonder who will be the next “top 5” big companies - the ones 10 or 20 years from now. Are the existing giants going to stay, or will we see new ones? Right now, it looks like Nvidia is going to be there. How about Tesla or OpenAI? If you’ve got any ideas, write in the comments. Cheers.