Digital Capitalism: How to Make Money Online

Everyday we use services of Google, Amazon, Facebook (aka Meta) etc. They are some of the richest and most powerful companies in the world. But how do big tech companies make money, even if their services are mostly free? How do their business models work, what does collecting data have to do with it and what are the global consequences?

Let Prophit Guide You

<Prophit> I’m Prophit, your friendly assistent today. In this tutorial I will show you how making money online really works.

Understanding this digital business world isn’t always easy – not everybody is lucky enough to meet a humble and kind bot such as myself 💅. Digital capitalism is similar to capitalism offline – it’s all about maximizing profit. Companies try to make as much profit as possible to ensure growth and to be more successful than the competition. Since the 1990s there’s a meteoric rise of companies that make money with digital platforms and shape our lives massively. We mostly know of the “Big Five” of the US-Tech Industry: Google, Amazon, Apple, Meta Pflatforms (former Facebook) and Microsoft.

In this tutorial you can learn more about

1. The Basics of Digital Capitalism

2. Data As a Commodity

3. Business Models of Tech Companies

STEP 1: Back to Basics

<Prophit> To be successful in business you have to learn the basics…and understand what you’re getting yourself into. The power of these companies not only shape the online world but also the working conditions of people, the environment, the mining of raw materials and world politics offline. And there’s always the question who has access to online services – and who doesn’t. Test your knowledge with this quiz!

Quiz Time!

STEP 2: Who Owns Our Data?

<Prophit> During the quiz you came to know one of the most important raw materials of digital capitalism: ✨Data✨. Data results from all the things you do online, from uploading pictures, writing messages, listening to music or using other services tech companies gladly provide. There are cookie banners or terms of service that you have to agree to when using a service – but what kind of data is really being collected and what happens with them often remains mysterious. This is pretty useful for tech companies... 😇

What Is Data?

Information can only be processed by computers in digital form. That’s why information is translated into data, meaning it’s coded in (mostly binary) sequences of numbers and saved with electronic devices. Digital devices nowadays can save and process massive amounts of data.

What Is Data Processing?

Data can be used and processed in various ways. This is especially the case when there is a lot available - so-called big data. From big data you can know how groups of people behave, what they buy, where they spend their day. This information can be used for profit-oriented purposes as well as interests oriented towards the common good.

Click on the red info points in the pictures to learn more about data and data processing.

What Are Different Types of Data?

Who Collects, Stores and Processes Data?

STEP 3: Let's Make Some Money!

<Prophit> Ok, now you know how the business works, what data is and how it is being processed – but how do make money with data? Let’s look at the business model of Google. Most of the money tech companies make doesn’t come from the times users are paying for a service. It really gets interesting when their costumers are other companies.

Google

<Prophit> The data collected about our preferences, wishes, fears, needs, sexual orientation, family status and political attitudes are also used to predict our behavior 🔮. This is how advertising companies learn how they can best assist us with a helpful suggestion for our wallet 😘.

Goodbye :(

<Prophit> I'm afraid our time together has come to an end. However, there are still so many questions I would like to discuss with you: What are the opportunities and difficulties of digitalization in relation to the ecological crisis? How do tech companies contribute to global exploitation and inequality? What are the alternatives? To help you learn more about it, I have a few suggestions - perfectly tailored to you of course 😘.

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Article and media content by Alina Kopp. This content is published under the terms of the Creative Commons license CC BY 4.0 (external link, opens in a new window)! It is based on the educational material "Wirtschaft demokratisch gestalten lernen: Digitalisierter Kapitalismus", that was created in cooperation with Konzeptwerk Neue Ökonomie e.V., Attac Trägerverein e.V. and the Rosa-Luxemburg-Foundation. Share, use or adapt this article for your educational work. Don't forget to republish it under the same terms, giving credit to LINX and the authors!