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What the biggest companies in the world all have in common

We got the news on Friday that the US internet search giant Alphabet Inc. (commonly known by its old name of Google) has become just the sixth company in history to have achieved a total market capitalisation of over US $1 trillion. It joins its fellow American giants Apple, Microsoft and Amazon.com as well as China’s PetroChina and the recently floated Saudi Arabian oil giant Saudi Aramco in this most exclusive of clubs.

It makes our own biggest ASX company Commonwealth Bank of Australia (ASX: CBA) (at $149 billion/US $102.7 billion) look like a very small fish in a very big pond.

So this news got me to thinking, what do all of the biggest companies in the world have in common?

For an interesting comparison, I’ll first just list the top ten companies that were in place just ten years ago– provided by the Financial Times: Exxon Mobil, PetroChina, Apple, BHP Billiton (now known as BHP Group Ltd (ASX: BHP), Microsoft, ICBC, Petrobras, China Construction Bank, Royal Dutch Shell and Nestle.

And for good measure, I’ll throw in 20 years ago: General Electric, Microsoft, Exxon Mobil, Pfizer, Citigroup, Wal-Mart, AIG, Intel, BP and HSBC.

The Top Ten

Well, let’s have a look at the current top 10.

They are Saudi Aramco, Apple, Microsoft, Alphabet, Amazon, Facebook, Alibaba, Berkshire Hathaway, Tencent and JPMorgan Chase.

The first thing to note is that with the exceptions of Aramco, Tencent and Alibaba, US companies dominate this list. That goes in part to the global dominance of the American economy that has persisted since the Second World War.

The second thing is that of the last two decades, only Microsoft has consistently remained in the top ten. All others have waxed and waned in relative dominance, so it will interesting to see if this trend continues in 2030.

So, back to 2020 and we have one oil company, one consumer goods company, one conglomerate, one bank and six international/tech companies in this top ten list.

It’s worth mentioning that Berkshire Hathaway has a significant stake in Apple – which has probably helped it keep up with the Kardashians, so to speak.

If we break down the six ‘tech’ companies, Alphabet and Facebook are leaders in the online advertising space.

Amazon and Alibaba are both online marketplaces that also offer industrial cloud computing services, amongst other ventures.

Microsoft also offers cloud services but is also the undisputed champion of commercial productivity software though its Office and Windows platforms.

Tencent is a sort of mixture of all of the above, with a massive gaming segment as well.

Foolish Takeaway

It’s clear that the economies of scale relative to capital costs that online-based companies can provide has propelled the majority of the top ten global companies to where they sit today. I think this trend will continue, so if perhaps you’re hoping to find the next entrants to this prestigious club, this area would be a good place to look.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia has recommended Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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