Why are tech giants worth so much money? The answer is data.

If you look at Apple, Google, Microsoft, Amazon, and Meta, their combined market capitalization accounts for 26% of the entire S&P 500. What do they have in common? They all make money from data.

But there is a problem here: data is completely invisible on financial statements. Companies spend billions on storing and analyzing data, treating it as operating expenses rather than assets in accounting. If data were accounted for as assets, the book value of these tech companies would skyrocket.

How to value data? There are three methods in the industry:

Estimated at market price: Microsoft acquired LinkedIn for $26.2 billion when it had 433 million users, which means each user was worth $61. Now LinkedIn's users have doubled to 700 million, and according to this logic, the company is worth $43 billion. TikTok's U.S. business is valued at $60 billion with 100 million monthly active users, making each user worth $600—about 30 times what Instagram was valued at when Facebook acquired it.

Cost Estimate: Netflix users spend an average of 7.4 minutes a day, generating 275GB of data per year. The cloud storage cost is $0.24/GB, resulting in a data cost of $66 per user per year. Calculating for all users, the data assets amount to approximately 12 billion, accounting for 6% of Netflix's market capitalization.

Based on cash flow estimation: Twitter's data licensing business grew from 56 million USD in 2015 to 128 million USD in 2020 - the data assets of this business are worth 2.8 billion.

The key point is: data has a network effect. The more Meituan takeout users there are, the more merchants want to settle in; the more merchants there are, the better the user experience, and the more users there are. When data doubles, the value may triple. This is why in fields like social media, search, and e-commerce, the winner takes all — the first-mover data advantage snowballs, making it hard for latecomers to catch up.

Currently, 2.5 million TB of data is generated globally every day, and it is growing at an accelerating pace. Companies that have already mastered data will only become more valuable. This is also why sectors like AI, cloud computing, and data centers are so popular — they all help businesses better collect, store, and monetize data.