The GAFAMs - Google, Amazon, Facebook, Apple and Microsoft.

In today’s world, these names are omnipresent and resonate with almost every person on the planet. Most individuals on the Western hemisphere will have at least one of their gadgets, will be a member of at least one of their platforms or will have placed an order with Amazon at least once in their life. Yet nowadays, these companies’ activities stretch far beyond their origin, far beyond the digital information technology sector to include – not only, but also – retailing, health and automotive value propositions. Their impressive growth performance, cross-industrial brand portfolio and strong innovation potential is what has moved the GAFAMs into the public eye, with politicians, academics and society being highly invested in identifying the key drivers behind their ultimate success. Similarly, a world without the KHOLs – a newly introduced acronym encompassing France’s most prestigious luxury good manufacturers, namely Kering, Hermes, L’Oreal and LVMH is unimaginable for many of us. Similar to the GAFAMs, the KHOLs have been able to establish a world-renowned expertise, high pricing power and solid brand portfolio in their respective industry, resulting in financial performances incomparable to the remaining players in the luxury goods industry.

   In this blog post, we aim to investigate whether or not the KHOLs, despite targeting an entirely different industry sector, can be considered equal to the GAFAMs – or if indeed, they might even have the potential to become the new GAFAMs in the future. Ultimately, we aim to highlighting both similarities and differences which has led to the ultimate success of the KHOLs and the GAFAMs respectively, by analysing them from the following two standpoints:

  1. The economic perspective, composed of the companies respective business models and financial performance.
  2. The strategic perspective, encompassing the companies’ market position, geographic coverage (with an Asian market focus) and both the KHOLs and the GAFAMs approach to innovation.

Our first blog post will be dedicated to the economic perspective, with the second exploring the strategic outlook.  

Two powerful business models, but distinct brand management strategies

    The KHOLs and the GAFAMs, while both omnipresent in most of our lives, have an intrinsically different approach when it comes to their business model, and consequently, their target customers and value proposition.

   The KHOLs luxury business model encompasses the delivery of a high-quality product and a superior value proposition (Kumar,2018). Being able to generate a feeling of social status for the costumer is crucial to the character of a luxury brand, and a concept closely linked to that of brand value. KHOL’s competitive advantage first consists in their strong portfolio of exclusive brands with a long-lasting tradition, heritage and international renommée covering industries ranging from fashion, over cosmetics to Wines & Spirits and their devotion to creativity, innovation and excellence delivery. the KHOL’s enable each brand within their portfolio to retain its unique identity and autonomy but leverage the parent group’s scale and experience for growth, new market openings and shorter lead times.

   The GAFAMs, on the other hand, all follow an entirely different business model, the so-called data driven business model focusing on business analytics, but also on the collection, direct and indirect selling of data (University of Cambridge, 2014). GAFAMs predominantly rely on two revenue streams: on the one hand, on the selling of internal data for consumer analysis and targeting purposes, on the other hand, on sales through the exploitation of their platform’s popularity by offering advertising space to other corporates. GAFAMs competitive advantage appear to mainly set themselves apart by the means of disruptive innovations, product portfolio expansions and their global reach (with the exception of China) – something that they are able to achieve, not only, but also through the data they have access to. “Data is the new oil(WEF, 2011; Rotella, 2012). ‘Big Data’ mainly drives their competitive advantage – it is through this and their enormous investments in R&D and data migration practices that the GAFAMs can ultimately create disruptive new product lines tailored to their costumers’ needs.

   A key difference between the two is the degree of tangibility of their offerings: while the GAFAMs fully rely on intangible value propositions, the KHOL’s value proposition consists of both tangible and intangible components derived from a) the physical product attributed and b) the soft power associated with the brands. This ultimately also relates to the great variations between the two acronyms when it comes to brand image and target customer: while the KHOLs are able to greatly exploit the prestige, history and heritage of their brands, the GAFAMs are increasingly suffering from potential privacy issue violations, government restrictions and monopoly criticisms. Given consumers’ complete dependence on and omnipresence of the GAFAMs in our everyday lives, this does, however, have essentially no impact on user behaviour.

   Overall, the KHOLs tend to follow a decentralized brand management approach based on the creation of synergies between different value propositions to exploit the know-how, upstream and downstream activities and distribution channels of one another. The GAFAMs, on the other hand, appear to use a mostly centralized portfolio management strategy (Cavender, R. and Kincade 2014), with the ultimate goal of uniting many different offerings into one coherent group to ensure the best possible user experience (Cufano, 2017).

Can the KHOL compete with the GAFAM on the financial standpoint?

   What becomes clear is that, despite the GAFAMs and the KHOLs following entirely different business models and target different market sectors, they have both managed to become the top of their respective industry in terms of financial performance and brand value development over time. This shows that no single business model approach is the key to success per se, but rather that each business model can be made economically feasible through its successful execution.

Source: Bloomerg/Alphavalue

The KHOLs and the GAFAMs stand exemplary for this: their value proposition, brand image and brand value, are inherently distinct. Nonetheless, both the KHOLs and the GAFAMs tend to significantly outperform the market – they are more resilient in times of crisis, comprise strong market capitalizations and stock performances. This is not only the case in US markets, but extends also appears true on a global scale (Dorfleitner et al., 2019). One might even go further and argue that the outperformance of valuable brands is much larger during unstable market conditions than during stable ones. This seems to be particularly true in the context of the business services, retail and technology industry (Dorfleitner et al., 2019). Considering all fore-mentioned points, it appears that brand value, irrespective of being an intangible resource, is indeed crucial in driving a company’s financial performance, irrespective of the target industry.


From a strictly numerical perspective, all GAFAM members form part of the Top 10 brands by brand value according to Interbrand’s Best Global Brands rating in 2018 (Interbrand, 2018).

 When comparing this with members of the KHOL brand portfolio, we find that Facebook – the lowest valued GAFAM player – is valued one and a half times higher than the most highly valued KHOL brand - namely Louis Vuitton.


Brand value

  Similarly, brand value development displays the different growth performance in both groups: Apple’s brand value, for instance, increased by 23% p.a. from 6.6 billion USD in 2000 to 214.5 billion USD in 2018, while Louis Vuitton’s brand value grew by 9% p.a. from 6.9 billion USD to 28.1 billion USD in the same period (Interbrand, 2000, 2018). The GAFAM therefore have a significant advantage over the KHOL’s from both a brand value and brand value development perspective over time, as seen below:

Having said that, it has to be noted that both the KHOLs and GAFAMs have generated an impressive sales-, net income and shareholder value growth performance over the past decade (2010-2019), making them the uncontested leaders within their respective industries. Not lastly due to their impressive track records, LVMH, Kering and L’Oréal firmly established themselves as a constant in the stock market EuroStoxx50 - Europe’s equivalent to US’s Dow Jones (Schubert, 2018). The success of both KHOLs, all retail companies, and GAFAMs, the tech industry giants, appears to align fully with the theory outlined above – namely that brands with significant brand value tend to outperform other players in the market in terms of financial performance.

   As seen in Figure 2 above, the smallest GAFAM player, Facebook, has a higher market capitalization than all four KHOL members combined in 2019. It further has to be noted that all GAFAM players forming part of the world’s Top 10 companies by market capitalization globally. Also in terms of share price performance over the last decade, GAFAM players seem to lead the way allowing for a significantly greater increase in market capitalization over the review period: while the KHOL members also display strong share price growth over the review period, Kering is the only one to achieve a share price growth stronger than the weakest growing GAFAM share, Google.

   Whilst the overall scale may thus not be directly comparable, clear similarities can be identified with respect to both groups’ M&A activities: While the KHOLs heavily relied on acquisitions of already well-established heritage brands and family businesses in the past, they have now shifted towards younger, more unknown and creative entities targeted at the Millennial generation and luxury experiences. Examples of this include LVMH’s recent acquisitions of Belmont, a UK-based hotel and travel group, and Fenty Beauty by Rihanna. Similarly, also the GAFAMs have started to explore new business areas, being aware of the long-term risk posed by solely focusing on a few market segments. Similar to the KHOLs, the GAFAMs seek companies that are well-aligned with the core competences of the overall group, while placing a greater emphasis on the novelty, innovation and futuristic aspect in their expansion endeavors when compared to the KHOLs.

   KHOL luxury stocks are far from being able to compete with GAFAM’s technology stocks when it comes to market capitalization, share price growth and revenue development. Their combined market capitalization of around 448 billion euros corresponds to only a good tenth of the giants from the United States. The recent pandemic further increased this gap, with the GAFAMs continuing their market capitalization growth while the KHOLs suffered from losses. Nevertheless, the impressive financial performance of the KHOLs remains undisputable - just like the GAFAMs in the technology industry, they appear to be clear leaders in their respective industry.

Authors : Charles Missiaen, Anastasia KaranfilovicMarie Dutailly, Paola De Luca, Marc Houllegatte, Robert Lukaschek, Rodolfo Sciolla and Victoire Toulin


Key references


  • Fielt, E. (2014) ‘Conceptualising Business Models: Definitions, Frameworks and Classifications’, Journal of Business Models, Vol. 1, No. 1, pp. 85-105.


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