tv Bloomberg Technology Bloomberg October 26, 2017 5:00pm-6:00pm EDT
at the federal government bringing lawsuits against access, what they have and what they are doing against our people has been unheard of. we will be doing major lawsuits against people and companies that are hurting our people. the white house estimates house passage of a $4 trillion budget was necessary for a tax overhaul and set the stage to give americans economic relief. the house also overwhelmingly approved bipartisan legislation today to approve new sanctions on iran. it looks to penalize tehran but keeps the nuclear accord largely intact. having this hour, the government in secretlink up files of president john f. kennedy today.
this is in keeping with the lob passing 1992 for full pertaining to the 1963 assassination of your global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti, and this is bloomberg. ♪ emily: i am emily chang. this is "bloomberg technology." coming up, amazon's triumphant third quarter. beat across the board and shredded estimates and expectations. alphabet putting up the third-quarter numbers and driving to an all-time high. we will look at today's earnings reports. snapchat make fake news disappear.
it is the only prominent social network that has not been negatively affected by the russian scandal. to our lead -- amazon tops analysts' estimates, showing investors it can run grocery stores. and invest in markets all while selling products online and managing and expenses. for the first time, amazon is incorporating whole foods into the mix. chainocery store generates $27 million in operating income in a period which includes about a month of sales. joining us to discuss these is bloombergmore technology's olivia zaleski. to start with you. what are you see and when it strength?evenue hames: hat's off to jeff bezos. even when you strip out whole
foods, it is a three-point acceleration, so everything is growing and growing faster than it was before. there is a lot of scrutiny. dippped a little bit, but at the same time, you thought uptick in the aws margin , so allere were fears in all, a gold star. let's start with whole foods. they had a month of sales included. what are we seeing? livia: it was based off one month of sales. a lot of investors are curious to know how is whole foods doing within the amazon brand, and what is happening here is a sustainable interest in the brand, or is it rubbernecking that consumers are having that they are interested in a huge amount of publicity around whole foods. emily: james, let's talk about
the clouds. o usually spoke with the aws ce who runs the cloud -- cloud business, a business on track to multiply as well over the next decade. here's what he had to say about growth in aws. andy: it is certainly growing really fast, and i do not think any of us would have had audacity to predict the growth as it has. we always believed it had a chance to be a growing business. youy: james, what are expecting to see when it comes to the cloud business? james: it is interesting -- amazon originally built aws for itself and turned it into a product. cloud are looking to the opportunity, obviously, there options in there that are leading the pack, but when you look at which companies are turning out the figures, the
iterative rate that amazon is putting out, they are foreign companies. they are putting out 700, 800 every single year. this is exactly what the customers want. aws will continue to be a source of funds for the companies to subsidize the other assets, business, which makes them, frankly, so dangerous. emily: $20 million in operating income that must. -- that month. olivia, they really focused on consumer electronics. the fascinating part of the report. they focused on alexa, who you have in your home, you can order groceries are alexa voice services. that is good strategy moving forward. all of these products and services are really integrated. it kind of reminds me of apple when apple was really hot several years ago with all the and it created
this ecosystem so you did not want to go outside of the experience. we are starting to see that now with amazon. effortsames, amazon's have not always been massive successes. you look to the amazon phone, for example, the kindle got off to a bit of a rocky start. how much faith do you have in the new hardware efforts, whether it is the echo or the new service, amazon key? james: i would say it is not as much on the hardware devices itself as it is on alexa because what amazon is doing is taking a page of google's playbook with android and making alexa completely ubiquitous, across third-party devices as well, forging partnerships with the late.of bmw, as of i think that ubiquity is going to open up more and more opportunities to gather data and open up commerce
opportunities, not just related the options that they have on the site but more so getting you put on, i think their next iteration is going to be food, to really create a daily habit of ordering from amazon. i think there are a lot of buckets of opportunity, $500 billion to $1 trillion in value that the company has yet to unlock. after this quarter, this company is very dangerous. [laughter] prime,and amazon obviously the subscription service, very key. olivia: yes, 59% and continuing to grow. that is another strategy with whole foods, getting customers to sign up for prime. you get your salmon a little bit less if you are a prime member. we will continue to see that grow. this is also the part of convincing people to sign up for prawn, the tumult, the head of amazon studio designs resigned due to sexual
harassment allegations. do you think amazon will be able to keep up the initial success that have seen? james: at the rate they are going, they are going to connect with netflix, so i would not be surprised to see them surpass netflix and become the single strongest investor in content in the market. what i've not seen exploited that amazon have the potential to is sports. obviously dabbling in the nfl deal that they stole from twitter, but when you think about these mega-franchise package is coming up in the next couple of years, what company at? aerate successfully?they can spend a little bit of money. emily: we were up in seattle. we asked tony reid, the head of alexa, nobody would give us any hint, saying it was above their paygrade. james, do you have an event?
-- any bets? james: i am reading the same records you are reading -- great sourcing from bloomberg. one point on that, though, before, i used to say amazon has the most regulatory risk because it has become so big, and consuming such a big part of our lives as it relates to commerce, but i think what you are seeing now is incredible savviness on the political front, so i would venture to say from a regulatory thedpoint, amazon is now basis for the entire large tech cap group. emily: interesting. always great to have you on the cakmak, and olivia zaleski as well. estimates forng the fourth quarter. shares dropping after-hours, also causing concern for
they are surging 5% in after-hours trading, well above $1000, an all-time high. google's ad business continues. the company is showing out over $24 billion in revenue. i spoke with cfo ruth porat earlier. she also called out the other bets segment in this particular quarter. for though, i speak with ben ceo of adparlor and former coo of google europe. the billion -- this is money google paid for apps like youtube, front and center. on the phone, when i asked ruth porat about acquisition costs, she said the business is growing substantially. they partner in the ongoing shift to mobile, which he or he's higher acquisition costs in a glowing -- which carries higher acquisition costs in a growing area. how much of a concern is this?
the reality is, a lot of mobile companies are increasingly monetized, and they are looking for -- what is the maximum they can squeeze out of the revenue shares from google? i think it will go up. there are other areas of acquisition, too, where there is a lot of upward pressure for google in areas like display revenue shares as well. i think it is something that to a larger sense we have to get used to. there will be a trend upward. google definitely can slow that growth. i do not think it will reverse anytime soon. emily: when you look at the numbers, it seems like most things are otherwise going in the right direction. what are the main highlights to you? obviously, there is the overall growth rate expectation. they have not really broken out where that has come from, but my bet is a lot of that will be coming from youtube. youtube has been doing really well.
there are a lot of questions about youtube recovering from a whole brand safety scare earlier in the year. we have seen it meaningful price increases. every singlealmost advertiser back on youtube, so that is certainly a highlight. beyond that, i think it is overall health in the ad business. clearly, there are a lot of other vets out there. the revenue is growing. at least when i have seen so far, there is no real standout success, but clearly revenue growth is a good sign. being meaningfully prosperous, we will need a lot more growth yet. emily: alphabet now totaling $3.4 billion in spending on those have dropped dramatically over year. $24 billion last year, this year is $77 billion.
ruth porat says they are really focused on developing the technology for google fiber before expanding it. she also spoke specifically about how they decide where to continue to invest in other be ts. she said "we are looking to create valuable bets over term. it is really a multiyear look at creating what we believe are multiyear opportunities," and , and shed about waymo says "we are very pleased with the progress they have made with safety in a self driving cars." there is the sense that they are thinning out their investments in other bets. ben, what do you make of that? ben: i think they have to. they have to be disciplined. the reality is for google or for alphabet to know something that can immediately -- meaningfully change results and change the belief thatneed the
they can generate $10 billion in revenue. very few have the chance of building a $10 billion, 20 billion dollar, $30 billion company. what they can do that will really change the world, that will really generate a lot of revenue, and that alphabet has a meaningful, a good chance of being one of the winners. clearly driverless cars is a massive opportunity. industriesll massive. it seems like alphabet is one of the front runners in that area. i think there is a lot of focus there. i do not think there are many bets in alphabet where they say this is too small or we are too far behind. emily: as the former coo of google europe, let's talk a little bit about this record eu fine they are facing. remedyhas proposed a where a rival will compete for space at the top of the search
results pages. ruth porat told me they worked hard on this remedy, they feel good about it, but it is too early to tell whether they will come to an agreement with the eu. do you thinkpact this could ultimately have on the business in europe? ben: if their proposal is accepted, meaning that the google product search would be allowed to compete with, let's say, amazon or any other e-commerce site within the global world, there will not be much impact at all because in essence, the way these work is they do a follow-up search roughly based on how much consumers like it and click on it anyway. that will just be a creation of rules for a little bit less intuitive reading between google search and product search, but it would be a very soft landing for google. -- were toill to say say google cannot do product search and will stop offering that format, that could be
pretty bad for google. revenue from retail-related searches is probably something like 20% to 30% of all of its search revenue. clearly the money would not go away because people will still search on google, but you might find overtime, more and more people would search amazon or other e-commerce sites instead of google, and that is when the revenue goes away. -- if they start seeing all google does is take me to other sites and i might go straight to the other side, google starts losing revenue. it is a much bigger risk if they cannot break some sor form of google product search. emily: all right. i mentioned you are the -- were the ceo of google europe -- you were the coo of google europe. ben: i will take the promotion. emily: [laughs]
ben legg, always great to have you here on the show. waymo is expanding its winter testing. the economist vehicles will be testing again in michigan an attempt to see how the -- the autonomous vehicles will be testing again in michigan an attempt to see how they handle wintry mix is. coming up, while many social media platforms are trying to find a way to get ahead of fake news, one company is ahead. how snapchat is succeeding where facebook, twitter, and google fail. this is bloomberg. ♪
ground in video. video at sales are expected to grow this year. ande twitter, facebook, alphabet europe for capitol hill testimony in russian meddling in the elections, one notably absent will be snapchat. snapchat has remained virtually free of political advice. -- ad bites. joining me for the latest story, which you we you can find in the latest issue of "bloomberg frier.sweek," is sarah talk to us about how snapchat has remained remarkably outside fray. sarah: snapchat is not think of themselves as a social media company. they think of themselves as a space where people connect with their friends with photos and separately consume content that
is curated by snapchat itself, so the company is taking duration in its own hands, verifying things before it is posted, looking at user generated content and adding context to it. it is extremely different from what we see on the rest of the internet, user generated content being compiled and then shared and going viral. it is completely control. emily: why can't facebook do something like this? sarah: it is a completely different environment you're on facebook, anyone can do anything, something that you write can go viral, something that i write on a completely different subject, maybe i write and it does not matter, i do not have to be an expert, but on snap, it is something where they have reputable news organizations, ,"all street journal "cosmopolitan," and all of these
companies that have been in the business for a long time, curating their own companies, and snap owns these shows, and they have generated content in me mi -- the mix. emily: how scalable is this for snap? they are basically their own media organization. can snap grow this into a much bigger business? sarah: that depends on how much people want to watch it. there are definitely some tried and true ways to get your facebook, go viral on but content partners for snap -- people are not necessarily sharing or commenting on that stuff because there is not a way to do it on snap. it is going to be a completely different way of measuring success, and it is going to take a while for media partners and advertisers to get comfortable with a new way of imagining what content and media can look like. emily: all right, sarah frier, who covers step for us, thank you as always for joining us on the show. check it out in "bloomberg businessweek."
coming up, we will have much more of the earnings bonanza. we will be talking about intel, microsoft, and twitter, posting strong earning results. forhis a turning point the platform. ? you can listen on the radio and at bloomberg.com. this is bloomberg. ♪ who knew that phones would start doing everything?
see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. mark: i am mark crumpton in new york. you are watching "bloomberg technology."first word news -- chemical weapons experts blame the syrian government for the sarin nerve gas attack that 90,000 people.
the of initial findings by the united states, france, and britain claim syrian planes dropped the bombs. president trump today cleared the opioid crisis a nationwide emergency. the united states has taken the first of seven ambitious public-private partnership with pharmaceutical companies to develop nonaddictive painkillers and new treatments for addiction and overdoses. mark: senators who attended a class to find a briefing on the attack in niger differed on whether the attack would have been averted. senator richard blumenthal pointed to a shortfall in intelligence as a possible reason why troops were caught off guard. willonia's parliament
reconvene friday to debate how best to respond to the spanish government's plan to strip away regional powers. catalonian president decided against calling a snap election. spain's senate meets friday and byects to approve a request primary server boy to remove catalonia's leadership. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. it is just after 5:30 p.m. here in new york, 8:30 a.m. in sydney. my colleague paul allen has a look at the markets. good morning. paul: good morning, mark. equities higher, amazon beating expectations, and wti pushing higher as well. new zealand has been trading about 30 minutes now, up a little bit, .1%. the new zealand dollar has now
the three cents against greenback since the announcement last week of the list of the coalition government. futures up aalia, shade of .2%. just had an announcement that banks are profiting at 1.2 5 billion australian dollars. a dividend their of two cents. mutual futures also pointing higher. markets waiting for numbers from september. i am paul allen in sydney. more on "bloomberg technology" next. ♪ emily: this is "bloomberg technology." i am emily chang. shares of twitter gained the , nowin more than a year
reporting better-than-expected revenue in the fourth quarter. the more consistent performance can sustain user growth, but here to break down twitter's results is the vice president and research director of -- in new york along with "bloomberg technology's" selena yang. say that managing expectations is an art and twitter seems to have an active that as well, so cautious optimism on the stops. that said, selena, twitter has been miscounting users for years. they only increase total users by 2 million because 2 million of their users were not actually using it. selena: what is shocking if they are only now realizing the mistake.
it was only a couple million a year. that is not a huge impact, but it does show a bigger gain over some years, and it does show between users that are stagnant, and they actually fell, so it is fornitely not a good time the trust with investors and analysts about the quality and accuracy of their numbers. emily: melissa, does this miscount concern you? melissa: i think that is the fair assessment. i like to send out the actual numbers themselves. inre were not huge errors isculation, so that promising, but it does show a misperception of trust, the validity of numbers. i should point out, however, that they're very large named competitor has said that they have missed measured this and miss countered that, had twitter
is in a position of meeting to show some more sustained earnings. i think this news has a little bit of a bigger impact on them than some of its competitors. emily: selina, twitter has been piloting a number of new products. are we seeing any of these products having more traction than others? selina: interestingly enough, the video advertising as well as their data licensing business, it is actually growing at a double-digit rate. about 14% increasing, which is acceleration, but at the same time, they're going after the base of users, which is really exactlyd asking what does this mean, but the biggest risk factor is that u.s. revenue is the most important advertising market, and it fell more than 10%. emily: meantime, twitter is making changes in how at least it talks about how they are
working on the online proactive problem. twitter will be come along with facebook and google, testifying before congress regarding fake news, regarding russian infiltration of its platform. concerning are all of these issues combined? melissa: i think for twitter, these issues are quite concerning. it is an issue of trust, not just investors trust and confidence but marketers, users trust and confidence. they are trying to increase user ship the same way. they have to show that they are creating a safe, comfortable environment in which to engage. and all of the press around questionable advertising and testifying before congress is certainly not going to do anything to increase user confidence. i think we also need to see more concrete answers about what exactly the steps are that are being taken to protect consumers from things like bullying and
harassment. emily: meantime, selina, twitter has banned some russian partners from advertising. talk about what has happened there. selina: it has been a swift change for twitter which had recently been battered over things they had done. they had a presentation to lawmakers, which now it seems like they can run and had a strong push to show that they want users to trust the platform. through that come of a band russian today -- through that, and banned russia today sputnik. the money they made from them, they said they will donate to accelerating research in that area. that is a total 180 because if you talk to outside researchers, twitter has been anything but friendly to the requests to collaborate. emily: and there is a question about -- how many users are bots? how is the problem with online
harassment and trolling? melissa, when it comes to the future growth of twitter, do you see twitter basically staying the size for the foreseeable think there isou something out there that can truly accelerate user growth? melissa: i think there is always something out there, especially when we are talking about something as unpredictable, if you will, as social media. yes, there are competitors -- that i will not name here -- that are darlings, and who would have thought that 10 years ago? there is always something new on the horizon. ad-supported is in my mind a bigger question because ad-supported media is, to put it mildly, having his own issues. there is always some into accelerate growth, whether it is in their ad products or in other monetization opportunities
remains to be seen. parishall right, melissa at forrester research him a thank you for joining us, as well as selina wang. the parent company of bloomberg news is developing a global breaking news network for twitter. fortunes, amazon founder' jeff bezoss -- the retailer topped wall street estimates. if these paper gains hold through, friday's trading day will overtake microsoft's cofounder bill gates for the second time this year among the billionaire index. coming up, more tech earnings. microsoft and intel report. we look at how traditional pc-related businesses are relying on the cloud. this is bloomberg. ♪
billy mayor tom barrett 10 longer provide -- that billion mayor tom barrett will no longer provide cash to the company. we are in the midst of a busy tech earnings season, and microsoft and intel also both reporting after the bell. microsoft' push into clouds services helped it beat estimates. intel's product line helped it beat estimates for its fourth-quarter earnings per share and revenues. cory johnson is joining me. topline? fantastic topline growth. in $24.5 billion in revenue. give such a novella -- give adela kudos for that.
microsoft plus linkedin is more than microsoft, so we see that as a topline growth here, but microsoft has been giving lip service to it for a long time, but we are seeing growth in it now. emily: let's talk about cloud. there is a huge that. they are obviously feeling competitive treasure from amazon. what about google and ibm? cory: they are killing it, and google and ibm are not in terms dellrket share, space, and getting very little mention. google's business is not really showing up in spite of a lot of announcements by google. amazon services is still be top dog. we saw the amazon results big time today. speaking of amazon results, we saw the growth in the growth
area for the second in the last three quarters. the census had been microsoft starting to eat away amazon's growth rate, but amazon's growth bit.is picking up a little it is notable that it is positive, not negative, in terms of sequential growth, again, two out of three quarters, and we had positive numbers out of microsoft. you wonder if what we are seeing is what we have seen most out of technology, which is the cousin of the number of effects, the number one and number two are so much bigger, and number one is so much bigger that number two, that maybe services remain so much bigger than microsoft's web business. microsoft's web business will be bigger than everybody else. yaily: such a novella -- sat nadella on the call saying they are seeing a record engagement on linkedin. isy: what we don't see integration of linkedin into some product.
we spoke with a guest on bloomberg radio who said in a here and a half, we will see a microsoft-linkedin products for sale, and that will be a game changer for microsoft. emily: let's talk about intel. how to the pc business do? cory: the pc business did ok for intel. they were not arguably as bad as they were a few years ago, but still, the date of businesses where the growth is, it is increasing the biggest part of revenue for the quarter. emily: what about the internet of things strategy? obviously, this is an important part of intel's future. they have been catching up. are they going to be better with the internet of things than they were when it came to smartphones? glacial.nge is it is actually boring and slow where it is very difficult to turn the ship here, and it takes
so long to play for changes at a fundamental science level, which is where intel's new design for new architectures for new platforms. we see the decreasing importance of pc slowdown the importance of other things because the pc business is still so dominant, the data center business is still so dominant. it is taking time for intel. it is still a long-term bet for intel that it is hard to see results. emily: it seems like every company is making about there. cory: i think intel really sees its role as a data center that is benefiting from the cloud, benefiting from ai calculations happening on the cloud, they will really grow there. right, cory johnson, our editor at large, microsoft and intel, thank you. all right, there are new formerments -- airbnb's china had. -- head.
he violated a coat of content -- by dating a subordinate after only four months on the job. bayer is making a big bet on agriculture technology that could develop self brutalizing plants -- self- fertilizing plants. a quick programming note -- carly fiorina, former hp ceo, joins the "bloomberg daybreak america" team at 7:30 a.m. eastern time. this is bloomberg. ♪
appearing companies for tech workers. notably missing from the top 10 were amazon, uber, and airbnb. only two companies -- canada's another -- were outside of california. bayer beat analysts' estimates with its proposed $66 billion acquisition of monsanto. e visited a and must new section of the company that is investing in the growing world of agricultural technology. reporter: something is growing at bayer. >> we believe we have the responsibility to solve the big issues. according to the bayer life science center, one of the
big issues is reinventing how health props grow, an effort to help farmers respond to a growing population. you have to feed more people on a smaller piece of land, and that is why we believe the demand for self fertilizing plants is in mind for the future. bayer's life science center is teaming up in a venture of ginkgo biloba works that mimics genes like those found in peanuts that automatically produce nitrogen unlikely to do not have the capability, like corn and rice. the ceo -- >> we are taking the genetic design from the microbes and given to the ones who like to make vegetables. save farmerser can money and give consumers more
environmentally friendly options. growers today are spending about $80 billion a year on nitrogen fertilizer alone. both an enormous expense in the actual fertilizer you are buying but also in getting it out to the field. reporter: so for devising plans -- self-fertilizing plants are one way to increase. the bloomberg agriculture index has lost half its value over the last five years. that and declining arable land of meta-population growth has boosted investment into agriculture technology companies like ginkgo bioworks. industryachs says this may be worth $240 billion eventually. el: simply put, it is an entirely different approach.
10 times the money and 10 times it means if you will, 10 times the jobs, the brains, and the heart, and that is why we only work in publishing. reporter: the efforts to reduce the fertilizer comes as bayer awaits proposal for its $66 billion takeover of monsanto, the world's largest seed company. what we try to develop with perfectly speak to what we have and what we would potentially have. reporter: bayer admits it is in the early stages. it is giving five years to see if it makes it to the crop in sacramento, california for further testing. and finally, shares of expedia are falling in after-hours trading. the online travel agency is
blaming the devastating hurricanes in the last quarter. travel relies on a busy summer season. expedia said recent national companys cost the profit between $15 million and $20 million. we will speak with the ceo of expedia on bloomberg television on friday. that does it for this edition of "bloomberg technology." a reminder -- we're live streaming on twitter. check us out at bloomberg tech tv. that is all for now. this is bloomberg. ♪ .
♪ >> from our studios in new york city, this is charlie rose. china's communist party congress comes to an end today and the new politburo standing committee unveiled with no successor to the president and this comes after xi jinping wasn't tried in the party charter. -- was any party charter. he declared a new era for china, saying it would take center stage in world affairs and he merges from the congress as the most powerful leader in china in decades. on me from boston is richard mcgregor, a former washington and beijing eie