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, amazons triumphant third quarter. Beat across the board and shredded estimates and expectations. Alphabet putting up the thirdquarter numbers and driving to an alltime high. We will look at todays 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 technologys Olivia Zaleski. To start with you. What are you see and when it strength . Evenue hames hats off to jeff bezos. Even when you strip out whole foods, it is a threepoint 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. Lets 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, lets 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. Heres 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, amazons 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 googles playbook with android and making alexa completely ubiquitous, across thirdparty 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 ive 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 megafranchise 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 afterhours, also causing concern for investors. Baidu decreasing traffic and what is normally a busy fourth quarter. Apple fourthquarter reportss encouraging investors. We will dig into the numbers. And bloomberg tech is Live Streaming. Check us out at bloomberg tech tv. This is bloomberg. Emily tech earnings in full swing. Alphabet reporting a revenue of billion. They are surging 5 in afterhours trading, well above 1000, an alltime high. Googles 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 hes 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, lets 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, lets say, amazon or any other ecommerce site within the global world, there will not be much impact at all because in essence, the way these work is they do a followup 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 retailrelated 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 ecommerce 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. Emily popular streaming Music Service spotify is taking another shot at a video strategy. For the first time in three years, slot if regarding its brand for video content. It is canceling its plan for a series. Spotify has failed to gain 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 cant facebook do Something Like this . Sarah it is a completely different environment youre 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 . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. 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 Publicprivate 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. Willonias Parliament Reconvene friday to debate how best to respond to the spanish governments plan to strip away regional powers. Catalonian president decided against calling a snap election. Spains senate meets friday and byects to approve a request primary server boy to remove catalonias 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.