The vote will make it easier for republicans to get there tax reform plan through congress. The house also overwhelmingly approved Bipartisan Legislation today to impose new sanctions on iran. The bill looks to penalize tehran for longrange Ballistic Missiles but keeps the Nuclear Accord largely intact. Theening this hour, government is expected to release the final batch of files linked to the assassination of president john f. Kennedy today. This is in keeping with the new law passing in for full 1992 disclosure pertaining to the 1963 assassination. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am alisa parenti. This is bloomberg. Emily i am emily chang. This is bloomberg technology. Coming up, amazons triumphant third quarter. We will crunch the numbers from todays Earnings Report that beat across the board and shredded estimates and expectations. Alphabet putting up big thirdquarter numbers and driving shares to an alltime high. We will put todays Earnings Reports and bets into focus. Snapchat make fake news disappear. It is the only prominent social network that has not been dragged into the Russian Election ad scandal. How they did it, i had. Amazon out with thirdquarter sales and profits that topped analysts estimates, showing investors it can run Grocery Stores, turnout gadgets, expand its Cloud Business, and invest in new markets all while , selling Products Online and managing expenses. Shares rising as much as 8. 2 in afterhours trading. For the first time, amazon is incorporating whole foods into the mix. The Grocery Store chain generates 27 million in operating income in a period which included about a month of sales. Joining us to discuss these earnings and more is bloomberg technologys Olivia Zaleski. James, i want to start with you. What do you see when it comes to to revenue strength . James hats off to jeff bezos. What you see is acceleration. Wholehen you strip out foods, it is a threepoint acceleration on top of the acceleration we saw in q2. Everything is growing faster than it was before. There is a lot of scrutiny. Yes, north america dipped a little bit, but they are holding flat. You saw an uptick in the aws margin where there were fears about the pricing pressures. So all in all, a gold star. Emily olivia, lets start with whole foods. They had a month of sales included. What are we seeing . Of 21 we saw an increase million, which was based off of 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 cloud. I usually spoke with the aws ceo who runs the Cloud Business. A business on track to multiply as well over the next decade. Take a listen to what he had to say about growth in aws. Andy it is certainly growing really fast. I do not think any of us would have had the audacity to predict the it would grow as fast as it had. We always believed it had a chance to be a significant business. Emily james, what are you expecting to see when it comes to the Cloud Business . James it is interesting amazon originally built aws for themselves and then turned it into a product. I think you are seeing that success translate into other parts of their business. As you are looking to the cloud opportunity, obviously, there leaving horsemen a leading the pack. But when you look at which companies are turning out the figures, the iterative rate that amazon is putting out, there is only one company. They are putting out 700, 800 features every single year, and listening to what the customers want. Aws will continue to be a source of funds for the companies to subsidize the other assets, which is what makes them precisely so dangerous. Generated 21od million in operating income in that month. Olivia, talk about what else they discussed in this report. They really focused on consumer electronics. Olivia that is the fascinating part of the report. The focus on alexa, who you have in your home, you can order groceries through alexa voice services. The Earnings Report really showed it is a 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 various devices that all spoke to each other and with each other and created this ecosystem so you did not want to go outside of the apple experience. We are starting to see that now with amazon. Amazons hardware efforts have not always been massive successes. You look to the amazon phone, 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 likes of bmw, as of late. I think that ubiquity is going to open up more and more opportunities to gather data and also open up commerce opportunities, not just related to the options that they have on the site but more so getting you hoped on what the next iteration will be, to create a daily habit of ordering from amazon. Are ahere are lots 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] james sleep with one eye open. Emily and amazon prime, 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 see that continue to grow, as well. Amazon studios have been part of convincing people to sign up. 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 in that neck 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 the nextcoming up in couple years, what company can operate at a 0 margin successfully that can spend a lot of money and hook a lot of people that way . Content is still at the forefront. Emily in the meantime, the mystery around the future of amazons Second Headquarters continues. We were up in seattle. We asked tony reid, the head of alexa, nobody would give us any hint. They claim it is above their pay grade and have no idea where hq2 will end up. Do have any bets . James i am reading the same reports 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, the rubberstamping from the fcc and whole foods. So i would venture to say from a regulatory standpoint, amazon is now the largecapm the entire emily interesting. Tech group. Always great to have you on the show, james cakmak, and Olivia Zaleski as well. Also reporting earnings after the bell. Baidu issuing estimates for the Fourth Quarter well below the average. After hours,ng in causing concern for investors. Ad crackdown around a sensitive political trafficking decreasing traffic during a normally busy Fourth Quarter. Tech earnings continue, alphabets fourthquarter report encouraging investors. We will dig into the numbers. And bloomberg tech is Live Streaming on twitter, check us out. This is bloomberg. Emily tech earnings in full swing. Alphabet reporting a revenue of over 22 billion. Shares of 5 in afterhours trading, well above 1000, an alltime high. Googles ad business continues. Over 24 billion in revenue. I spoke with the cfo earlier. And growingoutmna, political pressures. And we talked about strengthening this particular quarter. I speak with ben legg, ceo of adparlor and former coo of google europe. Lets start with traffic acquisition costs rising to 5. 5 billion, this is the money google paid to its Distribution Partners like apple to keep apps front and center on the phone. When asked about traffic acquisition costs he said it is growing substantially and reflects the change in partner agreement. We have a strong position in a growing area. How much of a concern is this . Ben depends a you define concern. , theirf mobile companies products are increasingly commoditized. They are looking for the maximum they can squeeze out of those revenue shares from google. I think it will go out. There are probably others 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 large extent we have to get used to. There will be a trend upwards. Togle doing what they can slow the growth. But i do not think it will reverse any time 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 . Ben so 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. The evidence suggests they are. We have seen meaningful price increases. We have seen almost every single 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 bets 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. To start being meaningfully prosperous, we will need a lot more growth yet. Emily alphabet now totaling 3. 4 billion, and spending has dropped dramatically over the year. They spent 24 billion last year, this year is 77 billion. Ruth porat says they are really spending less on google fire focused on developing the ,technology before expanding it. She also spoke specifically about how they decide where to continue to invest in other bets. She said we are looking to create valuable businesses over the longer term. It is really a multiyear look at creating what we believe are multiyear opportunities, and mo, the selfout way driving car unit. She said they are pleased with the progress they have made for safety and 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 build something that will meaningfully change their results or change the world, they need to focus on bets that can generate 10 billion in revenue. Very few bets any company can make have a reasonable chance of building a 10 billion, 20 billion dollar, 30 billion business. They need to think through the things i can really change the world, generate a lot of revenue. Alphabet has a meaningful, a good chance of being one of the winners. Clearly Driverless Cars is a massive opportunity. It seems like alphabet is one of the front runners in that area. I think they are right to 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 have to ask you what is going on in europe, since you are the former coo of google europe, lets talk a little bit about this record e. U. Fine they are facing. Google has proposed a remedy whereby rival shopping sites 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 e. U. How big an impact do you think 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 prioritize google product 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. If europe or to say google , cannot do product search, just let other advertisers compete and stop offering that format, that could be pretty bad for google. Googles 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 consumers start their searches for amazon or other ecommerce sites instead of google, and that is when the revenue goes away. As long as people start their shopping journey with google, google is in a solid place. But if they say all google does , is take me to other sites and i might go straight to the other sites google starts losing revenue. , it is a much bigger risk if they cannot operate some form of google product search. Even if they have to create walls between them. Emily all right. I mentioned you were the coo of google europe. Still very valuable to have your perspective. As always, great to have you here on the show. Staying with alphabet, waymo is expanding its winter testing. Next week, the Autonomous Vehicles will be testing in michigan in an attempt to see how the cars will respond in a mix of wintry conditions like snow, sleet, and ice. Is another state where they will test Autonomous Vehicles. 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 third time in as many years, they are rebooting their plans for video content. The company is canceling its plan for an original series. Spotify has failed to gain ground in video. Arene video ad sales expected to grow nearly 28 this year. While twitter, facebook, and alphabetic europe for capitol russiantimony in the meddling in the elections next week one , notably absent will be snapchat. Snapchat has remained virtually ad bites. The secret to their success . Good oldfashioned human beings ting news stories. Joining me is sarah frier. Talk to us about how snapchat has remained remarkably outside of the fray. Sara snapchat does not think of itself as a social media company. Wherehink of a place people can message their friends with photos and separately curated by ant host of Media Companies and snap itself. They are taking cure ration into their 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 controlled. Emily why cant facebook do Something Like this . Sarah it is a completely environment. On facebook, the idea is that anyone can say anything. Something that you write can go viral, something that i write on a completely different subject, even i am in even though i am a journalist , maybe a talk about travel, it does not matter. I do not have to be an expert. But on snap, it is something where they have reputable news organizations, wall street journal, cosmopolitan, and all of these companies that have been in the business professionally for a long time, curating stuff for their own channels. Snap owns these shows, and compilations of User Generated Content in 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 content to go viral on facebook, 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. 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 snap for us, thank you so much for joining us today. 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. Is this a turning point for the platform . If you like Bloomberg News check us out on the radio, the radio app, and sirius xm. This is bloomberg. I am Haslinda Amin with the latest first word ne