History to the fbi. It includes information the air force did not report about the texas church shooter. The pentagon is now reviewing the telley case kelley case. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Bloomberg technology is next. Im cory johnson from new york. This is bloomberg technology. Coming up shares of snap are in freefall in afterhours trading after a crummy earnings report. Plus, alphabets soup driving int chauffeuring people minivans without human backup drivers. We have a Progress Report from the ceo. Congress continues to make the case for Holding Big Tech more accountable. We will talk about the efforts to hold Internet Companies legally liable for the content on their platforms. But first, to the lead. Snap with disappointing results. The analysts are always wrong anyway, but the users numbers are really bad. Daily average users, 170 million. Less than the 180 million analyst estimates. Shares tumbling after the results. Down in freefall 17 . A lot of people were expecting this, but the only analyst we want to hear is right here. Diss you analysts. Look, analysts get these wrong. 24 of the flow was short going into the quarter. These numbers are weak. In fairness, when you look at the color commentary around the , you could have arrived at the numbers they posted, but with the street has once some benefit of the doubt in trying to give them some hope that engagement that some of the new features are going better, but i think the takeaway is when you look at the Facebook Google the wobbly, there is no silver bullet. Duopoly, there is no silver bullet. Cory the daily users is a lot of people, but nothing compared to twitter and an infinitesimal amount compared to facebook. Is less than Instagram Instagram stories. That only numbers from instagram, but last report is 300 million on instagram using instagram stories. This 178 million users a percentage of fact, just 2. 9 growth on a sequential basis. That is weak. James it is not great from about the same time, you have to think that they have so much opportunity to engage these users. They have all of these publishers trying to forge relationships with them. It is more raw content, and there is a discovery aspect that is not there with the after ephamoral nature. Snap has all of the users. I think they are there number one worst enemy. They are not capitalizing and monetizing on the engagement and the users they do have. You could draw the same parallel to twitter. Cory they are losing money on every sale. They have negative gross margins. Again, negative gross margins. Not negative operating margins. Negative gross margins. It costs them more to deliver dancing hot dogs than they get revenue from dancing hot dogs. D, and their hosting costs went way up again. James there are areas of criticism that i give you credit for criticizing, but on the host inside, i do not think that is quite fair because they at the same time, the opportunities, the business skilled in the way it was supposed to, you would see much do yo deeper leverage directory. Cory i wanted to start in the nba, but it did not work out that way. Your point, if the revenue was going, we would not be talking about this, but the rising cost per user, 1. 18 per user, by my calculation. That number is way up from the . 84 last time. There seems to be no skill to this business. Once they got over 100 users , you would think the cost would fall off and they can continue providing the service, but with the filters out there, it is costing them more to do it. James there is no scale because the moderation and the growth curve is a lot steeper downward then you would like to see. 1. 17 this number. 39 from last year. That is a number that should be growing in the triple digits. Cory 35 yearoveryear. James it is not great because you are so early in the growth curve. These numbers need to be posting at a bare minimum in the triple digit territory. Cory when i try to Say Something nice. That is your duopoly thing. I have been thinking about the way i started my career in the magazine business. One of the claims to fame was putting out a 584 page issue of Sports Illustrated previewing the olympics. Sports illustrated now no longer chockfull of ads. A tiny thing. They are going to facebook and google. Is seems like facebook and google it seems like facebook and google alone. James i think the it effect is potentially shrinking the overall advertising because you are not seeing the big brands advertising as much as they need to because they go to the private label. You think about the three biggest advertisers are finance, auto, and consumer packaged goods. Consumer packaged goods is going private label. Services and auto as well. The pioustructurally, shrinking pie is shrinking. Cory talk about shooting themselves in their own foot. They cannot get around the problems with the android. Most smartphones in the world are android phones, and they have technological problems to put it kindly providing snapchat on those phones. James almost all of the problems i would argue are selfinflicted like the android issue. That should be done. They have a great search functionality, but people dont know about it. The maps feature is very interesting, but people dont know about it. Maybe this new app format maybe this new app format they are rolling out will fix things. Cory the last one i will tell out there. Ng priceof the fawni they got over this stupid glasses, exactly my point, who would not want that besides you . 40 million write off in the corner for those glasses. 40 million of worthless inventory that i think anyone could have probably predicted. Except for you. Do you really where those . James i bought those for research purposes, but it is actually quite entertaining to format whole circle or circular format. If they capitalize on that, maybe there is an opportunity, but the resources were not put behind it the way they needed to be. Cory always great analysis, great work. James thank you. Cory coming up, alphabet taking over in the driving space. We will hear from john krafcik. This is bloomberg. Cory did you see what happened to shares of blue apron today . The stock was down more than 20 today, hit a record low after the ceo talked to the Investor Conference and said there were concerns about the Profit Margins at any with the helmet center. Analyst rossport sandler downgraded the stock to three dollars. Blue apron having all kinds of problems out of the kitchen. Selfdriving car units have been making progress the last few years. Waymo has announced they will start shivering people in minivans without the safety drivers. The staffers who are there to make sure nothing goes wrong. They are testing out the actual Autonomous Service in phoenix. Mark sat down at the lisbon summit with john krafcik and they talked about the progress of tech driving tech. We have been at this a very long time. It has been more than eight years working on fully self driving cars. We learned that experience is the best feature. Over those eight years, we have driven 3. 5 million miles autonomously. We have been learning an awful lot as you know in a virtual world, we have now driven over 2. 5 billion miles just last year. And now we are to the point where we are driving really 10,000 miles on a daily basis autonomously in the cities in which we are testing and 10 million miles every day representing driving of 25,000 cars every hour of every day. We got it down to the point of confidence. That confidence allowed us to go forward internally with what we just showed the world today in phoenix, arizona. You have had success with your volunteers in phoenix for almost five years now. Talk to me how that program is going. What are participants like . What are the major lessons you have taken away . John yeah. We started the program earlier this year in the spring. The first signal that we had Something Special was the overwhelming demand. We talked about the possibility that these folks can help define the future of mobility. We had 10,000 applications to join the Program Within the first play for hours. Right now, we are in this position where there is a lot more demand for seats in our cars tha we can actually providen, which is not a bad problem to have, but we are learning a lot from these guys, the intricacies of pickups and dropoffs. They have helped us refine that in car user interface and what we share with the users on the screen. They have helped us determine what is the best way to get them to the start of the get them to the location of the start. Mark you said the commercial service is coming soon. It will take the shape of a ride hailing with a mobile app. Any reasonh lyft, for not working with lyft . John we have a lot of partners we are working with in the space. And, fca, autonation, davis. We will share more about what we are doing with our partner lyft going forward. We will help each other with the launch of new products. Stay tuned for details on that one. Mark you also started testing vehicles recently in michigan to deal with snowy weather. What is the next market . Cities like phoenix . More challenging areas next . John well, phoenix is a big place. There is a lot of interesting and very challenging parts of phoenix that we will be driving and including the downtown area as we roll out our technology, but i think it is a good vet to look at the places we are testing right now and imagine those will be likely the next candidates for us to rule out truly driverless capability. Mark something about a truly driverless that we talked about in the past is you are taking the driver out of the front seat. Lyftnies like uber anfd employ a lot of drivers. What response ability will waymo play there . John i think it is something all of us in the space need to think about pressure. For sure. We are adding a lot of jobs as we are developing this technology. There are a lot of of people we need with our partners and davis and waymo to maintain these vehicles, to work on our High Technology and the cameras and the radars. So there will be a lot of skilled trade positions available at Companies Like waymo in the future. The other thing to keep in mind is that for the most part, the people who are using our technology right now in arizona are replacing personally driven miles anyway. The great bulk of the miles we will be driving as waymo, the driver, will be replacing drivers that. Us would have driven otherwise. Mark talk about you mentioned you are reimagining with the inside of a car will look like. Is that the case . These vehicles will not necessarily look like they do today a few years from now . John well, just about every car that has ever been put out to the world has been primarily designed for the driver, right, at the primary focal point. It really does open up a lot of interesting possibilities when you imagine no specific driver other than waymo is the driver. No human driver. We have taken our first shot at that with our firefight prototype. Going forward, yes, we can imagine a lot of really interesting possibilities as we expand, and i mean the collective we, all of us working in the space. As we expand to provide more applications and use cases for this technology, you can imagine the vehicles becoming more specialized. Imagine a vehicle that might be person. For just one another vehicle might be perfect for a larger group of folks. Some might be designed with sleeping or napping in mind. Some might be food related cars you take on your way to a venue. Truly endless in the future going forward. Cory that was waymo Ceo John Krafcik talking to mark bergen. Coming up, investors left 1 billion in enters. What jeff bezos is funding of blue origin is different. We will bring you the details on that, next. This is bloomberg. Cory well, the private race into space is heating up, but the billionaires on a mission i try some different routes. All of the spaceships will go straight up. We know that. Jeff bezoss sold 4 billion in stock in amazon and is using most of that money to personally support his space company, blue origin. Different Business Model from what elon musk is trying at space x or Richard Branson at virgin galactic. Little would try to quickly move in their Space Business and commercialize the business. Do you live here now . I do now. Cory i have not seen you lately. This is really interesting that bezos, who has not sold stock in amazon for most of the time he has run amazon, which is why he is one of the richest men in the world because it is the value of the stock that keeps them that way, he is now selling stock to own a different enterprise. Isthat points to blue origin his absolute passion project. He is in this unique position even more so than elon musk. He can basically go, i want complete control over this, and the way you do that is to not have outside investors and also not chasing revenue out of the start. Cory in the case of Richard Branson anyone musk, they are cumulative their fortunes. Accumulated their fortunes. All in different ways. Jeff bezos started a Hedge Fund Business but made his money at amazon by owning and keeping his amazon shares. Elon musk selling shares in moneylosing businesses long before they had any hope of success, whether it was tesla or spacex or paypal even when he worked there. That was not yet a profitable business when he got out. He and community losses for all of the businesses, enormous. Richard branson sold all leases of businesses like Virgin America or other things, but it seems to follow the philosophy of bringing outside contributors to the businesses and bezos going it alone. Tom bezos is in a better position than anyone else because of the funding. Even though he is selling a billion dollars worth of stock, that is a small proportion of his whole holdings. The interesting thing is what elon musk is doing. When we first started looking at the story, is he pledging shares to support spacex . He is using shares to support the city before he brought in tesla. If you think spacex, because they managed to build his business, not a sinkhole of money. Cory maybe it is my of session a former hedge fund manager, but it reduces the flow of the stock if you locked up shares, which raises the cost of shortselling, but also some costs to cover. Tom that is getting very technical for me. Cory a huge Short Interest in tesla. Someone is getting paid to hold the stock. Is an interesting thing. How far along are these guys in their efforts . It seems they are all making very great progress in their efforts. Tom i think so. Spacex is an operational business for the last 10 years at least. Blue origin is looking a lot of progress. What they are not tried to do is get customers yet. Maybe next year they might send tourists to space. Spacex is that neither leader in trying to commercialize it. Out of choice, blue origin is pretty much like in stealth mode and doing the same thing. Cory Richard Branson is in a great because he wants to put his mother, who is 93 years old, on the first flight. He wants to do that. He might get enough light himself. Tom i think he said he will be certainly among those customers. Maybe next year might be the time. Tesla, theyt unlike managed to secure a lot of that business with big deposits from some of those future astronauts if you will. Tom yes, it is enormously popular. Just members of the public putting down hundreds of thousands of dollars. For futures deposits models, they have been able to fund and get the operation up and running. Cory i checked, and Richard Bransons mother is in fact 93. Good to see you. Thank you so much. Coming up, banks and companies have long used the 1996 law to shield themselves from what their users post online, but that could change if some people in congress have their way. We will talk about that story, next. Check out my show on the radio, onomberg markets on siriu, sirius xm. Alisa i am Alisa Parenti in washington. You are watching bloomberg technology. The Senate IntelligenceCommittee Interview with donald trump jr. Is being delayed. The panel wants to talk to others who attended the meeting first. Jared kushner, Paul Manafort have been interviewed. Syria informed diplomats in germany attending a u. N. Acclimate negotiations they will join the paris agreement. The u. S. Is the only to pull support. U. S. Can officially lead leave the pact in 2020. The crackdown in saudi arabia expanding. The kingdoms of central bank ordering them to free hundreds of accounts linked to the investigation. In brussels, former catalan igdemont, carles pu vowing to defeat the spanish nextnments oppression month. He fled after the parliament was dismissed. The first country to give women the vote now wants to close the gender pay gap. New zealands new Prime Minister said her government plans to achieve a equity for women in Public Service within four years. 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. It is just after 5 30 p. M. Here in washington. 6 30 in the morning in hong kong. We are joined by david ingles with a look at the markets. Good morning. David a very good morning, it is dark and early in hong kong. A few things we are watching across markets, let me start with the currency markets. We are coming into the Asian Session with the dollar recovery. Essentially back to levels this time yesterday in asian, the euro is below 116. . 76. Ssie, closer to you have china trade on top of everything else, tracking in the asiapacific, 70 companies have earnings, we will continue to track that. A soft start to the trading session in new zealand, 0. 7 lower. When you look at futures, were looking for applause after the strong rally tuesday. , there has been strong momentum from the equities session. Section. A lot are at decade highs, overbought in some cases. I am david ingles here in hong kong, more from bloomberg technology, next.