Concerns. And the proclaimed arrogance of Silicon Valley. Ripples ceo has called Facebooks Libra pitch to lawmakers somewhat sumptuous presumptuous. We asked how it is impacting the broader Crypto Market. To our top story, facebook, tesla, alphabet, all reporting secondquarter earnings. Amazon and alphabet reported thursday. For atbat, it was about sales and regulation. Two guests waited. Weighed in. 85 of revenue in google is from the ad business. I think that given the competition they will be facing, you do not want to be in a spot where you have north of 80 of revenue coming from advertising. So i think they will place a bigger emphasis on the cloud. Usiness how much successful they have . They ared to say facing massive competition against microsoft and amazon who have had a lot of success and put significant dollars so i think it will be something that is hard to get out of there but still out of. But still a significant part. Emily they did by look or earlier this year and i asked if acquisitions in cloud would make sense. They said they were open to acquisitions but there is lots they are doing organically. At the same time she said they are still interested in acquisitions, she also said organic is doing well. So it is certainly interesting given the antitrust scrutiny that google might hesitate to do more acquisitions in the near future. Is that what you would expect . I think the Cloud Business is important strategically. Look at what microsoft just did with open ai, investing billions. It is a company but also a nonprofit. I think google will look at the Cloud Business in a similar fashion. The technologies of the future that will be scaled out, obviously, the Cloud Business will be important. It is a platform for this new businesses. Amazon will continue to push that business to the bottom line, it is incredibly important for the stock price. Heavily incso i so the bottom line numbers. For google, i dont see it quite that way. Strategic to more google than it may be for amazon. Emily that was estimize founder and forrester analyst. On thereet on amazon heels of a recordsetting prime day. In, advised clients to buy expecting Strong Revenue growth and operating income. From an analyst after the ecommerce giant reported that insight from an analyst after the Economic Insight from an analyst after the giant reported. Intricateow much this stop writing prophets, i think this may be the canary in the coal mine. It might also be a one quarter blip. But that is something that may be more concerning as we go forward. Emily it is interesting singling out aws given how we were talking about googles Cloud Business. Business cloud continues to grow, what do you think the slowdown or the disappointing numbers have to do with . Is it because of competition or amazonspecific issues . I dont think it is specific issues so much as the competition. Microsofts Cloud Business is up over 60 , so we know that business is on fire. Kingthe stopping stal horse is google. You hear that there are signs of life here. If that becomes a strong third player, now amazon is competing with two and that can eat into the top line. The companyfo said didnt spend more than what they said they would on the same day delivery and that it has been more difficult to execute van expected. I can echo that as a customer. It often does not work out. What are you watching their . There . Topline growth is driven by the commerce business. I was expecting investment to pay off in q3 and q4. If we are already seeing an acceleration, we could be looking ahead to an explosive q4. Consumers have to develop a habit. That habit, they are not feeling the impact of that one day delivery. Those habits will get ingrained in q3 and then cement themselves. I think that is where we will see the upside. Emily lets talk about the rest of the year, going into the holiday quarter. Lots of acceleration is going to be happening. You have got cyber monday, black friday. How do you expect amazon to perform, relative to the , in the ecommerce unit, in particular. There are a few advantages and q4, particularly in light of the oneday shipping initiative. I dont know if folks are thinking about this, but we got into a compressed holiday season. Andays between thanksgiving christmas, this year, 27 days. That really advantages someone like amazon. We always see them increase their share later in the season as consumers dont have the same confidence as getting deliveries ontime. That season will really be to amazons advantage. Emily that was an analyst for the marketer for emarketer. Analysts visit the white house. Of the biggeste Tech Companies to talk about the fallout from the trade war and the ban on huawei. And if you like bloomberg, check us out online, on sirius xm. This is bloomberg. Emily white house officials are sending a delegation to china led by robert lighthizer. This is after a highlevel meeting with the Trump Administration and ceos from google broadcom, cisco, intel, and qualcomm. It was geared towards easing a sales and on ban on huawei. I spoke to a representative from arizonas seventh district. Iswhile way is not huawei not an independent actor, it is an arm of the chinese government. We cannot trust it will not have negative consequences. Huawei was working with a Shell Company in north korea, supplying them with technology that was explicitly banned through our sanctions regime. This is why we have joined with congress when gallagher from wisconsin to enforce the sanctions regime we think is being effective. The president should not do a oneoff trades for farm goods for something that could significantly impact the future of both our country as well as our allies. Some in the are business community, including many highlevel tech ceos who will tell you privately they see usesidence that huawei this equipment to spy. What would you say to that . [laughter] i hope they would just read the panda Shell Corporation that would allow huawei to do business, so clearly, this company is not operating on the up and up. Known two, it is well that they must make any Assets Available to the chinese government. And while i respect a lot of these companies, their goal is to have the highest Profit Margins for their shareholders. As a member of congress, the most important thing for me is National Security. And this sends a bad message to oversee allies who we are trying to convince not to incorporate wei into theua National Security apparatus. It makes it very difficult for us to share information. Emily you referenced a report that huawei has partnered with a chinese stateconnected company panda to improve things in north korea like the wireless infrastructure. They have been partnered, according to the washington post, for eight years. , saidesident, when asked he did not seem particularly alarmed. How does this new potential revelation about while way about huawei and north korea, how does that change your level of objection . I object even harder. I think other corporations and members of congress should be worried about this. The fact that the present does not seem to understand the problem or scope tells you that we should question his judgment when it comes to decisions on this very key issue. The president does not understand the full scope of what is happening or what could happen should huawei have access to our market and that of our allies. Play essentially trying to a trade war against each other. We should not be trading access to the five d market for 5g market for us to go back to the pretrade war, us selling Farm Products to china. This should be separate because this will have longer lasting affects effects. Emily that is my next question. The leaders of these u. S. Companies will say the blacklisting has significantly hurt the bottom line. Some of these companies provide supplies and chips to huawei smart, laptops, and Consumer Products that they say do not have much of a threat to National Security. What would you say to those ceos . They are wrong. It is the determination of the u. S. Intelligence community, as is congress, that they are dangerous operators. Nation toe right as a stop corporations from engaging with other countries and entities that put our National Security in danger. I dont see these companies complaining about us having a sanctions regime against iran or other bad actors around the world. They do not have a right to corporate profit at the sake of National Security. That is just how it is. It is,ely, unfortunately. Hopefully, we can stop them. Emily what would you like to see the Trump Administration do . I think the Trump Administration should continue with the sanctions regime they have and go stronger. Hopefully, that stays. If the president does not do that, i think the house and congress should pass a new sanctions regime or continuous weizte to make sure we are enforcing good order and discipline to protect our National Security interests. Emily since i have you, i have to ask about iran. The president defends withdrawing from the nuclear deal, and in the meantime iran has seized a british oil tanker. Tensions seem to be escalating, what do you think the u. S. Should do . We have to respond, but in a measured manner with assistance and concurrence with our allies, especially britain and european allies. , we have totime recognize that us leaving the jcpoa as a kneejerk reaction to antiobama policies has created this situation. Evensays they will comply, though they are not receiving any of the economic benefits. But there are still other areas we have to keep. The last thing we can afford and the last thing we need is a war in the middle east that is not even in our National Security interests to engage in. We have a lot of other tools of the toolbox to both keep iran in check, and at the same time, deescalate the situation through diplomatic means. Emily speaking of tension at home, the president is under fire for what some have called racist language about four democratic congresswoman of color. Do you believe the president s remarks are racist and that he is stoking racial tension . Especially given his response, or lack thereof, to supporters at his rallies . Yes, of course. This is not the first time the president has used race as a way to engage and enraged his base. Presentember of this started off his political career accusing president obama of being born in africa. Then he accuses a mexicanamerican judge warned in indiana of having dual loyalties born in indiana of having dual loyalties. So it is not a surprise he describes for american women is not being american. These women are of color. She does not describe nancy pelosi or any other women that are white as being unamerican or not loving the country. He is clearly trying to drum up the base of his support that is racist and does believe in these racist theories. Emily that was congressman Ruben Gallego of arizonas seventh district. Coming up, tesla shares fell in afterhours trading after the company pulled back on profit promises. We break down secondquarter results. And later, we talked to ftc commissioner know if phillips about facebooks record fine. This is bloomberg. Emily tesla posted losses and backtracked from profit forecasts as part of the secondquarter report. Cash and deliveries of emerged as the Biggest Challenges to growth. The Company Announced the longtime Technology Officer is stepping on down. I covered the challenges with max chafkin the Bloomberg Businessweek and a tech analyst. I think the 5 billion on the Balance Sheet is a great number. I think march is probably why the stocks are down margin is probably why the stock is down, and i think margin is actually, if you go through the numbers in detail, better than expected. And i think Forward Guidance of being gaap positive on that income is good as well. Its kind of an overreaction to the downside in my opinion. Emily if it is an overreaction, it is a big overreaction. Shares are down 10 right now. Max, there is a disappointment on profit. The company turned profitable at the end of last year. That reversed at the beginning of this year. Elon musk said the company would become profitable later this year. It looks like thats not going to happen. They are still trying for it. It should be said there are two things going on with tesla. One is that theyve been pushing like crazy for volume. They want to be a large volume car manufacturer, one of the biggest in the world longterm. This car that they are selling , the model three, does not have great margins, it seems. They pushed so hard to get the price down to that magic base price, got there. It has come up a tiny bit, but the margins are supertight on those low in cars. Lowend cars. As people by the cheaper model three, they are moving away from teslas more expensive cars, so there is a pressure on profit that is, at the very least, a nearterm problem and critics are going to say this is a longterm problem. They will say this is a company that will have a hard time getting to profitability. Emily is it a near or longterm problem . Its not true. The model three they actually had better margins quarter over quarter, x credits, which Everyone Wants to look at. So its not true. They are making improvements on gross margin, so im not sure what that statement is. Emily max . Yeah, the company is not profitable right now. They obviously like to get profitable. I think in the long run, they want to be more efficient in the factory, be more efficient in their operations. Thats the message weve been hearing from elon musk basically for the last year, and then they want to get these new cars out, the model y, which could be a huge boom for the company. That is the category of car most americans are buying, and also getting to china emily it is a cheaper suv. What is the status of it . Is it going to be here next year . Well, you know emily inquiring minds want to know. [laughter] i dont have any inside information. Certainly the big effort tesla is doing right now on top of building a giga factory in china, which would be huge. The Chinese Market is the biggest market in the world for electric vehicles. Emily what is your take on how much china can change the tesla story as they continue to try to get new models to the market . We dont have any production in our numbers from china this year. I think what is most underestimated about everything here is the brand in china and how it has kind of become a wildfire there and how many cars it can sell, and i think that is upside. Just back to the cash flow they generate during the quarter, it is a couple hundred million dollars, so the idea they dont make money is completely wrong, and the headline needs to change. Theres 5 billion on the Balance Sheet. They are not going out of business. You have other oems that have really hard problems, restructuring problems, and its not tesla. Its xyz, german manufacturers. They are getting their lunch eaten by tesla. Emily theres a point there and in that if you talk to people who own teslas, they love their cars. They are not focused on the ins and outs of if the company is making money, how many delivers they are making, what production looks like, so how much does that matter . Its huge. Making a good car, if you are a car company is definitely the most important thing, more than anything else. And to bens point, one thing about the conversation that has changed over the last year is about a year ago, people were saying the company is doomed, they will never get to volume production, and now, the debate is a different debate. It is is tesla a niche manufacturer . That would be the bear case. The bull case is this is a company that is going to be bigger than toyota, daimler, and so on, and if you are elon musk, that is a good shift in the conversation. You dont have as many people going around talking about this thing collapsing any day. Which was happening a year ago. Emily talk about a shift in the conversation. It has been a little bit more restrained on twitter, lets say, since his settlement with the sec over how he is communicating with the public. What is your evaluation of musks leadership, given some of the hiccups over the last year . I think people want to invest with musk. I think him being more restrained or quiet is helpful. I think that being cash flow positive is helpful and having 5 billion bucks on the Balance Sheet is helpful for the growth managers that have not been paying attention or cannot own this or are of avoiding it to come back and buy it at a lower price then, whatever, a year ago where they were. Emily that was max chafkin and tesla analyst ben kallo. Facebook marches forward with an ftc settlement in the Rearview Mirror and a new investigation underway. They posted secondquarter results, shares are up more than 50 as most of wall street says the fundamentals are still strong. Bloomberg tech is life treating on twitter, check us out and follow our breaking Global News Network. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Of bloomber