Million fine to settle privacy concerns. The proclaimed arrogance of callingvalley, a ceo the facebook pitch to lawmakers on libra by facebook uncomfortable. First our top story. Facebook, tesla, amazon all reporting secondquarter earnings. Amazon and alphabet reported thursday. Alphabet was all about sales and regulation. Our analysts weigh in. How google gets revenue, 85 of revenue is from the ad business. Competitionen the that they will be facing, you do not want to be in a spot where you have north of 80 of your revenue coming from advertising. I think they will place a bigger emphasis on the Cloud BusinessGoing Forward. How much success they are going to have is hard to say. They have not been able to get out of the third slot. They are facing massive competition against microsoft of amazon who have had a lot success and put significant dollars behind that business. It will be something that will be hard to get out of that third slot but still a significant part of their business that they will focus on Going Forward. Emily you wonder if acquisitions will be part of the story to beef up the Cloud Business. Acquisitions and cloud specifically would make sense. A google representative said they are opened acquisitions, they are doing a lot organically and they are excited about acquisitions. She said they are excited about acquisitions but the organic business is doing well. This is interesting given the antitrust scrutiny that google might hesitate to do more acquisitions certainly. Is that what you would expect . Any Cloud Business is important strategically for this reason. Look at what microsoft did with open ai, investing a billion dollars in that. It is a company but kind of a nonprofit. I think google will look at their Cloud Business in a similar fashion where the technology is the future that will be scaled out. Obviously the Cloud Business is going to be important for that and in a sense a platform for those new businesses. Will continue to push a lot of that Cloud Business to the bottom line and as we have seen today it is incredibly important to the stock price because it impacts csoi so heavily. For google i dont see it quite that way. It is more strategic to google that it may even be then it may be to amazon. Amazons earnings, show wall street on the company. Most analysts advise clients to buy into amazon expecting Strong Revenue growth. I got insight from a marketer from chicago after the ecommerce giant reported. Aws is the bigger story. We saw 37 growth. The first time we saw that dip below 40 . Considering how much that contributes to profit that is potentially the canary in the coal mine. It could also be a one quarter blip. I think that is more concerning to investors. It is interesting singling out aws considering we were talking about the google Cloud Business and how it is still in third place. The Cloud Business in general is continuing to grow and it is not a zerosum game. What do you think the slowdowns or disappointing numbers that have to do with it . Is it because of competition or amazon specific issues . I dont think it is amazon specific as much as it is the competition. The microsoft Cloud Business is up over 60 recently. We know that business is on fire. We dont have a lot of visibility into those numbers but you do hear that under new leadership there are signs of life here. That becomes a strong third player. Now amazon is competing with two giants. That can influence the top line. The ceo said the company spent more than what they had said they would, 800 million, on the same day delivery addition and it has been more difficult execute then expected. When i try same day delivery on amazon it often does not work out. What would you be watching their . The top line growth is driven by the Commerce Business and what i was expecting is to see that investment start to pay off in q3 and q4. If we are already seeing an acceleration in q2 we could be looking ahead to explosive q4 growth for amazon. They have to develop a habit. They are not really feeling the impact of that one day delivery especially as it continues to roll out. Those habits will get ingrained in q3 and cement themselves and q4. Lets talk about the rest of accelerations of is going to be happening. You have cyber monday and black friday and all of this competition ratcheting up. How do you expect amazon to perform relative to the competition in the ecommerce unit in particular . I think there are a few things that advantage amazon and q4, particularly in light of the oneday shipping initiative. I dont know if a lot of folks are thinking about this, but we get into a compressed holiday season. Last year we had 32 days between thanksgiving and christmas and this year it shrinks to 27 days. That disadvantages amazon. Their shareases later in the season as consumers dont have confidence of getting there products on time like they do with amazon. That compressed season will be to amazons advantage. Was an analyst for the marketer. A tech giant visits the white house, the white house host the Biggest Tech Companies to talk about fallout from the trade war with china and the ban on while huawei. This is bloomberg. Emily white house officials said they would send a delegation to china read by Robert Lighthizer after a highlevel meeting in washington between the Trump Administration and ceos from google, broadcom, intel and qualcomm. The meeting was geared towards easing a ban on sales from chinas huawei. I think this is a very dangerous meeting. Huawei is not an independent actor. It is an arm of the chinese intelligence agency. Us doing trust that business with them will not have negative consequences. I just read the Washington Post this past weekend and 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 in a bipartisan manner with congressman gallagher to make sure we enforce the huawei zte sanctions regime that we think is being effective. The president should not do a oneoff trade for things that can significantly impact the future of our country and allied countries in terms of Information Technology. In the u. S. Some Business Community including many highlevel tech ceos who will say they see no evidence that huawei uses its equipment to spy on the u. S. Or anyone else. What would you say to that . I would hope they read the panda Shell Corporation that was put up in north korea to allow huawei to do business with north Korean Companies that we have sanctions against. Operating on the up and up, number two it is wellknown that among Chinese Companies it is part of their mandate that they must make anything available to the chinese government. I respect a lot of these companies but their role is to have the highest Profit Margins for corporate shareholders. The most important thing for me is our National Security and this sends a bad message to our allies overseas who we are trying to convince to not allow huawei into the National Security technology apparatus because as partners it makes it difficult for us to share information with them. You are a report in the Washington Post that huawei has parted with a chinese stay connected company, panda, on a project in north korea to improve wireless infrastructure. They have been partnered with this company for eight years. When the president was asked about the story he did not seem willed and said the u. S. Lead on five gmt will see what north korea does. How does this new potential revelation about huawei in north korea, they have denied any work in north korea, how does that change . It certainly makes me want to i object even harder. Think other corporations and other members of congress should be worried about this. The fact that the president does not see the problem or the scope shouldou that we question his judgment when it comes to his positions on the very key important National Security issue. Huawei should be able to have access to our Information Technology market and our allies. Trying to play one trade war against each other. We should not be trading access to the 5g market for huawei for us to go back to what we had pretrade war which is us being able to sell foreign products to china. There should be separate from the trade war because this will have longlasting effects to National Security. That is my next question. The leader of these u. S. Companies will say the blacklisting of huawei has significantly hurt their bottom line. Some of these companies provide supplies and ships to huawei smart phones, laptops and Consumer Products they say do not have much of a threat to National Security. What would you say to those ceos . They are wrong. The u. S. Mination in Intelligence Community and congress, huawei are dangerous operators. Congress andht as the nation to stop corporations from engaging with countries and other entities that could put our National Security apparatus in danger. I dont know if these companies are complainings against sanctions regimes against iran and other bad at his around the world. They do not have the right to corporate profit at the sake of national u. S. Security. It is andst how hopefully we congress get our way and are able to stop the administration from getting their way. What would you like to see the Trump Administration do and what should congress do . The administration should continue with the sanctions regime, maybe even make it stronger. Does not dodent that i think the house and the senate in a bipartisan manner should pass a new sanctions regime or continue the existing regime on huaweis zte to make sure we are enforcing good order and continuing to protect National Security interests. I have to ask you about iran. The president defends withdrawing from the Iran Nuclear Deal and iran has seized a british flag oil tanker. Tensions seem to be escalating. What should the u. S. Do about the iran situation . We have to respond to them in a measured manner with consistent and concurrence with our allies. Especially britain and our european allies. We have to recognize that without anyjcpoa plan, more as a kneejerk reaction to antiobama policies has created the situation. Ton has said they are going comply with the jcpoa even though they will not receive the economic benefits but there are still other areas that we have to keep the last thing we need or can afford is a war in the middle east that is not in our National Security interest. We have a lot of other tools in the toolbox to keep iran and check and the escalate the situation through diplomatic means. Speaking of the tensions at home, the president under fire for multiple days for what some have called racist or racially charged languages about four democratic congresswomen all women of color. s you believe the president remarks have been racist and that he is stoking racial tensions . Orecially given his response lack thereof to supporters at his rallies calling send her back. It is not the first time the president has used race as a way to engage his base. Stirred up his base by accusing president obama of being born in africa. He accused a mexicanamerican judge born in indiana of having dual loyalties. It is not surprising that he described four american women as essentially not being american and not loving this country. These women are of color. He 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 stir up a base of support that is racist and does lead racist types of theories. Emily that was congressman Ruben Gallego of the arizona seventh district. Tesla shares fell in after hour trading after the company pulled back on profit promises. We talked to the ftc commissioner about facebooks record 5 billion fine as part of a settlement to put privacy violations behind it. This is bloomberg. A worse thaned expected loss as part of its secondquarter report. Cash and deliveries were the Biggest Challenges to growth and the Company Announced its longtime chief Technology Officer is stepping down. Anugh he is staying on as advisor. I spoke with analysts. I think that the 5 billion on the Balance Sheet is a great number. I think margin is probably why the stocks fell but i think margin is if you go through the numbers in detail it is better than expected. Of gap for guidance positive on the income is also good as well. It is kind of an overreaction in my opinion. If its an overreaction it is a big overreaction. Shares are down 10 . There is a disappointment on reversed to the beginning of this year. Elon musk said the company would become profitable later this year. It looks like that is not going to happen. They are still trying for it. It should be said that there are two things going on with tesla. They have been pushing like crazy for volume. Large volumebe a car manufacturer, one of the biggest in the world longterm. The car they are selling the model three does not have great margins. They push so hard to get the price down to the magic 35,000 base price, they got there and have come up a tiny bit. The margins are supertight on those lowend cars. Buy the cheaper model three they are moving away from the more expensive cars, the model s and y. There is a pressure on profit that is a nearterm problem and critics will say it is a longterm problem. This is a company that is going to have a hard time getting to profitability. Is this a near or longterm problem . The model three actually had better margins quarter over credits which is what Everyone Wants to come look at. It is not true that they are making improved i am not sure what that statement is. Max . The company is not profitable right now. They like being profitable. They want to be more efficient in the factory, be more efficient in their operations, that is the message we have been hearing from elon musk are the and they want to get these new cars out, the model y which could be a huge boon for the company. What is the status of it will it be here next year . I dont have any inside information. Tesla big effort that is doing right now on top of building a giga factory in china which would be huge because the Chinese Market is the biggest market in the world for electric vehicles. China change the tesla story as they continue work on the factory and try to get new models to the market . Any productione in our numbers from china this year. What is most underestimated about anything here is the brand of china and how it has become i wildfire there and how many cars they can sell. Flow ack to the cash couple hundred million dollars. It is completely wrong and the headline needs to change. There are 5 billion on the Balance Sheet. Oems that have heart problems in restructuring problems. Manufacturers are if you talk to people who own teslas they love tesla. They love their cars. They are not focused on the in and out of whether the company is making money and how may deliveries they are making and what production is looking like. How much does that matter . It is huge. Making a good car is the most important thing. More important than anything else. To beens point. One thing about the conversation that has changed over the last year is, about a year ago there the people out there saying company is doomed and they are never going to get to volume production. Now the debate between the bears and the bulls is different. Manufacturer,he that would be double bull case, and the bear case as this is going to be bigger than toyota. If you are elon musk that is a good shift in the conversation. You dont have as many sane this thinging about collapsing every day which was happening a year ago. Emily talk about a shift in the conversation. He has been more restrained on twitter since his settlement over how he is communicating with the public on social media. Givens your of valuation some of the hiccups over the last year . I think people want to invest with musk and him being more restrained or quiet is helpful. I think being cash flow positive 5 billionand having on the Balance Sheet is helpful for the growth managers that have not been paying attention or cannot own this to come back and buy it at a lower price a year ago when they were not where they were with all the emily that was bloomberg businessweeks math and with at marches forward least one ftc settlement in the Rearview Mirror and a new antitrust investigation underway. Facebook posted secondquarter results. Street says fundamentals are still strong. Bloomberg techs livestreaming on twitter. You can check us out and be sure to follow our global breaking news source tictoc on twitter. Welcome back to the best of bloomberg technology. Facebook Second Quarter results out wednesday proving yet again, the company can grow while still sailing the heat from regulators worldwide. Just hours after facebook the social media giant confirmed it is now also being investigated by the fcc on antitrust over its social media ads and mobile apps. This, as daily active users eat estima