He is not banning politicians from lying in as. They are banning political ads of all ties. Tristan harris talks about the sooner than you think event in new york. His thoughts about humanity and ai. Apple shares are rising after reporting its fourthquarter earnings. Apple has be across the board. Is a Significant Development for apple despite some sputtering iphone sales. To break down the report, i am joined by our analysts. Let me start with lee. What is your take away with this . Lee weve seene have seen this upward movement. It is not a surprise. De, this wasces si a really large beat. Obviously, the guidance for the Holiday Quarter was really good. I want to put that in context. When you look at the i phone numbers and when you look at the expected revenue numbers, the midpoint of that guidance number for the Holiday Quarter is about 5 billion below the alltime high. Business,f apples they will be a smaller business. The financial is asian has led financialization has led to this higher eps. Carolyn it comes down to higher iphone sales. Carolyn talk about the average sale price. The number of phones are slowly starting to pick up. How much of this demand are you seeing . Particularly around the iphone 11 . Bringering the prices can more consumers into the market or it can speed up replacement cycles. As the phones have got more expensive, sometimes they are higherpriced. Consumers have slowed down. If we were to look back five or six years ago, it was much closer to two years. Now it is beyond that. Did we see people replace their older phones faster . Is that what is driving the forecasts . It does not look like it. I think julie has it. My wife and i are good examples. I have the 10 and she has the seven and neither of us upgraded. We are looking forward to something new. Something that is a game changer in terms of the hardware. There is nothing there. The next cycle looks like we will get 5g. That is where the both of us will upgrade. I think the markets basically they could this in. You will get lower upgrade cycles. Out in china, that upgrade cycle is also slowing significantly big was there working off of comps from the last year where that upgrade cycle is very high. Where apple did not really have a large phone to sell into china. Now we are on the back end of those tough comps. It will take a while for that to burn off. Then again, that 5g upgrade cycle, you may see it pick up again. As we want to focus on iphone, we want to talk about services as well. Here,howing another chart showing the growth of that Services Business. It has rebounded 18 here. How much of that Services Business do you see pushing growth for the company . Julie i think it is essential to apple as we look forward. You have more services on the market. You have the tv service and you can bring the arcade service in. You could be up over 500 per this per consumer on basis. Because these services are prescription subscription, they have a lot of building relationships with all their customers. That makes it easier to convert customers and keep them. Taylor do you need to see apple transitional of the revenue to Stable Services from cyclical iphones . When does that happen . Lee it has to be 1. 52 years. The conversation is those around why apple does not get a higher multiple. Heres my problem with that. Services rendered you revenue is dependent on the hardware revenue. The question itself may not necessarily matter. That is why they will not get the higher multiple. It is great that they have more Services Revenue but if for some reason a competitor comes in in the next cycle or two and puts out these of hardware that really blows the iphone out of the water, i think they will have problems either way. Whether the Services Revenue is a lot or a little. We are hearing tim cook on the call. Aying that he is calling for 9 decline in the iphone and that is an improvement over the 15 decline in the quarter and the iphone 11 is the bestselling iphone. We will continue to bring you those tim cook headlines as they come. Thank you for joining. Taylor you are sticking with me. Twitter has announced it is banning political advertising from its platform globally. In a tweet on wednesday, jack this should be earned, not bought. The policy will go into effect on november 22. Joining us for all of the details is kurt wagner. Why this decision . Facebook announced this at the same time. Twitter is rolling out a policy that is very counter to the one that is for cap. We have been talking about this a lot. These companies will do going into 2020. Will they allow politicians to pay to promote falsehoods on their form . Jack dorsey hinted in an interview that he said he did not agree with the stance Mark Zuckerberg had been taking. Here he is making the official Statement Today that they are not going to be the ones to let people to pay pay to promote live. Taylor the headline in that tweet came out. Facebook was reporting their earnings. It is not a coincidence. Kurt i imagine not. This policy is so starkly different than the one that facebook as. It was a pretty opportune time for them to not only make a splash and announce this but do it at the time when everyone was paying attention to what facebook was going to be doing with their earnings. Ill think this is necessarily going to dental. Taylor i want to talk about twitters business necessarily coincidental. Taylor i want to talk about twitters business. Do we have any indication of how much political ads contribute to twitters revenue . We do. We just heard from twitter executives on their own earnings call. They said they brought in about 3 million in revenue from political ads. That is a very small percentage. A pretty much nonexistent part of twitters business. It is an easy thing for them to do. The only other taking a stand. Jack dorsey believes this is a moral or symbolic stand about free speech but it will not hurt them at all financially. Taylor hurting them financially, how does this help overall appearance with regulators . Twitter had been staying out of the eyes of regulators. What does this change and i regulators in the eyes of regulators . Kurt i dont think it changes much. It might apply some extra pressure to facebook. Of their chief rivals when it comes to not only advertising and his first speech these freespeech debates. Work on twitter, why cant it work on facebook . I think this provides a little extra pressure. Another weapon for those politicians. I dont think it will dramatically impact twitter. It has not really been one of their major issues around regulation. Wagner. That was kurt thank you. Coming up, it still may be taking heat from its political ads policy but facebook is going to love from wall street. We break down the thirdquarter results, that is next. If you like bloomberg news, check us out on the radio. On the bloomberg app, bloomberg. Com and sirius xm. This is bloomberg. Taylor it looks like regulatory challenges and criticisms cannot stop facebook. The social networks thirdquarter sales rose to betterthanexpected 29 . Facebook also added about 35 million new users with monthly users reaching 2. 4 5 billion. That was matching estimates. For more from seattle, we have our guests. I want to start with debbie. We are hearing on the call from Mark Zuckerberg, he is taking on a jack dorsey taking on jack dorsey of twitter. He says he is opening up the cause. He wants to talk about principles. While it does not impact his business, all of this controversy is creating a lot of these headline risks so to speak. Even the political ads still make up a big portion of facebooks business, i wonder how much of these headlines are really starting to distract the debbie that is one of the things i was feeling very. Trongly about this is taking a lot of attention away from running the core business. Timeis taking a lot of share away from the major executives to defend their practices. Even though it doesnt account for a lot of facebooks ad revenue, it is accounting for a lot of mind share across the company. That is concerning to me. Taylor before we dig into the network, your take on political ads and outside influences on the company, lee . Especially from the regulator standpoint. Kurt political ads were 8. 9 of the revenue. Political ads were 8. 9 of the revenue. I think it would make sense for zuckerberg to throw that by the wayside. The substrate that jack is ma king of zuck is you cant target people on twitter the way you can on facebook. What is more interesting is we have not seen hits to the bottom line that zuck has alluded to. Toociated with the spending secure the platform. There is all sorts of worried that the business itself of facebook would be encumbered by all the money they had to spend but that is not really materialized at the end of the day. The business is still on fire here. They are pushing as much on the bottom line as they ever have been. They did miss our are proven number our number. That is something we will watch out for. Instagram is on fire here. At the end of the day, it would make a lot of sense for him to throw that by the wayside and move on. Taylor he is saying is our goal either side happy, i think were doing a better job. Isbad job because everyone angry with us. Marginsa beat on the and the operating income and a beat on the bottom line. Are they really doing enough to spend and cleanup that platform . Shouldnt those margins come in on oneit lower . Hand you could say facebook could never spend enough to clean up this platform. There is clearly a lot of cleanup to do. There is no question that it is spending a lot of money. The more it can throw at this, i think the better. At the same time, the revenue continues to rise. The User Base Continues to rise. These are issues that facebook has not had to worry about for several quarters now. They are the more boring stories about a company like facebook. You worried that revenue or user growth will not match up. That is the big story going into earnings but here, the big story is not earnings or revenue growth. Bigs these other overhanging issues. I agree, the more that facebook to appeasend save the many critics it has, the better it will be over time. For now, the revenue and the User Base Growth is looking just fine. Sometimes what is news is what is not said. What has not been talked on the call so far is that news. Lee iroline think the interesting thing with the pasthen we look at for facebook, it is their ability to basically lock people in with different aspects of identities that has kept them on the platform. Single signon was such a mess of thing for facebook. I think his strategic approach was if you can lock them into this currency, you can keep them in all ofeir identity the platforms and all of the personal data flowing to the marketing machine. I think when we look at 2, 3, 4 years, that was the big strategic driver. At 2, 3, 4 years, where is the growth continuing to come from . We will have to find another acquisition to keep people in the garden. This does not seem to be what it is. I think they thought it was going to be the future. Taylor that was debra williamson. Thank you for joining. Lee as well. You will continue to stick with me. Up next, how things fair for this quarter. Facebook, weo break down all of the results. This is bloomberg. Apple, amazon,k, google, netflix, they have all reported. It is time to take a look back lee. Ere hear from who is your stand up performer . Lee facebook continues to put up incredible numbers against a background of cacophony. That is a great report. Netflix was a little bit of a disappointment. I think they are a little tapped out on user growth and coming up against a lot of competition. I think facebook really stands out here. Taylor netflix is rising today. They are up as much as 4 at one point because at t is pricing at 15 per month. How big of a headwind remained in competition and your eyes . Eyes . Your i think these platforms will be able to raise pricing. With so many of them in the market, at what point are consumers tapped out . I am not really concerned about pricing. I dont love the fact that they pushed the stock up for hbo. I dont think that makes so much sense. I dont know how much more runway there will be domestically for facebook netflix. I think the International Growth for netflix is still totally on the board. Those numbers about their moving look like they are moving in the right direction. Taylor we spoke with scott minor at guggenheim. We asked him about unicorns. The cracks are forming in the dam. It is hard to know exactly when the dam will give. We definitely have the signs of erosion at this point. There may be another last hurrah for the unicorn but i think the prudent money would stay away. Taylor can you confirm that you see cracks in the unicorn market . Lee i dont look at it as a monolithic thing. I think there are companies that represent a specific aspect of venture funding and late stage venture funding. There are also at of shenanigans going on. There are companies that totally absolutely deserve their valuations. I think airbnb will come and absolutely deserves every dollar of its valuation based on the fundamentals and have it has raised money in the past. Then there are the Companies Like uber and left and we work. All of the food delivery companies. Basically anything where you have humans involved, where these companies have said for so just donthe margins matter and they are going straight after growth and well figure it out later. That is basically done. I think we work was a seminal moment for that. That was not a part of that or paying him is less than you should trend. The Capital Raising was of the same ilk. Im really scared for this over report. Uber report. I think it will be really rough. The lyft report was not terrible. The grubhub report was awful. I think it is so interesting what they did with the letter they put out where the listed themselves on fire despite the rest of their industry. For good cause, they are in the right saying that i was have Good Business models. I think that is the case across the board for a lot of these countries companies. I would not them with a 10 foot pole. Taylor are we appropriately pricing these stocks . Lee the california thing will be really interesting with the ballot initiative. Definitely keep an eye on that. That is the main thing that will drive this. I think that is a tertiary thing. I think the general aspect of the fact that we are having this ,onversation, the input costs the human input costs of these businesses, that is a thing. Taylor we drove in, thank you for joining. Still ahead, more on apple and facebook. Later, we go to lyft. They are impressing wall street. They say they will reach profit by the end of 2021. This is bloomberg. This is bloomberg technology. Tech, appletimes of highlights include sales and profit, topping analyst projections. Services and revenue reached a record high. Apple will launch a no interest iphone payment on the apple card. The ceo believes the apple card is the most successful launch for a credit card in the u. S. Ever. Tom, weve given you a few minutes to dissect the earnings. What is your key takeaway . Takeaways that apple continues to benefit from low expectations as it transitions away from the iphone. You talked about the success of apple card and how they will leverage it to offer free financing for future iphones. If you look at their Financial Services efforts and look at the upcoming content efforts, and you look at health care, all these things enabling apple to diversify away from the smartphone industry. Its very good news for the shareholders. Taylor what do you need to see from this company to take the stock higher . We talk about it as a stock thats up more than 50 on the year. It reached another record high this week. What else do you need to see from this company . Tom its an excellent question. What im trying to determine is for next years upgrade cycle on the iphone, what are the expectations on a 5g device . For anvestors we looking global rollout of a 5g device or just a regional rollout . I think the argument now can be made that over the next two years, you have the potential for unit growth in smartphones to return as they start rolling out 5g devices. That could be the next leg up for the stock, as we look for expectations of a 5g device for next fall. Taylor im taking a poll of every analyst on the street so i pose the same question to you. What percent of revenue within the Company Needs to come from services, where you get to a place where you no longer worried about the highly cyclical revenue . Is it 30 . 50 . Tom it is the inverse of what youre talking about. If you look at the last fiscal year, iphone sales were 60 of total sales. So what does success look like for apple from an iphone standpoint . In five60 of sales years can be 30 of sales, the dominance of one device goes from essentially two thirds to one third. That would be wild success. If you go from 40 to two thirds, that would be a different way of looking at the numbers. Are hearing that wearables are up more than 50 from a year ago, according to the cfo. Is wearables automatically assuming that will be a growth driver for the company . Tom the answer is yes. The amazing thing about the success in wearables is that the battery life for a lot of smart watches remains limited. I think the fact that they have been able to do so well with what you thought would have been a guiding factor to succeeding wearables, having to watch it doesnt last 24 hours, its very remarkable. But what was so interesting was, 17 sales growth when you adjust for the iphone, so they do have a fair amount of growth going on if you can set aside the mature iphone market. Itlor i want to look at chart im showing a bloomberg audience. It is total cash, which is still minus 100billion, billion of debt or so, which leaves you with net cash of 100 billion. Where should the company be using their cash . Tom the big story has been returning cash to shareholders via dividends and buybacks. I think what they are going to lean into is basically new products and new services to diversify their revenue away from the iphone. So you are seeing that were recently with kind of dipping , but we wouldtent like to see them lean more heavily into services and devices that are not iphones, in addition to returning money to shareholders and i think the stock will continue to rise. Foror tom forte, thank you joining. Now want to go back to another tech story of the day, and that is facebook. Ceo Mark Zuckerberg has been remaining defiant on the investor call. Take a listen. I expect this will be a very tough