Zuckerberg would not. Twitter is banning political ads of all types. We have details. Googles former head of design ethics talks to bloomberg from the event in new york. His thoughts on to knology, apple has beati across the board, topping estimates from both last quarter and next quarter. This is a significant accomplishment for apple despite some sputtering iphone sales. To break down the report, i am joined by our analysts. Let me start with lee. Broadbased beat, what is your take away with this . Thatit is not a surprise the stock had performed pretty well coming into the report. Especially on the Services Side of of this was a pretty large beat. That and the Gross Services number was pretty unexpected. That and the guidance for the Holiday Quarter was pretty good. Look at the expected revenue numbers, the midpoint for the Holiday Quarter is about 5 million below the alltime high, which was last year. In terms of apples business, they will be a smaller business. The financialization has led to higher eps and stock price. Know, 52 of the revenue still comes from the comee, so it does still down to iphone sales. Talk about the average sale price. As states lowered that, actually, the number of phones are slowly starting to pick up. How much of this demand are you seeing . Particularly around the iphone 11 . I think certainly lowering the prices can bring more consumers into the market or can speed up replacement cycles. As the phones have got more expensive, and sometimes they rival or are higher priced than even laptops, 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. Taylor did we see people replace their older phones faster . Is that what is driving next quarters forecasts . Lee it does not look like it. I think julie has it. That replacement cycle is expanding. Myself and my wife are good examples. I have the 10 and she has the and neither of us upgraded. 7 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 you will see that upgrade cycle take up again. I think the markets basically this in. Asically bake you will get lower upgrade cycles. Out in china, that upgrade cycle is also slowing significantly because they are 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. Taylor julie, we were talking a little bit before the show. As we want to focus on iphone, we want to talk about services as well. That is the highermargin business. I am showing another chart here, showing the growth of that Services Business. It has rebounded 18 here. How much of that Services Business do you see pushing growth Going Forward for the company . Is essentialk it to apple as we look forward. Bringing the you have more services on the market. You are bringing the tv service and arcade service in. You could be up over 500 per month per consumer on this annualized basis. Services, because they are subscription, tend to be stickier. They have a lot of building billing relationships with a lot of their customers and that makes it easier to convert customers and keep them. Taylor do you need to see apple of theiransition more revenue to Stable Services from cyclical iphones . When does that happen . Lee we have discussed this. It has to be a year and a half, two years. Is builtrsation around, why doesnt apple get a higher multiple . Heres my problem with that. The Software Revenue is dependent on the hardware revenue. The question itself may not necessarily matter. One really leads to the other. 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 a piece 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 relative to that hardware revenue. Taylor we are hearing tim cook on the call, coming out and saying that he is calling for a 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. Julie and lee, thank you. Twitter has announced it is banning political advertising from its platform globally. In a tweet on wednesday, jack dorsey, the ceo, said, we believe messages 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 . Kurt i think the timing is unique in that facebook literally announced earnings at the exact same time and twitter is rolling out a policy that is very counter to the one that is facebook ad. We have been talking about this a lot. What are these Companies Going to do going into 2020 . Will they allow politicians to pay to promote falsehoods on their platform. 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 pay to promote lies. Taylor the headline in that tweet came out right as facebook was reporting their earnings. That is not a coincidence. Kurt i imagine not. Because 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. I dont think this was necessarily coincidental. Taylor i want to talk about twitters business a little bit. Said d that facebook that twitter said it was not a big portion of their business. Do we have any indication of how much political ads contribute to twitters revenue . Kurt we do. We just heard from twitter executives on their own Earnings Call a week ago. They said during the 2018 midterms, 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. So, it is kind of an easy thing for them to do. Not only are they 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. So it is a pretty easy decision when you think about it that way. Taylor hurting them financially, how does this help or hurt their overall appearance with regulators . Twitter had been staying out of the eyes of regulators. How does this change in the eyes of regulators . Kurt i dont think it changes much. It might apply some extra pressure to facebook. You have one of their chief rivals when it comes to not only advertising and these freespeech debates. All of a sudden, people might say, if it is going to work on twitter, why cant it work on facebook . I think this provides a little extra pressure. Another weapon for those politicians who think facebooks policy is wrong. But i dont think it will dramatically impact twitter. It has not really been one of their major issues around regulation lately. Taylor bloomberg to knologys bloomberg technologys kurt wagner, thank you. Coming up, it still may be taking heat from its political ads policy but facebook is going is feeling the love from wall street. We break down the thirdquarter results, that is next. If you like bloomberg news, check us out on the radio. Listen in on the bloomberg app, bloomberg. Com and sirius xm. This is bloomberg. Taylor it looks like regulatory challenges and political ad criticisms cannot stop facebook. The social networks thirdquarter sales rose to a betterthanexpected 29 . Facebook also added about 35 million new users with monthly users reaching 2. 45 billion. That was matching estimates. For more from seattle, we have marketing analyst deborah williamson, and still with us, lead rogan lee drogan. I want to start with debbie. We are hearing on the call from Mark Zuckerberg, he is taking on jack dorsey of twitter. He says he is opening up the call, 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 dont if they were, shouldnt those margins come in a little bit lower . Debbie on one 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 think of some companies and you worry that revenue or user growth will not match up. That is the big story going into earnings but here, the big story is not revenue or user growth. It is these other big overhanging issues. I agree, the more that facebook can spend and the more than it to appease 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. Taylor sometimes what is news is what is not said. Libra has not been talked on the call so far. Is that . Is that news . Lee i think the interesting thing with this is when we look at the past for facebook, it is their ability to basically lock people in with different aspects of identity that has kept them on the platform. Single signon was such a mess such a massive thing for facebook. I think zucks strategic approach with libra was if you can lock them into this currency, you can keep them keep their identity in all of 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. I dont think anybody really discounted it into the price. If you look out 2, 3, 4 years, where is the growth continuing to come from . We will have to find another acquisition to keep people in the walled garden. This does not seem to be what it is going to be. They would talk about it more if they felt that it was going to be the future. That was debra williamson. Thank you for joining. Rogen, you will continue to be sticking with me. Up next, how things fare for this quarter. From google to facebook, we break down all of the results. This is bloomberg. Taylor facebook, apple, amazon, google, netflix, they have all reported. It is time to take a look back. Who is your standout performer . Leigh 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 is pricing the hbo max service at 15 per month. That is the first time we have seen pricing above netflix. How big of a headwind remained competition in your eyes . Leigh 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 sorry, netflix. I think the International Growth for netflix is still totally on the board. Those numbers about their moving in the right direction and taylor we spoke with scott minor at guggenheim. We asked him about unicorns. Take a listen. 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 . Leigh i dont look at it as a monolithic thing. I think there are a set of companies that represent a specific aspect of venture funding and late stage venture funding. All sorts of shenanigans going on. There are companies that totally absolutely deserve their valuations. I think airbnb will come public and absolutely deserves every dollar of its valuation based on the fundamentals and how it raised money in the past. Then there are the companies and wework. D lyft, all of the food delivery companies. Basically anything where you have humans involved, where these companies have said for so long that the margins just dont matter and they are going straight after growth and well figure it out later. That is basically done. I think wework was a seminal moment for that. That was not a part of that an delivery or pain humans paying humans less than you should trend. The Capital Raising was of the same ilk. Im really scared for this uber report. I think it will be really rough. The lyft report was not terrible. The grubhub report was awful. Their guidance was awful. I think it is so interesting what they did with the letter they put out where the listed where they basically let despite then fire 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 companies. I would not them with a 10 foot pole. Taylor are we appropriately pricing these stocks . Or should we see a bigger regulatory discount overhang . Leigh the california thing will be really interesting with the ballot initiative. Definitely keep an eye on that. I dont think 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 conversation at all regarding the input costs, the human input costs of these businesses, that is the thing. Taylor thank you for joining. Still ahead, more on apple and facebooks big beats. Later, we go to lyft. They are impressing wall street. They say they will reach profit by the end of 2021. This is bloomberg. Whether youre out here on lte. Or here on a wifi hotspot. Xfinity mobile has more coverage to keep you connected to what matters most. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. Switch now and see how you could save up to 400 a year. And get 50 off when you buy any new lg phone. Xfinity mobile. Click, call or visit a store today. This is bloomberg technology. Back to the titans of tech. As for apple, highlights include sales and profit topping analyst projections. Services and revenue reached a record high. Apple will launch a nointerest iphone payment on the apple card. Ceo tim cook says he believes the apple card is the most successful launch for a credit card in the u. S. Ever. Ith more, it is tom forte tom, weve given you a few minutes to dissect the earnings. Your key takeaway . Tom the key takeaway is 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 mature smartphone industry. You are seeing that in the stock. 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 . Will investors we looking for a 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 the way that i think about it i guess is slightly 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 . If that 60 of sales in five years can be 30 of sales, the can be 33 of sales, the dominance of one device goes from essentially twothirds to onethird, that would be wild success. If you go from 40 to twothirds, that would be a different way of looking at the numbers. Taylor we 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 gating 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. Taylor i want to look at a chart im showing a bloomberg audience. It is total cash, which is still above 200 billion, minus 100 billion of debt or so, which leaves you about 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 need to lean into is basically new products and new services to diversify their revenue