Of all types. We have details. Tesla owners talk. Bloomberg conducts the biggest survey of tesla drivers to date. 5000, in fact. What they have to say about what elon musk is doing right and wrong. Now, this week was dominated by tech earnings. Apple beat across the board wednesday, topping estimates for both last Quarter Results and next quarters forecast. This all despite sputtering iphone sales. Highlights included sales and profits that topped analyst projections. Services revenue also reached a record high. The ceo announced apple will launch a no interest iphone payments on the apple card, adding that the apple card is the most successful launch for a credit card in the u. S. Ever. I got insight from forrester analyst julie ask. And from lee drogan. We have been seeing upward revisions to basically all of the numbers throughout the quarter so it is not a surprise that the stock had performed pretty well coming into the report. That said, especially on the services aside, this was a really large beat. That and the Gross Margins number were very unexpected. Obviously, the guidance for the Holiday Quarter was really good. I want to put that in context. When you look at the iphone 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, which was last year. So in terms of, you know, apples business, the financialization has led to higher eps and higher stock price. Taylor julie, as we know, the company, 52 of the revenue still comes from the iphone so it still comes down to iphone sales. Im showing a chart in my terminal at g tv talking about the average sale price. As they have lower that, the number of phones are starting to pick up. How much of this demand are you seeing, particularly perhaps around iphone 11 . I think certainly lowering the prices can bring more consumers into the market or speed up replacement cycles. As the phones have got more expensive, and certainly they rival and are higherpriced than laptops in the market, consumers have slowed down. If we were to look back five years ago, the replacement cycle was much closer to two years and now its up beyond that. Taylor lee, did we see in this quarter people replace their older phones faster than we thought . Is that also what is driving next quarters forecast for iphone sales as well . It doesnt look like that, actually. I think julie has got it that the replacement cycle is expanding. Myself and my wife are good examples. I have the 10 and she has the seven and neither of us upgraded this year because we are looking forward to something new, you know, something that is actually a game changer in terms of the hardware. There is really nothing there. The next cycle looks like we are going to get 5g. Thats where both of us will obviously upgrade. I think you will see that upgrade cycle tick up again. I think the market basically baked this in, that you will get a lower upgrade cycle. The other issue is out in china, that upgrade cycle is also slowing significantly because they are working off of comps from the last year where the upgrade cycle was very high when apple did not have a large phone to sell into china. Then it did. Now we are on the backend of those tough comps. So it will take a little while for that to kind of burn off. And then again, that 5g upgrade cycle you might see pickup again. Taylor julie, we were talking a little bit before the show. As we want to focus on iphone, more and more we want to talk about services as well. That is the highermargin business of the company. Im showing another chart in my terminal showing the growth of that Services Business. Which has rebounded, up 18 here. How much of that Services Business do you see pushing growth Going Forward for the company . Julie i think it is absolutely essential to apple as we move forward. Look forward. On one hand, they have more services on the market with bringing the tv service and arcade service in. And if you were to look at somebody opting in to buy all of their subscription services, you could be up over 500 per month. Thats per consumer on an annualized basis. Because they are subscription, they tend to be stickier. The other advantage apple has in the market is a lot of billing and do have the billing relationships with almost all their customers. That makes it easier to convert customers and keep them. Taylor that was forrester analyst julie ask. And lee drogan. Facebook was also one of the most anticipated Tech Companies out with earnings this week. The company impressed wall street wednesday by posting strong thirdquarter sales. This is all despite regulation woes and doubts about its cryptocurrency plan. Ceo Mark Zuckerberg remains defiant on the investor call. I expect that this will be a very tough year. We try to do what we think is right, but we are not going to get everything right. This is complex stuff. Anyone who says that the answers are simple has not thought long enough about all the nuances and downstream challenges. I get that some people are going to disagree with our decision. I get that some people are going to think that these decisions may have a negative impact on things that they really care about, but i dont think anybody can say that we are not doing what we believe or that we have not thought hard about these issues. Taylor for insight, i turned to our Bloomberg Intelligence senior analyst. It has been a big topic for the last couple of quarters and it will continue to be so. Going into an election year. If you look at the business side of things, that is humming well. They came ahead on every metric there was. Including margins where there were some worries. They are projecting a slowdown in 4q. It might be a little conservative. There are some comparison issues in four q with respect to product changes and things like that. What this quarter is really showing is that facebook is setting appear next year for its newer businesses to diversify beyond advertising. So you are talking about ecommerce, payments. That is what is going to be the story all about from a business standpoint. As far as the regulatory aspect is concerned, i mean, that is going to be an ongoing discussion, debate, argument throughout next year. But the business side is sort of stays untethered. Taylor are we seeing any cyclicality in their ad revenue around the election cycle . We know that facebook and google continue to dominate the ad space. But are we starting to see any cyclicality there . Jitendra it is not that big in terms of their total revenue. So if you look at facebook or twitter, the political ads, it is a very small portion of their business. Not a lot of cyclicality in terms of revenue, per se, but there is some organic traffic, more eyeballs that come along the way. That may help twitter more so than facebook. Cyclicality based on elections, at least on the business side of things, it should not sway the results much. Taylor not to be a total negative nancy, but i think there were some concerns that the margins beat. We were looking for a margins miss to show that they were spending money on cleaning up the platform. Are they doing enough on cleaning up the platform . Jitendra and they are accelerating hiring next year. If you look at their expenses, 54 billion for 2020, they usually give a higher guidance early on and taper it off. It is basically telling you that the headcount growth will continue to increase going into election year. They are being more cautious with these improvements and henceforth. This is really going to be a moving target over here. This is not a one quarter or one year fixed really. And how they allocate personnel theres going to be an evolution of Infrastructure Spending and how they allocate personnel. So at least from a financial standpoint, they are making sure that there is capital and spending allocated or baked into expectations for next year, especially going for an election year. Taylor that was Bloomberg Intelligences jitendra waral. Later this hour, we will hear from facebook coo sheryl sandberg, who sat down for an exclusive interview with the bloomberg with bloomberg after the Company Reported earnings on wednesday. Again, that interview later this hour. Coming up, political ads on social media sites like facebook coming under scrutiny. Twitter makes a big play, announcing it will stop accepting ads from candidates for elected office. Details ahead. And if you like Bloomberg News, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com and in the u. S. On sirius xm. This is bloomberg. Taylor twitter announced on wednesday it will ban political advertising from its platform globally starting november 22. Ceo jack dorsey tweeted to the move saying we believe political message reach should be earned, not bought. Bloomberg opinions shira ovide says twitters decision clearly upstaged facebook. She weighed in on the matter thursday. Shira he was already under some considerable pressure, right, if you have people like joe biden and Elizabeth Warren and alexandria ocasiocortez all piling on, criticizing Mark Zuckerberg and facebook about their policy on political advertising and political speech on facebook. I am not sure jack dorsey really tips the scales that much more, but certainly what jack dorsey and twitter did on wednesday, its one, it takes away one of Mark Zuckerbergs arguments, that his peers at twitter and google are all doing the same thing when it comes to political advertising. Dorsey basically said ,nope, we are not. Taylor at. 5 of revenue, why revenue, the political ad contribution to facebook, why even get into this controversy to begin with . Shira i say that is a great question and certainly that is a point that many people have made, that facebook would not be giving up really that much revenue if it decided we are just going to stop taking political ads and just take ourselves out of this part of the conversation. I think the argument that Mark Zuckerberg is making and you can say it is the wrong decision, but it does feel like he really believes it, is that facebook does not want to be in a position where they are asked to censor political speech. He really sees this as kind of a freespeech argument and there are certainly a lot of people, particularly conservative politicians, who agree with him. It does feel like a principled stand rather than a stand that is motivated entirely by money. Taylor facebook has. 5 , twitter has 1 500 of their revenue from political ads. So why their decision to weigh in here . Shira it is one thing for them to start saying they are going to stop taking ads related to certain issues, because those kinds of advertisements are a teeny fraction of a company that is already a fraction of the size of facebook. So twitter has never been a place that was either large enough or were the ads are targeted enough to be appealing for political related advertising. Dorsey, look, give him credit for taking a position and sticking to it, but it is also true that it is a little bit easier to take that kind of stand when the advertising that he is talking about is relatively insignificant for twitter. Taylor you read a Bloomberg Opinion column and you get hundreds of calls coming in. Using that as sample data, who is right here . Shira i dont think my email comments are necessarily representative. But i do feel like that facebook is in this cycle were nothing they do is right. Where nothing they do is right. There is a little bit of unfairness to that, but it is also true that look, they are a place that has an audience of a couple billion people plus on a daily basis. The choices they make have an extremely large impact, both on what people see, who gets seen, whose voice gets heard. Thats why there is so much attention on the policy choices that facebook makes and on how they write their algorithms that the choices of one company, controlled almost entirely by one man, are so important in the discourse of the country. Country and the world. Taylor you write a very obvious question that i had failed to ask up until this point, which was, how did google manage to stay out of all of this . Shira i dont know. To me, this is one of the great mysteries of advertising, Online Advertising controversies. Google has managed to stay out of the fray. Google is the largest advertising seller in the world. While Mark Zuckerberg has gotten criticized by everybody from the president on down for how they handle political candidates and their advertisements on facebook, google has said nothing, as far as i can see, and they have not really been called to account. I cant imagine it will stay that way, but so far, they have just kind of let Mark Zuckerberg take the fire. Taylor that was bloombergs opinion shira ovide. Coming up, complete earnings coverage continues with alphabet posting a few misses in the thirdquarter. We had details, next. And bloomberg conducts the Largest Survey ever of tesla model three owners. What they think about reliability, design, and function. This is bloomberg. Taylor while facebook and apple beat earnings, alphabet, googles parent company, delivered a mixed bag when it reported thirdquarter earnings on monday. Operating income, earnings per share, and even paid clicks missed estimates. But the company did say it is investing heavily in thousands of new jobs geared towards googles Cloud Computing business. According to the ceo, Cloud Computing and Machine Learning continues to be the companys priority. I got reaction from a market analyst Nicole Perrin and jitendra waral. Jitendra they are spending and ramping up cloud but it is showing results. It is pretty strong. Probably cloud is going much faster than that. What we are seeing over here is for the next year, cloud is going to take center focus as they push into enterprise. They are getting some early success over here. They have the capacity to compete with amazon and microsoft. Youre going to see cloud becoming a bigger and bigger deal for google but it will come at a cost as they scale that business. Thats what you largely see in the Cloud Business. Taylor nicole, what is your take on the cost of keeping up and gaining market share in that Cloud Business . Nicole it is going to take some continued investment, as we just said, but i think there is the potential for a huge payoff on that side. We have seen some major contracts awarded to competitors recently, so i expect google to keep investing in hopes of winning some of that business in the future. Taylor i want to talk about the income statement, because it seems like a broadbased myth. Toppling revenue comes in line, Topline Revenue comes in line, but operating income, margins, and the bottom line seemed to be a miss all in a row. Is it a revenue problem or expense problem . Jitendra it is not a revenue problem. If you look at their core ad business, there is a dynamic where the ad pricing is improving. We see a search becoming more and more valuable on mobile as it gets more credit with space. Corroded with crowded with this space. There is impact in terms of improving with pricing. That is offsetting the 18 increase in paid clicks, the volume of ads that you see. This dynamic will keep playing. I think the ad business will keep humming well. The Cloud Business is where disclosure could be a bigger deal for them next year. At scale, it is a very profitable business. As we have seen with other competitors. Google has the scale. And if they can come out and show that disclosure, look, this disclosure to the street, look, this is how fast we are growing and this is the profitability, which could very well happen next year. It could spur a rerating for the company. Taylor i just got off the phone with the cfo as she said it was a very noisy quarter, which broadly led to the miss in the margins and bottom line. On the expense side, there was a onetime Legal Expense they had to pay for. There was also an unrealized gain or loss which had to do with some accounting changes and how you have to mark to market. Some of those unrealized losses on your income statement. Namely, we think it is uber and slack. She would not specifically clarify that those are the companies. But is there a real impact that the Venture Capital arms of these companies can lead to some bottom line misses relative to where you think they should be . Nicole i think that it is possible. For me, my biggest take away from google, we do focus really heavily on the ad side and they beat Investor Expectations and our expectations for their gross ad revenues. Although cpcs are continuing to decline a little bit, overall paid clicks are way up. As we said. Additionally, traffic acquisition costs have continued to stabilize. That was something that had investors worried. They peaked earlier this year. They have dropped slightly since then. I think that is a really good sign for the bottom line on their ad business. Taylor we have talked a lot about the ad business. Last week, we sat here and said the same thing about amazon. But that ad business is so strong for that company. It is a lever they can pull. How mature is google and alphabets ad business or is there still more levers they can pull . Jitendra Google Search has room to grow. They are still trailing peers. As the results show, it continues to be a very valuable franchise for the company and they are the market share leaders. So we expect the momentum to continue there. But with amazon and google sidebyside, they are switching roles, where advertising will come at the forefront for amazon Going Forward as the Cloud Business faces large numbers while google will start showing results on the cloud front. You will see this dynamic pl