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tv   Bloomberg Technology  Bloomberg  January 31, 2019 11:00pm-12:00am EST

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>> i'm caroline hyde in new york
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in four emily chang. this is "bloomberg technology." all about alexa. a sales gain, but the slowest fourth-quarter growth in three years. highlights from amazon's earnings results. the permanent ceo -- and investors turn permanent -- bullish on facebook. can the company move past its scandals? first, to our top story. amazon sales and earnings in the busy holiday quarter beat estimates, showing that the web retailer can maintain 20% revenue growth while improving profitability and fending off competition from rivals. advertising was the key moneymaker. highlighting amazon's ability to charge brands for its 100 million-plus loyal subscribers on prime. ubyguest currently has a rating -- buy rating on the company. great to have you both here. primarily, i'm looking at what the numbers, what the earnings are speaking to you at the moment. can you give us a sense of the moment what you think of the fourth-quarter numbers, but also the first-quarter forecast?
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>> yes, i think amazon has obviously shown great growth in the fourth quarter. the advertising business is skyrocketing. we have seen the growth of clicks, sponsored clicks, grow to 10% now. thatould easily imagine business doubling to a $7 billion per year -- for quarter. we have seen strong transaction volume. the dominantl e-commerce player in the fourth quarter and we expect that to continue into the first quarter. caroline: tom coming your perspective, you have a buy rating. these numbers substantiate that? >> absolutely. i think the fourth quarter is a continuation of a trend from the second and third quarter. you have to get used to the more profitable amazon. what is driving that profitability is not only advertising, but third-party unit sales, which was 52% versus 51%.
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the items sold on amazon by third parties utilizing its platform, which is very profitable. also, the cloud computing effort, where the revenue growth for aws was very similar between the third and fourth quarter. i do think you are seeing a more profitable in the growth engine of amazon being cloud computing and advertising. areline: to that end, they more profitable and they have plenty more cash. i'm looking at a chart showing the sheer cash hoard. where do you think they put the cash to work? is it about advertising, is it about aws? they are clearly outperforming in e-commerce. tom: historically, you think of investment spending with amazon. as it pertains to using the cash, we 100% them to continue to the high pace of investment spending, in addition to cloud computing -- it looks like they may do more with physical stores.
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they talked about expanding the whole foods footprint. we still think that amazon could do gas station's. what they intend to do with whole foods is expand the delivery network by adding more physical whole foods stores. gas station's potentially do that to a greater degree. they could invest in proprietary content, another important area for amazon. expect more investments for amazon across the board in a lot of their growth drivers. caroline: the interesting element is that perhaps we are seeing a plateauing of growth when it comes to prime subscribers in the united states. does this were you in any way? do you think it is time to focus on international growth? deren: i think that is a great point. i think amazon has to focus on international growth. they basically invented e-commerce in the u.s. when they have grown internationally, they have had to go into market with entrenched competitors. they have to focus on international. i would also say another area that they need to focus on is a lot of the higher-end label
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products. they need to go after higher-end markets like apparel, clothing, things like that, both internationally and in the u.s. caroline: there is already plenty of competition out there. could they throw aside the far fetches of this world that have been clear competitors who have made it their business to dominate certainly in the higher-end luxury side of apparel? can amazon win there? that goeshe spending on in amazon is a lot less than the competitors. deren: we have seen numerous examples. orn the average price -- where the average price of a purchase went from $35 to $58. almost all of it is that the higher spend level, where competitors are making cash. so amazon has to move in that direction. they have dominated the cheap goods market already. caroline: i want to go to the other part of the business that
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drives growth. we are talking e-commerce and also a ws, amazon web services. 46% growth is phenomenal, that they can sustain this sort of growth. are we expecting to see that continue and how are they changing of the model? how are they seeing the competition when we have microsoft making inroads and there were worries that cloud spending was dialing back a little bit? tom: i definitely think the story for amazon as it pertains to cloud computing with aws is the pace of growth should decelerate. the question is how quickly as it becomes a bigger effort for the company as far as total revenue generated. the good news for amazon and what drove the share price over the last 12 months is that its most profitable as it pertains to cloud computing. good news to your point is that they have been able to sustain this elevated growth rate despite significant advancements from both microsoft and google.
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i do think that cloud computing remains a very important effort for amazon. a fast-growing, and a slowly decelerating rate of pace, but a huge profit driver as well. caroline: it is only 12% of its overall revenue. how big do you think aws becomes compared to the rest of the business? tom: sure. when you compare the relative growth rates 10 years from now, it could between 5% of sales. if you look at it on that basis -- it could be 25% of sales. if you look at it at that basis, amazon could have a consolidated margin, so we do see more margin expansion of amazon in the next 10 years driven by the cloud computing efforts and advertising and third-party unit sales. caroline: overall, you are both sounding very optimistic. the share price has been wavering after-hours. which is unsurprising given the ramp up we have seen since the
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lows in december. can you give us areas of concern that you have for amazon going forward? where do you think are the key areas of competition and where it really needs to focus the business to ensure that investors keep buying in and making it one of the most valuable companies in the world? deren: i think that is a great question. for me, the risk is that competitors have decided to take a strategy of focusing on little, niche areas. target has seen 50% year-over-year growth in children's clothing, where amazon is down 15%. walmart has seen fantastic, 40%, 50% growth, in certain categories like food, personal care. the challenge for amazon is that each competitor is going to take a niche set of areas to focus on and how does amazon not die a death of 1000 cuts? how are they going to compete on all of these fronts at the same time versus entrenched competition? caroline: great way to spin it forward. deren baker and tom forte.
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meanwhile, apple taking action on google apps after similar moves against facebook. we will discuss the standoffs among the biggest tech players next. this is bloomberg. ♪
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caroline: let's talk google now. employees can no longer use internal smartphone applications that run on the apple ios mobile operating system following a decision by apple that alphabet broke its rules. the action is similar to the one apple took against facebook after it violated development rules. we are here to break it all down. what seems tout
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be apple really wielding its power in terms of user privacy. this is something they have rather dined out upon. >> apple has cast itself as much better when it comes to privacy than google and facebook because it does not have an ad supported business model in the core way that it makes money. there are ways that apple has some privacy red flags, but at the end of the day, this is a big part of their narrative and branding. this is a strong action they have taken against two huge tech companies, very important platforms in their own right and it reminds us that apple is a very powerful company that it can do something like this. caroline: remind us why they are wielding this power, what it allows -- what allows them to. gerrit: research apps is a bit of a euphemism. google and facebook have these programs that they would essentially ask people, they would pay them sometimes ready small amounts of money to participate in these programs, download certain apps that would monitor the behavior of those
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people so they could learn about how people use their services and the internet. yesterday, this came out in the morning that facebook had done it. cap elected quite quickly. what they did was -- apple acted quite quickly. what they did was they made it impossible for facebook employees to use these internal ios, soions that ran on it ruined a lot of the early versions of the apps they are trying to push to consumers and if you internal things, even things that allow them to order lunch in their own building. pretty disruptive. caroline: disruptive for them. are these things being ironed out? facebook is already taking away the research apps. is google doing the same thing? gerrit: google sent out a statement saying they expect this to all be cleared up soon. it has been 24 hours for facebook and it has not been cleared up. i'm sure obviously the phone calls are flying back and forth are meeting with
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tim cook to figure out what to do here. we originally thought google was going to get a free pass on this. they apologized very quickly when it was announced they had done the same thing as facebook. they immediately took down this research app and it looked like apple was not going to act on them, but they of course have. caroline: you also mentioned to me, they have not been paying teenagers, it seems. gerrit: google said it is very different what they are doing because it is pretty technical, but they were not asking for quite as much data as facebook was, and they have not been paying teenagers. facebook say the teenagers -- says the teenagers were a very small part of the program. caroline: could this get wider? gerrit: it is hard to say how much wider it could get when you have these two huge companies. it is a very technical thing when it comes to add tec -- ad tech research, but people are very concerned about these things. these programs have been out in the wild for a while.
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people were not concerned about them. they were very esoteric. suddenly, we are reevaluating these things. when you cast them in this of privacy and data collection and responsibility for user like auddenly they sound big deal and they can result in hefty action like this. caroline: we thank you for your opinion on all things apple power. over for intel after months of saying no to the job. we will take a look at the challenges he faces. this is bloomberg. ♪
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job, so i'm day excited for the progress that the board is making. finding a great ceo for this wonderful company. caroline: that was bob swan in july of last year when he was intel's acting ceo, reminding us
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that he loves being the company cfo. after reports saying he did not want the job, he has changed his mind. on thursday, he was named the company's seventh full-time ceo. so, why the change of heart? >> when i spoke to him about this earlier, what he said was i love my job and i just wanted to make intel a better place. the more that i did the job, the more that i took over talking to customers, dealing with those kind of interactions, the more i understood about how pervasive we are in the industry and that became an interesting thing, and when the board said will you do it, i could not refuse. caroline: the market initially was a little bit mixed about this, shares fell. they managed to retrieve some of that loss. why the disappointment? there was plenty of hope they would get a slightly more -- for want of a better word, female --ceo, but a more external candidate. ian: you are exactly right.
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predecessor of a when they were forced out, people thought bob swan would be a good interim candidate. as things dragged on as bob said he did not want to do it, people started to look in other directions and assumed the board was doing so. then we go back seven months later to the person we thought was going to get it, it is a sense of, what went wrong in the interim? what happened? there was a little bit of disappointment. caroline: and now the key focus for bob swan to prove himself is to take on some of the competition. thanks to you, we have some great quotes coming from him discussing how he is going to be doubling down on services and customers. take a listen. bob: we believe we need to realnue to provide differentiated service for our customers and not just have great financial results, but to increase the wide gap between us
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and the competitors in which we compete within the market. technology toring light by having systems on shelves in the holiday season of 2019. ian just how hard, is the competitive landscape right now for intel? ian: that is a very good question. to look at their numbers, you would think, what is the problem? if you actually look at what is happening behind the scenes with the manufacturing technology, which is extremely important in the semiconductor industry, and something that intel has been leaving for for decades, it does not look quite good. intel is years late on the latest manufacturing notes. something that other companies appear to have gotten to first. over the next 12-18 months, it will be facing more competition than it has for a very long time. caroline: which other companies that are the ones to watch that are biting on intel's heels when
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it comes to the new innovations? ian: the obvious candidate would be amd. they appear to have resurrected their fortunes and become a credible supplier again. really what is potentially more damaging for intel our customers such as amazon, aws, microsoft, they are looking at their own chips, their own designs for the data centers where intel makes so much money, and that really has to be a huge threat. they are outsourcing production to tsmc, which is arguably leading in terms of manufacturing right now. caroline: what do you think bob is?'s next key move is it about building the team around him? is it about going out to customers and clients already, but ensuring they are ahead of the curve and are able to persuade those to stop building their own? ian: yes, that is a very good question. and one that i think people are a little bit unsure about because, as you remember, he is not from a technical background.
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he is from a business and finance background. they look at the problems right now is being technology problems and they want to see technological answers to the issue of the manufacturing, that is what people want to see -- intel getting back on track, getting back to the regular cadence that it has really set the pace of the industry for. caroline: we think you for joining us. great that we have been talking about one executive change. let's talk about another. tesla losing another executive. revealed during the earnings call on wednesday that the cfo is retiring. the company saw a series of departures last year, including the chief accounting officer, who resigned after just one month. joining us from san francisco to seenss it all -- we have him retire once before, but how disruptive is this being seen as that the long-term executive is taking the exit? >> the market reaction is not good. it was dropped at the end of the
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earnings call. it was like one more thing. you sell the shares drop 5% and recovered.ot really to be fair, he is retiring. 2018, there were so many executive departures, i think the hope was that we had put that behind us and 2019 would be focused on the manufacturing ramp and that his --this hit investors as a surprise. caroline: as a surprise and maybe some of the conspiracy theories start to evolve a little bit. this is a company focused on production, but also on cost cutting, been counting, and they lost their chief one. dana: to be clear, the new guy has been a tesla nine years, he is a protége of deepak ahuja's. elon musk trusts him. he was on the call yesterday. from tesla's position, they are trying to position this as continuity, that he has been part of a finance team for a decade, that he is a young,
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rising star. they are trying to say this is not necessarily a negative. that he really understands how the business works and has been deeply involved in the operations quite some time now. caroline: remind us how the cash flow is looking. they have had two consecutive quarters of profitability, of bringing in positive cash flow, but how helpful our analyst -- analysts that this can be sustained? dana: profitability two quarters in a row for tesla has never happened before. that is huge for them. the call was interesting because elon musk talked a lot about the risk for a recession and how tesla would manage through with a big focus on reducing costs, the headcount that was recently reduced, and just being very frugal. i think they are kind of gritting for macroeconomic forces beyond their control. the big question for 2019 is really demand. what is the demand for the model europe?na, in
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when can they get this $35,000 version out? caroline: that is what they were warning, that potentially sales in the u.s. for the model 3 might have to suffer in the coming quarter as they look more further afield, as they go global with this model. dana: the focus in the first quarter is on shipping these cars to europe and china and making sure they get there. they do not want to have a lot of vehicles in transit at the end of the quarter. january and february is typically soft for the u.s. auto market. most people don't buy a car during the middle of a blizzard or polar vortex. the first quarter is likely to be a little lumpy because of that. caroline: we always talk about the bull versus the bear case for tesla. who do you think is winning? dana: it is always kind of a mixed bag. the good news is that tesla has $920 million in debt coming due march 1. they said that they will be able to service this debt with the cash they have on hand.
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that is the positive. the market reaction to the earnings report itself was relatively flat and then they announced that deepak ahuja was leaving and it dropped 5%. it is not really recovered. caroline: great reporting. thank you for joining us. much more coming up when it comes to earnings. we continue to monitor amazon's earnings. 's selling and marketing expenses spiked, shares are flat in after-hours trading. this is bloomberg. ♪
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"bloomberghis is technology." we bring you the latest in global tech news. ?hat is in sydney let's take a look at the top global tech stories today, heidi. withalcomm is ramping up apple. the chip maker has asked for a fine for not complying in the sale of iphones in germany. apple says the company unfairly leverages its position as the biggest provider of chips for smartphones.
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nintendo beat estimates thanks to strong holiday demand for its "super smash brothers" and "pokémon" games. shares of nintendo are up 15% this year. earnings for the seventh consecutive quarter, coming in below wall street expectations and raising concerns that some of the markets amazon used to catapult itself into a juggernaut might be falling off. america slowed dramatically and the company says it is evaluating the impact of new e-commerce rules in india. those of the top global tech stories of the day. >> right, president donald trump met with china's top trade negotiator in the oval office on thursday. trump said he received a "beautiful letter" from chinese president xi jinping. hoax ther says that xi leaders keep in contact. president trump said there is no meeting date set as of yet.
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two of. is dispatching its top trade negotiators to china, treasury secretary mnuchin and robert lighthizer. joining us from hong kong to discuss is our chief asia correspondent. we are hearing from ambassador light heiser, saying that the trip -- robert lighthizer, saying that the trip maybe around mid february. what is interesting is what trade a -- shape a trade deal could take. issident trump said no deal no big deal and that it could get postponed. what do we know so far? >> that is right. it was interesting to hear from robert lighthizer in that oval office impromptu press conference where he said they are really focused on the structural issues. buying soybeans and buying lng, buying more commodities from the united states, that is the easy stuff. china needs those commodities. they are planning to do that. they stopped buying soybeans as a retaliatory measure.
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they still need the soybeans as a net importer of soybeans and the demand there is in china. also the fuel needs. it is the structural issues robert lighthizer talked about and that is the theft of intellectual property by the chinese that the united states alleges, as well as the state-supported key industries and technology transfer. these are the tough issues. keep in mind, these negotiations have gone back and forth, back and forth, with some process, maybe one step forward, a step back, and etc. i'm not supposed to give my opinion, but i've always been a little bit pessimistic that they will get a lot of process from the chinese on these key structural issues and that perhaps any deal could be just a more u.s.eal to buy products, where is the key negotiations in just a month left to go before the march 1 deadline, there is a lot of optimism, but there is also a lot of challenges to get those structural issues adequately addressed. >> light heiser -- robert
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lighthizer a notable china hawk saying enforcement, enforcement, enforcement. i was also interested from a tech perspective. they are discussing how hauwei has not been discussed, but it will be. stephen: it will be. it was interesting that donald trump dismissed the case saying we will talk about it, we have not talked about it yet, and this is a small component of the overall trade relationship between china and the united states, but it has soured the mood between the two countries. it was obviously the third country being canada. it will be discussed. it goes back to the allegations of intellectual property theft and so it does go to the core of the u.s. allegations on china as far as the trade partner. we will see where those negotiations go and whether that could potentially derail any kind of structural deal that we might see before march 1. >> what is interesting is that
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the u.s. has been hammering the point that we need a viable and enforceable deal. we heard from ambassador robert lighthizer today. take a listen. we have much work to do if we are going to have an agreement. we have made substantial progress. we focused on the most important issues, the structural issues, the theft of u.s. intellectual property, intellectual property protection, agriculture and services issues, and enforcement, enforcement, enforcement. both sides agree that this agreement is worth nothing without enforcement. >> does this complicate any potential progress between the two? stephen: you know, it always does. implementation of every promise comes from the chinese, that has always been the biggest challenge. look at the wto commitments they have made, look at the implementation.
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as well as the draft laws going through the chinese legal system on intellectual property rights. we are hearing there are new nationwide draft laws being put , they haveing level not been implemented, but implementation and enforcement have always been the biggest challenge for the chinese. caroline: of course, what is interesting about who has the power play at the moment, we are seeing the u.s. stock market almost completely recovered from the december selloff. technology back in charge. meanwhile, talk to us about the pressures on the economy and the stocks in china and some of the damage we have seen wreaked by the trade war. stephen: just look at the regular headlines that we cover every single day. tsmc, the largest semiconductor founder in the world, a lot of the business is in china and one fourth of the sales are tied to apple and apple made that warning about the chinese consumer and the products being sold there. tsmc out with a warning. samsung had its warning
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yesterday as well and slashing for the second consecutive year. then you have these taiwanese manufacturers talking about moving their production base or some of their production to indonesia, vietnam, even india. companyand another which gets half it sales from apple, they are talking about investing $200 million in indonesia, in vietnam. pegatron is another parts supplier in the i.t. chain, they are talking about india, indonesia, the anon. these are taiwanese companies. i was looking back in 2015, 15 of the top 20 exporters from china to the united states were taiwan-originated companies or affiliates. they can pick up and move production bases a lot quicker and easier than a chinese domestic manufacturer. that could be significant collateral damage on the chinese economy. caroline: great perspective is always. stephen engle in hong kong.
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much more ahead on bloomberg. looking into amazon a little bit more when we come back. ♪ ♪
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caroline: facebook goes on the offense. a sign that the company is moving past the cumbre -- a number of scandals that crushed the stock for months. emily chang spoke with sheryl sandberg. they begin the conversation focusing on the company performance in the last quarter. >> we have a strong quarter and i think with a really end to a challenging year for facebook. the growth across the board, we now have 2.7 billion people using at least one of our services every month and that is facebook, instagram, whatsapp
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messenger. sorry. i think it is really important -- facebook is growing. we have 2.3 billion users on a monthly basis with 66% coming back every day. i think one of the questions people have about us right now is we are making such big investments in safety and security. we have so much work to do to protect people on our platform. can we do that while growing our community and well building our business? i think this quarter shows that we can do both. we still have a lot of hard work to do. across the board. but i think we are making process. emily: there was an incident in the last .4 hours where it was revealed that facebook at a tool that was collecting data from users, including teenagers, in exchange for payment. apple has shut down your internal apps and our sources are telling us that employees are panicking. how are you triaging this? sheryl: i want to be really clear what this was. is an app called the
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facebook research app.there is nothing secret about it . it is completely opt in. the great majority of people were adults, not teens. and people were compensated for being part of market research. emily: but even apple has punished you. sheryl: well -- we have taken it out of the app store. it was violating their terms and that is something we never want to do. we are working with them on employee certificates. it has been a pretty productive day at facebook where people are continuing to do good work. emily: for a lot of people this is a sort of "not again" moment. what do you have to say in terms of why should people trust you? why should people trust facebook? sheryl: i want to be clear what this is. what matters is that people know how their information is being used and in this particular case, the people using the research app in the study knew they were in it and knew heather information was being used. you are right that it has been a challenging time for facebook.
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we need to earn back people's trust with the steps we take. one of the things you saw in our quarter is how much we are investing in safety and security. and you know this. if you want to look at what a company cares about, look where it spends its money. our expenses are massively up. we have changed our profitability because we want to take the hard steps to protect people on the platform. you see us doing that. you see what happens with elections. fake accounts, decreasing the distribution of fake news. these are hard and ongoing problems. but we are determined to do the hard work and keep doing it. emily: the ftc has been investigating facebook's privacy practices and they are preparing for a record fine. what are you preparing for? sheryl: we are working closely with the ftc and regulators around the world. what we are preparing for us to continue to make the investments in safety and security. on error earnings call, mark said it was a top priority for the company. we have a lot of work to do.
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we are making really good progress in a lot of areas and we will continue to work hard. we are continuing to build great products. i think what the quarter shows is that people are continuing to use facebook and how different products around the world. and we are going to make important investments. one of the things i'm proud of is that we are making massive investments in and renewable energy. by next year, we will be 100% renewable in all of our operations, including all of our data centers. we will continue to make investments across the board. emily: more broadly, the cfo said a few times that revenue growth is going to slow down. you promised to make changes, to fix the problems people perceive, you said you welcome regulation. how do you convince investors that facebook will also continue to grow rapidly with all of this? sheryl: our numbers are public and we are still a very fast growing company. by any stretch. and we are going to continue to
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make the investments to prevent harm, to build great products people want to use, and invest in the future with things like vr and ar. our focus is continuing to do all of that. i think people wonder if we can do it all at once. i think this quarter shows that we can and we will. emily: mark said on a call that he wants to decentralize power and we know that you are working on merging the back ends of messenger, whatsapp, and instagram. there are concerns that privacy will be compromised in that process. why do that? sheryl: we know what people want from messaging and the focus is on what people want. they want messaging that is simple, reliable, and privacy safe. we are working on ways to make it easier to find your friends and family through the network. in all of that, as we do it, we are going to make very, very careful decisions with people's privacy. these are very early
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conversations with a lot of hard work to do. caroline: facebook coo sheryl sandberg with emily chang. let's continue the conversation on facebook. joining us now to discuss is sarah fry. talking much about their focus on privacy, but also on the fact that this is still a fast-growing company. why our customers, companies, advertisers, and users not fleeing amid the controversies? >> first, i want to get to some breaking news. facebook has just told me that their enterprise certificate with apple has been reinstated, so the problems over the last couple days of using their internal ios apps, the development of the standstill that was created at facebook headquarters over the last couple days has been resolved. to answer your question, this is a company that has a dramatic power over our world right now. their size is 2.7 billion users across all the different properties that facebook owns.
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and there are a lot of other a lot of other places advertisers can go with that network of an -- information and there are not a lot of places users can go to get that network of friends and family. though we have seen a lot of criticism of facebook, there is no denying that they are incredibly powerful and incredibly good at making money. caroline: credit suisse saying they are switching to playing offense. plenty of price targets being raised across the board for the company. do you think they will be continue to show growth going forward? is the optimism back in san francisco? sarah: there was a lot of concern ahead of this earnings report that they might see some saturation in markets, like the u.s. and europe, whether most lucrative advertisers are. this earnings report showed that they were still able to grow in those markets. if you look to the future, they have said the revenue growth is going to slow and they have said that they are going to stop reporting how many users use
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just facebook. they are going to start to only report the aggregate number that includes instagram and whatsapp and messenger, which sort of hints at how they feel that facebook's core growth is not going to be as stable. caroline: interestingly, some analysts questioning perhaps whether or not we are going to systemocus -- a better put in place by facebook going we get talking the talk from sheryl sandberg that they are focusing on privacy, transparency -- whether or not the systems are there. that was raised by bank of america merrill lynch. interesting, today, we had more news that they seem to be getting to grips with certain manipulation of the overall facebook product and other spaces coming from iran. sarah: today, we have heard that they have found more problems iran out of people in
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trying to manipulate political conversations around the world using fake accounts. basically, they are impersonating people in very us countries and then using that to manipulate the conversation. sharing what the iranian government media has been saying. we don't know that these accounts are from the iranian government, but we do know they are spreading the same messages. that is concerning. the bright spot here in this particular set of news is that facebook found that through collaboration with twitter. so, there has been some collaboration among industry rivals to try to solve some of these societal problems that their platforms have brought. i think we unfortunately can't listen to some of the sound we were going to be bringing you from the coordination on cybersecurity. sara, the breaking news we brought to you, it seems as though what we are saying is
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that facebook is reinstated with apple. this is some concern to investors. sarah: this was a concern because facebook was unable to test some of its internal apps. they were not able to use the internal versions, the beta versions of instagram, messenger, facebook, etc., and they were not able to use internal apps for transit and booking rooms. their company runs on these internal apps. it has been a very difficult 24 hours at facebook, but i have just heard from a spokesperson that all is resolved with those enterprise certificates and they are able to get those apps back online. caroline: wonderful. thank you for the analysis on facebook. we thank you. coming up, the biggest take away of the amazon earnings results. the earnings call is underway. the cfo weighing in on the company's performance. >> we feel good about the growth in the quarter. q4 was a great quarter for
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customers. retail, a lot of strength in the retail part of the business. preparing, planning, and executing on the corner -- quarter. a very strong growth rate. continuing to deliver for customers. ♪
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asthere is much uncertainty to what the impact of the government role changes are going to have on the e-commerce sector. we remain committed to complying with laws and regulations and we will, but we are evaluating the situation. the main issue and concern is trying to impact the concern to customers and sellers in india. caroline: the amazon ceo -- cfo discussing the quarter. what for your key takeaways? >> if you look at the quarter, everything was fine.
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obviously, the profit shows that they are managing cost. they are worried about wages obviously, thehampering expansit they seem to be managing at well. what shook people was the revenue growth expectations for q1, which came in pretty light. currency is one of the influences. the dollar is pretty strong. an accounting change led to some of the slowdown. we think most of the slowdown is growth coming from outside developed countries where prices for the services is much lower. it is concerned they are showing because of the uncertainty in the international markets, especially india, given the role changes and the impact they could have. you are seeing a combination of those things waiting on the revenue guidance, but the profit guidance suggests that despite expectations that expenses are going to rise this year, they
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are able to manage it because of aws and advertising. caroline: suddenly, they have this cash. i'm looking at how expenses have been surging in the fourth quarter. there is a great chart on the bloomberg showing how they are splashing the cashmore. talk to us about the areas of profitability, the fact that they are raking it in from advertising, from aws. amazon web services, 46% growth in the fourth quarter. but it is not that much of the overall business when it comes to revenue. jitendra: it will continue to be a profit driver. offsets are there. in north america. all of these things have an impact on revenue, especially when they move -- they only book the small portion of what they sell as revenue. if you do some of the parts over here, what you will see is they
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seem to have enough offsets to plan for spending that is going to come online this year. they are expanding shipping. you will be seeing more push into advertising. aws infrastructure. there is worry that spending my to accelerate again and it definitely will, but the way they manage it with offsets for advertising and aws is what is going to decide the profit trajectory. we feel more comfortable with the profit growth than the revenue growth of this year. caroline: not often that you hear that when it comes to the likes of amazon, which is always been a revenue generator. jitendra: it has been a change of story for sure. we don't see the 20% growth number for this year, but profit growth could be potentially. caroline: always great to get your analysis. we thank you. that does it for this edition of "bloomberg technology." tune into friday's show.
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