Privacy concerns. And come at a claimed arrogant Silicon Valley ripples ceo has called Facebooks Libra pitch to lawmakers somewhat presumptuous. We asked how it is impacting the broader crypto market. By first to our top story, it is big techs turn. Facebook, tesla, alphabet, all reporting secondquarter earnings this week. Amazon and alphabet reported thursday. For alphabet, it was all about sales and regulation. The founders weighed in. If you look at the way google gets revenue 85 of revenue in , google is from the ad business. I think given the competition they will be facing, you dont want to be in a spot where you have north of 80 of revenue coming from advertising. So i think they will place a bigger emphasis on the Cloud BusinessGoing Forward. How much successful they have . It will be hard to say. They are facing massive competition against microsoft and amazon, who have had a lot of success and put significant dollars behind the business. So i think it will be something that will be hard to get out of, that third spot, but it is still a significant part of their business that they will be focusing on Going Forward. They did by another Company Earlier this year, and i asked if acquisitions in cloud would make sense. She said, they were open to acquisitions, but she also had the organic business is doing well. Certainly interesting, given the antitrust scrutiny that google might hesitate to do more acquisitions certainly in the near future. Is that what you expect . I think the Cloud Business is important strategically. Look at what microsoft just did with open a. I. , investing a billion dollars in two a nonprofit. I think google will look at the ir Cloud Business in a similar fashion, where the technologies of the future will be skilled out. Will be scaled out in a similar fashion. The technologies of the future that will be scaled out, obviously, the Cloud Business will be important. It is a platform for this new businesses. So while amazon will continue to push that business to the bottom line, it is incredibly important for the stock price. For google, i see it even more strategic than it would be for amazon. Emily that was estimize founder and forrester analyst collin. Most advised clients to buy in, expecting Strong Revenue growth and operating income. I got insight from an analyst after the ecommerce giant ordered. Story here. Bigger decline. Theould be the canary in coal mine. It could also be a one quarter blip. But that is something that may be more concerning to investors as it go forward. Emily it is interesting singling out aws given how we were talking about googles Cloud Business and how it is still in third place. So as the Cloud Business continues to grow, it is certainly not a zeros game. What do you think the slowdown or the disappointing numbers have to do with . Is it because of competition or because of amazonspecific issues . I dont think it is specific issues to amazon, so much as it is the competition. Microsofts Cloud Business is up over 60 , so we know that business is on fire. I think the stalking horse here is google. We dont have a lot of visibility into those numbers but you do hear that under new leadership, there are some signs of life here. Withamazon is computing the two giant, and absolutely, that could eat into the top line. Emily the cfo said the company did spend more than what they said they would on the same day delivery, and that it have a more difficult to execute than expected. I can echo that as a customer. When i say one day delivery on amazon, it often doesnt work out. . Hat are you watching there andrew topline growth is driven by the commerce business. I was expecting investment to pay off in q3 and q4. So if you already being an acceleration in q2, we could be looking ahead to an explosive q4 for amazon, because consumers have to develop the habit. And they are not really feeling the impact of that one day delivery especially as it continues rolling out. Those habits will get ingrained in q3 and then cement themselves. I think that is where we will see the upside. Emily lets talk about the rest of the year, going into the holiday quarter. Lots of acceleration is going to be happening. You have got cyber monday, black friday. All this competition ratcheted up. How do you expect amazon to perform, relative to the competition, in the ecommerce unit in particular . Andrew i think there are a few things that really advantage amazon in you for, particularly in light of the oneday shipping initiative. I dont know if folks are thinking about this just yet, but we get into a really compressed holiday season. Last year, we had 32 days between thanksgiving and christmas, this year, 27 days. That really advantages someone like amazon. We always see amazon increase their share later in the season as consumers dont have the same confidence in getting their deliveries ontime with other retailers as they do with amazon. That season will really be to amazons advantage. That is one upside to q4. An,ly that was andrew lipsm analyst for emarket. Coming up, we invite some of the Biggest Tech Companies to talk about the fallout from the trade war and the ban on huawei. And if you like bloomberg, check us out online, on sirius xm. This is bloomberg. Emily white house officials said they would send a delegation to china next week led by robert , lighthizer. This is after a highlevel meeting with the Trump Administration and ceos from google, brought come, cisco brough broadcom, cisco, intel, and qualcomm. It was geared towards easing a sales ban on huawei. I spoke to a representative from arizonas seventh district. While huawei is not an independent actor, it is an arm of the chinese government. You cannot trust about us empowering and doing business with huawei will not have negative consequences. You just read on Washington Post this last weekend huawei , was working with a Shell Company in north korea, supplying them with technology that was explicitly banned through our sanctions regime. This is why we have joined with a bipartisan manner, with congressman gallagher from wisconsin to make sure we actually enforce the huawei and zte sanctions regime that we think is being effective. The president should not do a oneoff trades for farm goods for something that could significantly impact the future of both our country as well as our allies. Emily there are some in the business community, including many highlevel tech ceos who will tell you privately they see no evidence that huawei uses this equipment to spy. What would you say to that . [laughter] i hope they would just read the panda Shell Corporation that was set up in north korea, the allowed huawei to do business, so clearly, this company is not operating on the up and up. Number two, it is well known that among chinese companies, it is mandated that they must make any Assets Available to the chinese government. While i respect a lot of these companies, their goal is to have the highest Profit Margins for their corporate shareholders. As a member of congress, the most important thing for me is National Security. And this sends a bad message to our allies overseas, who we are trying to convince also not to incorporate huawei into the National Security apparatus. It makes it very difficult for us to share information with them. Emily you referenced a report in the Washington Post but huawei has partnered with a chinese stateconnected company , panda, to improve things in north korea like the wireless infrastructure. And have been partnered with this company, according to the Washington Post, for eight years. When the president was asked, he said it did not seem particularly alarming. How does this new potential revelation about huawei and while it has denied any work in north korea how does that change your level of objection . I object even harder. I think other corporations and members of congress should be worried about this. The fact that the president does not seem to understand the problem or scope tells you that we should question his judgment when it comes to his decisions on this very key and important security issue. Again, i think the president does not understand the full scope of what is happening or what could happen should huawei have access to our Information Technology markets as well as our allies, and is essentially trying to play one trade war against another. We should not be trading access to the 5g market for us to go back to what we had pretrade war, which was basically us being able to sell Farm Products to china. This should be separate from the trade, because it will have longer effects to our National Security than this temporary trade war that would have. Emily that is my next question. The leaders of these u. S. Companies will say the blacklisting of huawei has significantly hurt their bottom line. Some of these companies provide supplies, provide chips to , laptops andhones Consumer Products that they say do not have much of a threat to National Security. What would you say to those ceos . Well, they are wrong. It is the determination, and has been the determination of the u. S. Intelligence community, as is congress, that they are dangerous operators. We have the right as a nation to stop corporations from engaging with other countries and entities that potentially put our National Security apparatus in danger as well as that of our interest. I dont see these companies complaining about us having a sanctions regime against iran or other bad actors around the world. They do not have a right to corporate profit at the sake of u. S. National security. That is just how it is. Hopefully we in congress get our way and we are it would to stop that u. S. Administration and these ceos from getting their way. Emily what would you like to see the Trump Administration do . And what do you think congress should do . I think the Trump Administration should continue with the sanctions regime they have now and enforce them stronger. Hopefully, that stays. If the president does not do that, the house and senate in a bipartisan manner, should pass a new sanctions regime or continuous sanctions regime on huawei and zte, to make sure we are continuing the protect our National Security interests. Emily since i have you, i have to ask about iran. The president defends withdrawing from the iran nuclear deal. Meantime, iran has used a britishflagged oil tanker. Tensions seem to be escalating, so what do you think the u. S. Should do about the iran situation . I think we have to respond to iran, but in a measured manner, with assistance and concurrence with our allies, especially britain and european allies. I think at the same time, we have to recognize that us leaving the j. C. P. O. A. Without any plan, more as a kneejerk obamanismto anti politics that this president has, has created this situation. Iran says they will comply, even though they are not receiving any of the economic benefits. But there are still other areas we have to keep. The last thing we can afford and the last thing we need is a war in the middle east. It is not even in our National Security interests for us to engage in this war. We have a lot of other tools of the toolbox to both keep iran in check, and at the same time, deescalate the situation through diplomatic means. Emily speaking of tension at home, the president is under fire for now multiple days, for what some have called racist or racially charged language about four democratic congresswoman of color. Do you believe the president s s remarks have been racist, and that he is stoking racial . Ension especially given his response, or lack thereof, to supporters rallies chanting send her back . Yes, of course. This is not the first time the president has used race as a way to engage and enraged his base. Lesser member of this present started off his political career accusing president obama of being born in africa. Then he accuses a mexicanamerican judge that was born in indiana of having dual loyalties. Surprising that he describes four american women is not being as essentially not being american and loving this country. These women are of color. Nancys not describe pelosi or any other women who are white of not loving the country. He is clearly trying to drum up the base of his support that is racist and does believe in these racist theories. Emily that was congressman Ruben Gallego of arizonas seventh district. Coming up, tesla shares fell in afterhours trading after the company pulled back on profit promises and the Second Quarter we break it down. And later, we talked to ftc commissioner know if phillips about facebooks record fine. Part of its settlements to put its privacy violations behind it. This is bloomberg. Emily tesla posted losses and backtracked from profit forecasts as part of the secondquarter report. Cash and deliveries of emerged as the Biggest Challenges to growth. The Company Announced the longtime Technology Officer is stepping down. I covered the challenges with max chafkin the Bloomberg Businessweek and a tech analyst. I think the 5 billion on the Balance Sheet is a great number. I think margin is probably why the stock is down. But i think if you go to the numbers in detail, margin is that are than expected. I think Forward Guidance of being gappositive on that income is good as well. Its kind of an overreaction to the downside in my opinion. Emily if it is an overreaction, it is a big overreaction. I mean, shares are down 10 right now. Max, there is a disappointment here on profit. The company turned profitable at the end of last year. That reversed at the beginning of this year. Elon musk said the company would become profitable again later this year. It looks like thats not going to happen. Max they are still trying for it. There are two things going on with tesla. One is that theyve been pushing like crazy for volume. They want to be a largevolume car manufacturer, one of the biggest in the world longterm. This car that they are selling, the model 3, does not have great margins, it seems. They pushed so hard to get the magic 35,000that base price, got there. It has come up a tiny bit, but the margins are supertight on those lowend cars. As people buy the cheaper model 3, they are moving away from teslas more expensive cars, so. He model x and the model y so there is a pressure on profit that is at the very least, it nearterm problem, and critics are going to say this is a longterm problem. They will say this is a company that will have a hard time getting to profitability. Emily is it a near or longterm problem . Ben its not true. The model three they actually had better margins quarter over quarter, x credits, which is what Everyone Wants to look at. So its not true. They are making improvements on the gross margin, so im not sure what that statement is. Emily max . Max the company is not profitable right now. They obviously like to get profitable. I think in the long run, they want to be more efficient in the factory, be more efficient in their operations. Thats the message weve been hearing from elon musk basically for the last year, and then they want to get these new cars out, the model y, which could be a huge boom for the company. That is a category of car that most americans are buying. Emily it is a cheaper suv. What is the status of it . Is it going to be here next year . Inquiring minds want to know. [laughter] max i dont have any is tied information. Inside information. Certainly the big effort tesla is doing right now on top of building a giga factory in china, which would be huge because the Chinese Market is the biggest market in the world for electric vehicles. Emily what is your take on how much china can change the tesla story as they continue to try to get new models to the market . Ben so, we dont have any production in our numbers from china this year. I think what is most underestimated about everything here is the brand in china and how it has kind of become a wildfire there and how many cars it can sell, and i think that is upside. Just back to the cash flow they generate during the quarter, it is a couple hundred million dollars. So this idea that they dont make money is completely wrong, and the headline needs to change. Theres 5 billion on the Balance Sheet. They are not going out of business. You have other oems that have really hard problems, restructuring problems, and its not tesla. Its xyz, german manufacturers. They are getting their lunch eaten by tesla. Emily there is a point there, max, that if you talk to people who own teslas, they love their cars. They love their cars. They are not focused on the ins and outs of if the company is making money, how many delivers they are making, what production is looking like. So how much does that matter . Max it is huge. Making a good car if you are a car company is definitely the most important thing more than , anything else. And to bens point, one thing about the conversation that has changed about tesla over the last year is a year ago, people were saying that the company is doomed, they will never get to volume production, and now, the debate between the bulls is ahe different debate. Is tesla a niche manufacturer . That would be the bear