emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up in the next hour, alphabet reports fourth-quarter results. highlights from my conversation with the alphabet cfo, ahead. plus, tech's going public pipeline is picking up. messaging service slack filed paperwork for its direct listing. and the crackdown on huawei continues. we will bring you the inside story of a chicago startup that

claims the company was trying to steal its technology. it starts with broken glass. but first, our top story. shares of alphabet falling in after-hours trading. in the fourth quarter ad revenue for the search giant remains strong with paid clicks climbing over 18% to $27 billion. however, operating margins fell below analyst expectations and expenses rose. meantime, the investor call is underway. cfo rush porat addressed rising costs. take a listen. >> the key drivers were, first, content acquisition costs, primarily for youtube, mostly for our advertising supported content, in what is a seasonally strong quarter for youtube. but also for our newer subscription businesses, youtube premium and youtube tv, which have higher cac as a percentage of revenues. emily: joining us to discuss in, have crawfords we

and in new york we have -- crawford, what are the key highlights you would pull out here? investors seem to be focusing on margins and capex. >> as you said, this is not a revenue problem. this has been an operating margin problem. we saw that even though revenue in the core advertising business was quite strong and even though revenue in some of the other revenue, which would be things like pixel and google home, actually beat expectations slightly, they just are having to pay more for some of the services that they want to create. i mean, if you believe in the long game here, if you believe that this company is really going to develop over the top services, they are going to have to pay more for them and you have to adjust your model in terms of what they are going to pay for their services, particularly for their partners. i think google really is going to be -- trying to be the video disruptor here, and that's what you're seeing in the numbers, which is a cramping of the operating margins.

emily: i spoke to porat before she jumped on the earnings call and i asked specifically about capex. she told me they remain focused on investing for the long-term. we take a disciplined approach to key areas. capex growing at a sizable clip. the primary driver continues to be investing in technical infrastructure to support growth, data centers and machines. this reflects our outlook for global growth in ad, search, youtube, and cloud. sort of echoing, crawford, what you suggested there. but paul, investors are concerned about it. paul: i think they are in the short-term. the market has generally given ruth porat very, very high grades for coming in and really instilling a sense of more certainty as it relates to both their operating expenses and their capex, so, a certain level of discipline. the three areas where they are investing are very high growth areas, including youtube.

internet ad spending on video is the fastest part of internet ad spending. clearly is a -- google is a leader there, along with youtube. when you combine that with the cloud, another extremely fast-growing end user business, i think longer-term, most google investors feel very comfortable with google's p&l and capital spending. emily: now, there continues to be questions about how much amazon is now taking a bite out of the digital ad pie. when amazon reported its results, their other revenue category, which is mainly advertising, rocketed up to $10 billion. so, we asked about amazon and how serious a threat amazon is in the conversation with ruth porat. and she said, "whenever you inventory is created that attracts consumer interest, advertisers will be interested in advertising against that inventory. the market is continuing to grow and there is still a tremendous amount that is off-line." crawford, would you say that the pie is growing, or is amazon actually a threat to alphabet? crawford: amazon is absolutely a

threat. amazon has got a lot of properties. they're going to be bringing on a tremendous amount of inventory going forward. and if nothing else, the classic law of economics, what does that mean? it means there's going to be more supply for a finite amount of demand. so, what google is going to try to do is they are going to try to create more valuable services where they can potentially offset some of those trends. but, you know, amazon getting into this market, like amazon getting into most people's market, is a threat to google in this space. emily: now, i got a question earlier. why don't investors punish amazon for the pressure on its margins, but punish google in this way? and there's still a lot of data that google doesn't give us about how fast youtube is growing, how fast is the cloud growing, company diversifying

beyond advertising. paul, did we get any hints about how healthy is the cloud business, how healthy is youtube, even though it has a lot of potential? paul: no, you are right, google needs to do a better job of exposure. we have been saying this to them for some time, particularly about youtube. it is about $8 billion or $9 billion of run rate, relatively high-margins. i agree with crawford that it is requiring a lot of investment, and that is pinching profitability in the near term. but i think this company, historically, alphabet, has gotten the benefit of the doubt from shareholders for making a the long-term bets, not just the near term operating expenses. ruth has dialed back some of those crazier, more moon-shop things. they have focused on three areas that can drive growth. and i think most long-term investors will give them the benefit of the doubt. emily: they are also continuing their share buyback program. take a listen to porat on the call just moments ago. ruth: finally, on capital

allocation, our primary use continues to be to support organic growth in our businesses, followed by retaining flexibility for acquisitions. after taking these needs into account, our board has authorized the repurchase of up to an additional $12.5 billion of our class c capital stock. emily: presumably, that is welcome news to investors. crawford, you do your own market research. can you fill in any of the blanks here in terms of the numbers that google is not giving us? crawford: yeah, so, not yet. what we can see is that some of these bets are extremely, extremely long in duration. so for example, things like google fiber. those are probably not meaningful yet, but yet the costs associated with those grew significantly in terms of the other bet loss. up to $1.3 billion year over year. they're spending more money on those things, and that's also

what you are seeing that is weighing on margins going forward. now, i guess, i will say that the one area where they need to start showing more growth and showing more progress is in the google cloud platform. and that's where they've got two competitors, one being azure, or microsoft, which has massively pivoted into the segment, and the other being amazon, obviously. and they are third in a three horse race right now. and i think they need to start disclosing the kind of progress they are making with thomas curry now in charge. i think that's going to be imperative for them to get investor confidence in that segment, and that they can participate. they are talking about capex growth in that space, but in the next few quarters, they need to start showing how they are growing revenue in that space. emily: thomas came in, replacing diane greene.

but google cloud firmly in third place, at least as far as we know behind amazon and microsoft. one interesting question i did ask ruth porat was about acquisitions, because this is a company that has not made any huge acquisitions in the last three years. so i asked if there were any plans to make acquisitions or if she had anything against acquisitions. she said, "we do believe acquisitions are an attractive complement to what we do to drive organic growth." they did more smaller acquisitions last year than the year prior but they have a high bar for those big acquisitions. "we want to make sure if we are doing a deal, it is the right deal, and if it is the right deal, it could be an accelerant for the business." paul, any ideas where google could buy smartly? paul: you know, i think one of the areas we see being disrupted is the traditional media business. so whenever you see a big media property come on to the market, whether it's time warner, directv, 21st century fox, investors step back and say is that a business that google should get into in a bigger way. yes, they have youtube, and that

is significant online video business for them, but do they need to jump into the deep end of the pool as it relates to content and make that another pillar of their growth, much like jeff bezos appears to be doing at amazon? to date, however, google has really shown no interest in getting into the media space. i think they are concerned about what it will do to their growth rate and what it will do to their returns. so, that could be an area, but to date we have not seen them do anything, really. emily: right. ruth porat saying they are keeping an open mind. bloomberg's paul sweeney, crawford del prete of idc, thank you both. you can turn to bloomberg for more on this. for more commentary and analysis from our bloomberg reporters and analysts. and of course we will have highlights for you here throughout the show. well, speaking of acquisitions, jpmorgan says there are a number of companies that would be strong, strategic fits for apple if the company decides to use that major cash pile. the bank says the company should look at acquiring netflix, videogame producer activision

blizzard, or home speaker maker sonos. apple has roughly $130 billion in cash in its coffers. coming up, messaging startup slack inches closer to going public, filing key paperwork with regulators to move ahead with its direct listing. we will bring you all the details, i had. and if you like bloomberg news, check us out on the radio. listen on the bloomberg app. this is bloomberg. ♪

emily: messaging platform slack is moving along with its plans to go public, filing confidential paperwork with

regulators. this is just one of several high-profile tech companies on track to hit the public markets in 2019, including uber, lyft, and perhaps airbnb. we are joined by olivia, who covers deals for us. and let's be clear, this is not an ipo. olivia: no it's not. today, slack confidentially filed for a proposed public listing, which is filing speak for a direct listing. so, direct listing, for those of you who are not familiar with this, is essentially when a company lets its shareholders, its employers, and early investors sell their shares on the public markets, but it doesn't go through the traditional ipo process of using underwriters and big banks of doing a big roadshow. essentially, it allows the early investors to get liquidity without generating more cash for the company, which saves a lot of dilution. emily: this is something that spotify did as well. it is unusual. why is slack going this route?

olivia: well, they are going this route for two reasons. mainly because they already have a lot of cash. and they don't need the marketing or the pr, the publicity, the recognition that comes with a traditional ipo. they really just want to give their early investors and their employees some liquidity. emily: and also they can sell the shares right away. olivia: right. there's no lockup, and the biggest reason is it doesn't create dilution. that is huge for a founder. they don't want to dilute their shares and bring in all this cash that they don't necessarily need. emily: so, what are the risks potentially? olivia: the jury is still really out on this. spotify had a very successful listing. i mean, their shares as of today were down 6% from the day they opened publicly, but that's normal. you know, i think that some people have said there is a risk the shares could flop on opening day, and you don't have an underwriter to prop up the price of the shares and guarantee it. but if the banks do their job,

and there are experienced bankers working on this, they should do a good job leading up to it of really getting the right price for the shares, understanding on the supply side what people are willing to sell for, and understanding on the buy side what people are willing to pay. emily: what about the chance of a government shutdown, another shutdown? i mean, we have been talking a lot on the show about how the initial shutdown stalled things at the sec, could have slowed things down for uber and lyft. we don't know, we don't have any concrete details on whether the process actually slowed down, but it certainly has the potential. olivia: it definitely slowed things down. there's a huge, huge backlog at the sec right now. there is sort of this sense of the boogeyman waiting in the wings. what is going to happen next week? it could delay things even further. we understand that the sec is just proceeding as everything is normal and there is a backlog and they will get through things. i mean, slack has said that it

will -- actually, they haven't said this. we understand that slack is planning to aim to go late spring, middle of the year. so, it should not delay things too much if there is another shutdown, unless the shutdown goes on for months and months, in which case everything will be delayed. emily: the uncertainty of going public during the trump administration. ok, olivia, our deals reporter, thank you so much for that update. bloomberg beta, by the way, is an investor in slack. coming up, electric car starup lucid wants to take on tesla, but after two years nothing has hit the market. is the company on track to begin production next year? we are live streaming on twitter. follow us @technology. this is bloomberg. ♪

emily: tesla has agreed to buy battery tech company maxwell technologies for $218 million in stock. they are paying a 55% premium to maxwell's closing price last friday. the deal will give tesla more expertise in energy storage and power delivery. leaders across the energy industry are gathering at bloomberg's future of mobility summit in san francisco this week to talk about the issues and opportunities in transportation. one company shaping the industry's evolution is lucid motors. the electric car startup aims to compete with tesla. with production of its first ev, lucid air, to begin in 2020. joining us now to discuss, peter, the chief technology officer. when will the car go on sale?

are you still on track? peter: we are on track and start of production is slated for the end of next year, 2020. emily: the car is going to start at $100,000. is that correct? peter: well, we will have a range of prices. the initial batch of cars we sell will be highly specified, so therefore they will average over $100,000, but we will make progressively more affordable versions of the car available as we ramp up production. emily: now, you said you think you can bring the costs down to about $60,000 for the car. peter: ultimately, yes. emily: the model three is aiming to get to $35,000 a car. how do you compete with that? peter: because our car is operating in a different sector of the market. it is a truly luxurious car. you need to compare us with a -- aity spends mercedes-benz, s class. emily: what about the higher end tesla? peter: a model s tesla would be a comparative electric model. but we differ in that we are

truly a luxury brand. if you look at tesla, they are high-tech, they are beautifully engineered, they are very disruptive, and they are a premium price, but you only have to get inside a tesla to realize it is not really a luxury car. it is a premium car, but not a luxury car. emily: have you told that the elon musk? peter: not yet. emily: give us a timeline on production. peter: we are starting production and casa grande in arizona in late 2020 and we gradually ramp up production throughout 2021 and 2022. we ramp up from just a few cars to 50,000 units a year within two or three years. emily: when does the first car go on sale and hit the road? peter: effectively early 2021. emily: so, the saudi private investment fund, which is also an investor in tesla, is an investor in lucid. peter: absolutely. emily: explain that relationship to me, given that tesla is your competitor. peter: well, all i can speak

about -- emily: on the premium end, not the luxury end. peter: yes, exactly. we are delighted to have them as strategic investors in lucid motors. they have invested in the management team, in the vision for the product, and the technology we have it lucid. our powertrain is designed and created in-house. it is world-class technology. that is what drew them to us. they are a great partner because in return we can work with them in enabling their vision to transition the economy of saudi arabia away from one which is heavily dependent on fossil fuels. but together we can create hundreds of high-tech jobs in the states of california and arizona. emily: the saudi public investment fund recently reduced -- they didn't decrease their stake in tesla, but they hedged their risk. peter: they hedged it. emily: is there any indication

that they might bulk up on their investment in lucid or any indication of why they did that? peter: i really can't speak for what moves they've made with tesla. i can only speak for the relationship with lucid. and in that, we are strong strategic partners. there is a spiritual alignment. we both are very committed to really transition towards a more sustainable mobility model, and we believe that the way to do that is first, by making the best car in the world, making up a premium luxury brand, which is lucid, and make that a global player, and as a consequence, and progressively make other cars which are progressively more affordable, then more people can benefit. and we can actually have a meaningful impact upon the environment and the impact it can have on global warming. emily: now, as you know, there was an explosion of press around the murder of journalist jamal khashoggi tied to saudi arabia.

do you have any concerns about the ethics of their money? peter: look, the story here, the key story is that we have an alignment, a partnership to do something which is very meaningful and very good for many people of this generation and for future generations in moving the world mobility, the way that mankind is mobilized, to a more sustainable model. and i really believe that is our focus. that is my passion. and it is something that we can do in partnership. the public investment fund of saudi arabia is enabling us to exercise that vision. emily: now, we've reported that you had talks with ford about selling a couple years ago. a deal didn't happen. the ford ceo confirmed they did look at lucid. would you still be open to a sale? peter: we believe that with the partnership that we have gotten,

strength from that partnership, and the future we have with a 10-year plan, lucid can be hugely valuable. we are not contemplating a sale. what we would contemplate is potential partnerships in technology. we think we have world-class technology that all the world could benefit from, and a lot of the incumbents, the traditional automakers, haven't got the technology that we have developed, and i think they could benefit from that. so, i think that model would work, but a sale, no. okwe will be watching for the -- emily: ok. well, we will be watching for the first lucid car to hit the road in 2021. peter, thank you so much for stopping by. coming up, our exclusive reporting on huawei, including details on how the chinese company has allegedly been trying to steal u.s. tech secrets. that is next. we are also continuing to monitor alphabet earnings after the company reported thinner profit margins in the fourth quarter. speaking on a call moments ago,

the ceo said google takes security for its users very , very seriously. we will continue to bring you headlines as we have them. this is bloomberg. ♪

emily: this is "bloomberg technology" global link where we join "bloomberg daybreak: australia" to bring you the latest in tech news. i'm emily chang in san francisco with shery ahn in new york and haidi stroud-watts in sydney. let's take a look at the top global tech stories of the day. haidi: we are watching sony again today. shares falling the most in 3.5 years. the japanese electronics maker reporting weaker profits in the playstation business. sony sony sony also reducing the annual revenue forecast. goldman sachs among firms that cut price target on the company. now that the trump administration is cracking down, u.s. semiconductor makers are complaining that china is stealing their secrets.

they are still not happy. china is the fastest-growing market and chipmaker lobbyists say tariffs are not the answer. they want more federal spending on research and immigration reform that would allow companies to recruit and retain foreign graduates from u.s. universities. google spending skyrocketed, the parent alphabet reported thinner profit margins in the third quarter as the internet giant spent heavily to expand its cloud and hardware businesses. $3.1 billion and google's capital expenditures jumped 80%. those are the top global tech stories of the day. shery: thank you. "bloomberg businessweek" has a report that sheds new light on huawei, specifically the allegations the chinese tech giant has been trying to steal u.s. trade secrets. businessweek editor max chafkin worked on the story and is here to discuss. we know there have been several investigations into huawei. most recently, the grand jury

indictments against the company but it is what happened last month on the sidelines of the consumer electronics show that really caught our eye. max: what we are reporting today is that while those indictments were basically dropping, the indictments last week, the fbi, u.s. department of justice is working on this other case. what we reported today was a small chicago-based startup, kind of like your typical startup, got in contact with huawei and found huawei's actions to be a little bit suspicious. reported that to the fbi and that led to this crazy scene in las vegas around ces where fbi agents had the akhan executives leading the huawei executives for this back and forth caught on tape. a reporter probably watching the whole thing.

emily: one minute you are a startup ceo, and the next you are wearing a wire for the u.s. government. we sat down with the ceo of akhan and talked about the opening incident that raised suspicion. i want you to take a listen to what he had to say. >> in sending some of our samples for nondestructive sampling as we do with the other potential customers, we received back on the second round of sampling, a sample had been damaged. a large portion of the glass was missing and broken, which was very concerning for us. after seeing this portion of the glass that was missing, we realized this is not really something that could be done in shipping, but more so attempt at theft of intellectual property. emily: by the way, this glass is supposedly very innovative. it has a layer of artificial diamond coating on it. give us the play-by-play in terms of what happens next after they get the broken glass back. max: they got the broken glass and they thought that was weird.

we should say, we don't know how good this glass is but what is interesting to me about this story is what happens next, which is one of the executives from this company, akhan, walked into a field office in chicago, reported this crime and, all of a sudden, the fbi sprung into action. there were conference calls. this piece, this sample was sent to a lab in quantico, virginia. it was analyzed. the analysis suggested it was cut by a weapons grade laser. then, the company executive got the huawei reps to tell them that the sample had been to china, which is a violation potentially of u.s. law. that led to this sting. i think what is pretty interesting here is we don't know how big a deal this specific piece of the

government's investigation is. we know the government is coming at huawei guns blazing. they are expending serious resources on what amounts to kind of a small in the scheme of things. shery: on all of those u.s. allegations, huawei denying those charges on the company itself or on subsidiaries. they are saying they have not committed violations of u.s. law and also not aware of any wrongdoing by the cfo. that was the latest huawei statement when it came to all of these u.s. indictments. at the same time, we know there is a history of these investigations ongoing on ip theft for the company, dating back more than a decade before president trump's trade war. max: huawei has not commented on our story. obviously, we are waiting to see what they have to say. it is important to say that

there has been this long running argument between the u.s. and china where the u.s. accuses huawei of stealing trade secrets and huawei kind of says this is ticky-tacky stuff. with respect to the indictment, the t-mobile alleged theft of a part of a robot. they said, this is something that happened years ago. it was settled, a civil proceeding that was settled. the u.s. is kind of picking on huawei for political purposes. politics are part of this. president trump is eager to strike a better deal with china. you can imagine a situation where the trump administration wants to put the screws to huawei to extract concessions out of china. emily: what are we hearing from the u.s. government? is there any indication about how this latest sting goes into the broader picture? max: it is all speculation for now. the investigation has not led to an indictment. we reported there was a raid of a huawei laboratory in san

diego. we will have to see where it goes. i think it is fair to say that the government is not done with huawei. that said, we don't know is this going to result in an indictment, charges? possibly not. if it doesn't, that tells you something as well because it tells you that the fbi, again, going full blast against huawei and not turning up much. emily: "bloomberg businessweek's" max chafkin, thank you for stopping by. check out the full report on this huawei sting in the latest edition of the magazine. much more ahead. stay with us. this is bloomberg. ♪

emily: since donald trump became president of the u.s., he has used his twitter platform to repeatedly attack one business leader in particular. that is amazon ceo jeff bezos. take the following january tweet -- "so sorry to hear the news about jeff bozo being taken down by a competitor, whose reporting is far more accurate than his lobbyist newspaper, the amazon washington post. hopefully the newspaper will be put in more responsible hands." since trump took office, it appears no one has benefited quite like bezos. the amazon chief has become the world's richest person in that time. his net worth skyrocketed by more than $56 billion. to tell us more, we have mike dorning in washington. the story president trump was referring to was a story in the national inquirer about a personal affair of jeff bezos.

that aside, it is quite ironic that bezos of all the business people in the world, his wealth has rocketed the most during the trump presidency. mike: it shows you the president puff all he wants, but he is not going to hurt a solidly constructed business that is riding a wave of e-commerce and cloud computing. bezos's business has been robust. all the things trump has threatened -- antitrust suits, raising postal rates, other attacks on amazon has not really materialized. so bezos has become the world's richest person while trump is in the white house, and has made $66 billion since donald trump's election. he has made more off the trump era than anyone else, even the president. emily: bezos has not just hung back. he has responded to the president at times during the campaign, when candidate trump

referred to amazon as a no-profit company. bezos wrote, "finally trashed by naldtrump, i will still reserve him a seat on the blue origin rocket, #senddonaldtospace." is this wise given the possibility of regulation and that amazon could be in regulatory crosshairs? mike: i don't think the tweets make that big of a difference. bezos's ownership of "the washington post" is one of the things that bugged trump, and "the washington post" has published a bunch of investigative journalism that has shown problems in the administration and also made revelations about the russia investigation. that is what appears to be aggravating the president. that's where the risk comes from and he has embraced having the washington post and doing that

journalism. as it has turned out, trump has not been able to do much that hurts bezos. if anything, bezos is benefiting. it looks like they are doing really well in the competition to get a big cloud contract from the pentagon. this is donald trump's pentagon, they decided it makes more sense to have cloud computing from a single source and that gave amazon a huge advantage over other competitors. emily: speaking of "the washington post," they ran a much talked about super bowl ad, narrated by tom hanks, celebrating american journalism. "knowing keeps us free," "democracy dies in darkness," which given the stories you have mentioned from the washington post, it seems to take a shot at the administration. trump jr. tweeted, "you know how mainstream journalists could avoid having to spend millions

on a super bowl commercial to gain some undeserved credibility? how about report the news and that the leftist bs for a change?" what is your reaction to that? mike: this actually probably helps the trump brand and "the washington post" brand, ironically. it shows "the washington post" to be willing to hold power to account. and it also trump supporters, it presents them as under attack from other institutions. there is a weird synergy between the bezos "washington post" and the trump political machine by having this fight. they both benefit tremendously. emily: bezos perhaps has not been totally unscathed during the trump presidency, of course given the "national enquirer" report. if you look at the size of his wealth, even if he has to split his assets with his ex-wife in the divorce, he would still rank

pretty highly on the wealth chart, right? mike: in fact, if he had to split assets with his wife, he would be back to where he was the day trump got elected. arguably, you could say the trump presidency paid for the divorce if there is a divorce. emily: which also puts into contact how much he has made in the last two years. his wealth valued at $134 billion. mike, thank you. now, speaking of people close to -- people opposed to amazon, new york state has appointed a critic of the amazon headquarters deal to the public authorities control board. new york state senator michael gianaris will be one of three voting members on the board that has the right to block projects. new york governor andrew cuomo must now decide whether or not to accept the election. gianaris told "bloomberg technology" that "my views are clear on the amazon deal and not changing." amazon has yet to respond to our

request for comment. still ahead, a brutal cold snaps -- a brutal cold snap gripped the country last week, bringing dangerous subzero temperatures to the midwest. the epa tells us what this means for climate change, next. and we will talk about the biggest takeaways from google's fourth quarter earnings report. sundar pichai moments ago on the call talking about expanding into a new business. product stream, being able to deliver gaming with a kind of real-time, our requirements are low latency. it is definitely for us. it is an important computing advance. we think it will help us strive -- help us drive the new computer platforms we're working on. you will see us do more in 2019. ♪

emily: the midwest faced a brutal arctic blast last week and president trump jumped at the chance to take a jab at global warming. he tweeted, "windchill

temperatures are reaching -60. the coldest ever recorded. the coming days are expected to be even colder. outside evenlast for minutes. what the -- is going on with global warming? please come back fast, we need you." i sat down with epa active administrator andrew wheeler, up for nomination to formally lead the epa, and asked if he agreed with the president. andrew: global warming is certainly occurring and man has an impact on global warming. there are some issues as far as the extent of the individual weather event but the important thing that we are doing is following the law. we are following the law that congress passed. the clean air act tells us what we can and cannot do. the supreme court decisions. under my leadership, we are following the statutes that congress has passed and the direction we have received from the courts. emily: did the cold give you pause about the validity of global warming? andrew: i don't think you can look at any one weather event

and determine the planet is warming or cooling. you have to look at the models over all, over a number of years and not focus on one particular weather event. emily: so the president's conclusion might be flawed? andrew: i did not say that. i think there was a lot more variability in the climate models and climate data than most people realize. i think the president is reflecting on that. emily: you did, at your confirmation hearing, you said you were on an eight or nine on a 10 point scale of climate concern. someone look at the actions of the epa has taken thus far as retreating from aggressively regulating carbon dioxide emissions. how do you square that? are you retreating from the fight? andrew: no, we are not retreating at all. the obama administration put forth a plan for the electric power sector, the clean power plan. that was stated by the supreme by the- that was stayed

supreme court so it never took effect. we are proposing regulation, the affordable clean energy rule for the power sector, that follows the law. so it will be upheld by the courts and lead to 34% reduction in co2 over the lifetime of that regulation. we are moving forward, making cuts in co2. co2 has gone down since 2005. that was the high water mark for the united states. it is a global problem and the president recognizes that which is why he pulled out of the paris climate accord. the paris climate accord was not a global solution. we do need a global solution if we are going to address that issue. we don't want to unilaterally disarm our economy when other economies are not doing what they should be doing. emily: getting regular climate updates. what are you doing to educate yourself? andrew: i am as well. i have had several briefings with the career scientists of the agency. we have more planned for january. we will get those rescheduled for february because the agency was shut down in january. i am getting regular briefings. emily: if not paris, what is better?

andrew: something that will bring china and other emerging markets to the table for real reductions. emily: my interview with epa acting administrator andrew wheeler. you can catch the full conversation online. recapping today's top stories, alphabet's fourth-quarter results. the investor call is now over. shares are down after profit revealed that they would be low. expectations as the company spent heavily on the cloud and youtube. with us to discuss is mark bergen who has been listening in on the call throughout the hour. they ended the call saying they are "very mindful of the pace of cost growth." a lot of questions about disclosures from analysts and why we are not getting more details. mark: a lot of those costs will continue. a lot of it went to headcount.

they are almost 100,000 employees which is a massive amount. a lot of it is going to the cloud business where he saw no new disclosures, but some signs of optimistic talk. emily: are analysts getting frustrated? came up a couple of times on the call. they were certainly in the analyst reports reporting earnings, maybe we would see some breakout of youtube. amazon broke out aws, a second ipo. analysts have been eager for some new disclosure over youtube sales and the cloud business. they shared vague terms of the cloud business about the members -- about the numbers of customers they have won, over one million, but nothing coming close to disclosures that analysts want. emily: why do you think investors give amazon a pass when it comes to profit margins , but not alphabet? is it because we don't have a lot of information about other businesses and it is built an -- and it really is an advertising business? mark: in part, the core business has wonderful margins.

they beat on all of the metrics today on eps, on revenue. look at the google properties. you assess the health of the advertising business, it looks pretty solid even though we don't have any visibility into youtube. what they are pushing into with cloud and hardware, moving more into e-gaming, these are businesses where amazon in particular, and apple, are well ahead. with cloud, they almost have a three-year runway and have not shown any progress that they are catching up to amazon and microsoft in that market. the same could be said about hardware. emily: let's talk about e-gaming. a new topic on the call. this is a business of interest. mark: that was the first time . the question was about project stream. google has been trying this in different ways, but they have a lot of the structure in place. they clearly have the back end to pull off streaming in a massive scale. youtube, the most popular videos are e-gaming. this is a market where amazon and twitch is running away.

in the cloud business, google was out and ahead, but yet there could be a possibility where they are out and ahead on the tech and yet they lose the market. emily: when it comes to costs this year, what will you be watching for? mark: keep watching for tac. traffic acquisition costs. it did go up. the cfo talked about this, it will eventually go down. that is the amount they pay out to companies like apple and carriers. we will keep looking at capital expenditure, which grew about 80%. it is all going to google. that is not spending on things like driverless cars and health care programs. i think they are demonstrating that the concern, if you go back three years, google is spending too much on moonshots. that is not the case anymore. they are spending too much on the cloud business. these are efforts that i think investors still, in the long run, believe they can turn into profitable businesses.

emily: mark bergen, thank you so much for keeping us updated. all right, that does it for this edition of "bloomberg technology." on tomorrow's show, we will be talking to roger mcnamee, the author of a new book out about facebook and the ceo mark zuckerberg called "zuck: waking up to the facebook catastrophe." tune in. we are live streaming on twitter. technology.t @ follow our global breaking news network tictoc on twitter. this is bloomberg. ♪ this isn't just any moving day.

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daybreak middle east. the present of the fed says it's members met with president trump to talk about the economy but did did not discuss policy. reports profit margins after higher expending -- spending on the cloud. saudi stocksnt of purchased last month. once the rush to riyadh? retirement. is this a cautionary tale for investors everywhere?