♪ >> welcome to bloomberg technology. stocks extending a rally. a volatile session. apple, amazon, facebook spiking on earnings. alphabet ending the day in the red. this, as president trump

considers a plan to order a for tiktok.nership microsoft is in talks to buy tiktok's u.s. operations. of covid-19 rising, but at a slower pace. florida reporting record deaths. as of today, the $600 unemployment checks millions have been getting will expire. next week, $200. to break down how investors are digesting this, abigail doolittle. we have to talk about this tech rally. buteveryone, it seems, google. abigail: yes, a big rally for apple, amazon, facebook. google the odd stock out. you and i were talking about quarters forblowup

most companies. apple, in particular, the stock had been up 5%, then in the afternoon around that news came reversed, and that is when apple took off, as though there was an invisible hand behind apple surging. it is hard to believe institutional money is buying the stock at a five-year high. they haven't provided in outlook, but nonetheless, great results, each beating estimates. apple and amazon beating, meeting or beating the adjusted earnings estimate prior to the pandemic, but almost as though they had never been reduced. facebook not as much, but investors relieved add the sales were strong. not for alphabet. relieved that advertising sales were strong. not for alphabet. down 3.3%.

all this leading us to record highs for apple and facebook. , notd see record highs just on the day, but on the open, really impressive. not the case for amazon, alphabet or the nasdaq 100, but inetheless, a nice feather cap of investors and shareholders for facebook and and willer volatility record highs, emily. apple it is clear with surging more than 10%. a big beat on earnings. adsple are still buying ip and iphones. why do you think apple is surging so much given the valuation metric? abigail: it is interesting. it was surprising. it felt as if there was this invisible hand, technically overbought.

it, a lot ofce of folks are saying this is a consumer staples stock because of the strength of iphone sales during the pandemic, the fact they were able to put up these strong numbers, beating revenue by 11%, the adjusted earnings estimate by 24%, services grew by 13% year-over-year, so strength across the board, and folks want in one of the biggest companies in the world, best managed, one of the best managed , and frankly when you have stocks in other areas not doing well, caterpillar, energy stocks, that money seems to be going into big tex. you mentioned -- big tech. you mentioned apple. this is their fifth stock split. it has a history.

1987 was the first one. it took quite some time to 2005, it tookter less than two years. here we are. some of this does make the stock more friendly to investors, retail investors in particular because instead of buying a stock that is a few hundred dollars, they will be buying one they think is cheaper, even though it is not, but the optics makes it easier for that retail community to get in. some analysts recommend amazon $3200, $500,ead of $600, more appealing to the retail investor. right, absolutely, definitely makes it more achievable for retail investors. thank you for joining us. moving on to the story i mentioned earlier, the president hatching a plan to order tiktok,

the chinese parent company of tiktok, to sell its u.s. operations. the personnow is covering the story. what is the president considering, and how is this within his power? has been an interesting day. said and mike pompeo earlier this month they were considering this, in part in retaliation. clear what trump is planning to do. the committee on foreign investment had already been 's purchaseytedance and ownership.

so this is already under scrutiny by the trump administration, so whether we out ofave seen movement those efforts, it could be possible. it sounds like that plan might be on pause because microsoft has emerged as a leading 's u.s.er to buy tiktok operations, which might relieve regulatory pressure. emily: as this story was breaking, this other story that microsoft is in talks to buy tiktok broke. obviously this is good news for tiktok? how would this help the company? naomi: it removes that regulatory pressure. bytedance had been considering selling a majority stake in its u.s. business because of these

regulatory threats, not only the trump administration, but lawmakers in congress have been raising questions about whether the ownership, the company represents a national security , andto u.s. interests whether it was potentially censoring americans on the app. it is a headache -- release a headache for them and helps, depending on what the price is, get a good financial deal. what: interesting though this would mean for microsoft. microsoft has been trying to get a foothold in social media, one place they have not dominated. it willosoft ceo said be an enterprise-like company going forward, and it is curious how that fits into that overall .trategy

what will this do for microsoft? , in a it gives them an in young, lucrative audience, given the age group it is popular with. microsoft access to artificial technology technology to gain more insight into consumer habits, in a way linkedin does not provide. it is also likely not an accident that microsoft is the is major tech company that not currently under antitrust scrutiny in washington, so microsoft has a longer runway to make a deal like this. right, you wonder if it will trigger some scrutiny. , arosoft is owned linkedin

different kind of social media, not as consumer focused, but something we will continue to follow and we will have more later in the show. naomi, thank you for that update. stocks following a blowout, apple, amazon, facebook seeing huge surges. we will talk about what is behind those moves come next. this is bloomberg. ♪ -- moves,. this is bloomberg. ♪ moves, next. this is bloomberg. ♪

tech. diving into big

i want to look behind the reaction. dan morgan is with us. i want to start with alphabet, the only stock in the red today of the stocks. looking at the massive contraction the global advertising market, but something facebook has not seem to feel the effects of. what makes alphabet different than facebook? dan: when we look at the four stocks, google is the only one down. i think with the street is focusing on is even though advertising revenue was above expectations, but the change from a year ago, down 8.1%, and over the quarter down 11%, compared to facebook, which beat expectations at $18.3 billion,

they had an increased of 10% year-over-year in advertising revenue, quarterly basis, they were up 5% was so comparing and contrasting the numbers between facebook and google, we would have to zero in on advertising revenue numbers come to exceeded expectations and is continuing to grow, where as google is showing negative growth from the first quarter and the same second quarter a year ago, so i think the street was a little bit focused on that, and that is why we saw good performance from facebook and google down. about what is us driving the decisions of appetizers. facebook in the middle of this massive and boycott this month, so we will see the impact of that in the current quarter, so happening on amazon, and not google.

what are the trends behind the scenes that might be impacting where advertisers are putting their dollars? dan: you are right. we heard the news a couple of weeks ago that quite a few customers of facebook because of concerns about hateful language and so forth on the website were going to boycott spending money for advertising revenue. what does that mean? if we took the top 100 customers facebook,acebook -- they would represent 1% of the total top line revenue, and 76% of all facebook customers are huge players, small, not fortune 500 companies, so i think that is something that a lot of people are concerned about. not allaid, it has impacted yet. it will going forward, but amazon is becoming a bit of a player in the space, and eating

into google space in terms of search, so we are starting to see overlap in what a lot of these companies are doing in terms of the areas they are focusing on but the fact facebook had such good numbers, that defied concerns about boycotts and so forth. emily: how successful has facebook monetizing instagram and whatsapp? dan: that is huge for them going forward in terms of a huge growth driver. something they have done a lot in terms of trying to monetize. that is a huge area of growth going forward. when facebook was getting bad news about cambridge analytics, a lot of people don't know they have instagram, what's up, ,essenger, -- whatsapp messenger, a ton of subscribers

on these platforms, and they are slowly moving forward in terms of monetizing them, so those are huge growth drivers, especially whatsapp. emily: let's talk about this rapidly emerging social media is in thektok, which crosshairs of the u.s. government, but now this headline microsoft is and talk's u.s. operations, what do you make of that? dan: it is huge. we think that microsoft like apple. they have a tremendous amount of cash. you talked about linkedin and that acquisition that cap them into the business area, but now expanding into a market where they don't have a tremendous amount of exposure, right? we think of microsoft, their presence in gaming, on the weerprise, the cloud, but

don't think about him as a company that has any real exposure to the small, in terms of young people, we think of snap and so forth, so i think this is a good move for them if they can get it to go through, because it will give them exposure into a market that they really don't have much of a presence in right now, and they have a tremendous amount of cash. it would be a great opportunity to use it. it would add to other areas they are in. hopefully it will go through for microsoft and they will pick up tiktok's operations, and that will be a feather in their cap going forward. emily: thank you so much for joining us to weigh in on this friday for have a wonderful weekend. coming up, more big tech. we look at one company we have not mentioned there, amazon, huge numbers, expectations, what

the demand in e-commerce means for the tech giant. this is bloomberg. ♪

♪ amazon out with second-quarter results yesterday. it was a humongous quarter was showing signs the company can make money, in fact, much greater profits than expected. despite spending heavily through the pandemic. i want to bring in our guest. -- workedfor amazon for amazon for 10 years and helped it to launch its advertising business. melissa, great to have you. we would love to hear your high level takeaway from amazon's

notlts, a company we have seen big profits from, despite the money they make. what is your take? yeah, it is pretty insane. it was their largest quarterly profit in their history. i was surprised. prioritizedit, they essentials, hand sanitizer, toilet paper, the grocery business grew. they sold a lot of stuff. on the call yesterday, they said it came from a reduction in marketing, so they did stop spending on google search for 12 and other things. business grew faster than the other business, and it is much more profitable for amazon.

aws, of course, is very profitable as well. the other bucket, usually advertising, that group 41%, in-line with the advertising data we are seeing from our clients as well. dip,w that take a little either in april or may, depending on where clients were in their lifecycle inventory, but it was driven by inventory out of stock and a dip in advertising, and continued growth from there. they: i want to talk about rise of amazon's own advertising business. the pointet ceo made about how amazon is a competitive threat in the advertising business, rapidly encroaching on facebook and google in the digital advertising market. how quickly do you think amazon can catch up to him? melissa: there chair is still

small, but eating into google google's share. in a recent survey, it was 49% of product searches start on amazon, and 22% start on google. declining,y are amazon is increasing, but still a small percentage, which means there is a lot of opportunity and room. emily: last question, because amazon, obviously some interesting highlights, able to triple grocery orders, but also running out of space. people are ordering so much they don't have a place to put all of it. how does amazon confront that challenge? melissa: that to me was the biggest kind of big challenge to brands and sellers, running out of space is not a good thing. hit,we saw when covid

every day was prime day without being able to plan for it, so what that means is brands will have to scramble to have dropship capabilities, hybrid accounts. sellers may not have space for them to ship into, so a lot of brands and sellers will need alternative names to get their products into amazon. also one of the things rand manufactures are doing right now -- brandon manufactures a -- brand manufacturers are doing right now, they may not have all the colors or the units to choose. question, iquick have to ask you about jeff bezos 's performance. he was backed into a corner more than i expected and did not have some of the answers. what did you think? melissa: i think he had good

answers and deflected by saying i will look into it and it didn't have the exact answers people were looking for, but the hearings will continue, and they will be a thorn in his side for a while. i don't know if investors really care. well, melissa,t, thank you for joining us and sharing your perspective on all of that here. great to have you here on the show come especially given your inside knowledge of the workings at amazon. thank you for joining us. i want to get to some quick breaking news. james murdoch has resigned from of board of news corp., course a family company his father founded, effective immediately. james murdoch has resigned from news corp. over disagreements over certain editorial content published by the company's news outlets and strategic decisions.

we will continue to dig into this and look at the letter mr. murdoch provided to the board about his resignation and will bring you more highlights as we have them. , microsoft,tiktok twitter, the big hat, and who is behind it. ♪ save hundreds on your wireless bill

without even leaving your house. just keep your phone and switch to xfinity mobile. you can get it by ordering a free sim card online. once you activate, you only have to pay for the data you need, starting at just $15 a month. there are no term contracts, no activation fees, and no credit check on the first two lines. get a $50 prepaid card when you switch. 5g is now included with all new data options. switch and save hundreds. xfinity mobile. welcome to camp tonsafun on xfinity! it's summer camp, but in your living room. learn how to draw with a minions expert... how to build an indoor obstacle course! plus... whatever she's doing. and me, jade catta-preta. the host of e's the soup! camp tonsafun. it's like summer camp, but minus the poison ivy.

unless you own poison ivy. in which case, why? just say "summer camp" into your xfinity voice remote to join. emily: welcome back. back to tictoc. earlier, we discussed the president executive order that bytedance divested personal leadership of tiktok. inrosoft seems to be position to buy the american operations. we are also hearing about an arrest being made of the recent twitter hack of politicians and industry leaders. we want to get to kurt wagner. there are three people who are now alleged to have been a part a this operation, including

17-year-old who just graduated from high school. tell us what we know. 17-year-old who was arrested today is a florida resident. i believe he lives in tampa. he's being charged with something, i believe, 30 different felony charges for what he and a few other people ,id which was, as we now know gain access to a handful of very prominent twitter accounts. this is just the latest kind of detail to come out of that investigation. twitter actually said last night that part of what happened with the employees were due to handing over some information and credentials via phone calls. we are slowly learning bits and bits about how this came together. yes, the arrest of a 17-year-old today is the latest news on that front. emily: what does it say about

twitter's security if a 17-year-old who just graduated from high school was able to compromise this platform in such a massive and high-profile way? kurt: well, it's obviously a problem. we actually had a story earlier this week that included the phone call detail which i think is important. it just goes to show you this is not just a technical hack, this was social engineering as well. this was a very advanced way of not only getting into twitter's systems but then taking advantage of those systems once they were inside. the company has said they have cut back on how many employees actually have access to some of the systems that could reset platforms while doing this investigation. our source on monday said there were more than 1000 employees and contractors of the company that have that kind of access. this is clearly something that's a major red flag. as we head into election season,

it is something we hope twitter will clear up quickly. emily: now, i'm so curious about this tiktok news you have been following with microsoft in talks to buy tiktok's u.s. operations. how exactly would that work if microsoft bought the u.s. part of a company that is an app used by millions of people use around the world? kurt: it is incredibly complicated. i think you are asking the same questions we are asking. i think the important thing to remember here is that tiktok is basically broken up into two apps. tiktok version that is available in china. then there is tiktok which is available in many of the western countries including india. what we have seen is that they have tried to delineate between those two services even though they are very much the same product. to say that one of them is kind of contained within china and

the other is outside of that. it is unclear if this would be microsoft buying everything outside of china or there would be a third version of tiktok, a version that microsoft buys, a version for the rest of the world, and then a version in china. it is incredibly complicated and i think those are questions we are waiting to have answered. emily: meantime, the president has made his intentions or his feelings clear. how that translates into action, we don't necessarily know. earlier today, he said we are looking at tiktok, we are looking thinking of banning tiktok. what do you think he means by that? kurt: well, as our story today points out, there was the expectation he was going to come out and say you have to do vest this ownership in the app. i think that would actually solve the banning problem because if bytedance were to

sell off the u.s. version of tiktok, especially to a tech company like microsoft, a u.s.-based company, it would kind of alleviate the need for trump to do anything like a ban. because suddenly, the data would be contained here to a company in the united states. as we know from a lot of the statements he makes sometimes, it takes a couple days to parse through exactly what he means. in this case, the fact that microsoft is in talks with tiktok is a sign everyone is taking a lot more seriously than probably without a couple weeks ago. -- we thought a couple weeks ago. emily: kurt wagner, i know you will continue to follow that story and we will be watching your reporting. thanks for that update. moving on now. apple's playing field is the most uneven in the history of technology, this is according to the ceo of epic games, the maker of fortnite.

we talked to sweeney earlier this week about apple and google as a duopoly, as he calls it, and what epic is doing to create what they hope to be fairer software practices around the world. take a listen. >> first, we tried for three years to have a meeting with apple senior executives. made a dozen requests or so. they always turned us down. i sent them a letter asking for exactly the right to process her own payments on fortnite and la unch an epic games store. ultimately, they had a lawyer send us a letter saying no. that's in no way an acceptable situation for a platform for billion users. it to a gamepare

council but a smart phone and computer are really unique. use inre devices people a large part of their lives in a large part of their business, sometimes their entire business. monopoly have a tech dominating all interactions between consumers and businesses on a scale of users. it creates the same sorts of concentrations of problems, like the early trust busters who fou ght the railroad of tying services together. if you want to use our railroad, you are not allowed to ship oil because we are in the oil business. you can build your own. these are disingenuous arguments aimed at supporting unfair business practices. emily: here's what the companies are saying. google says there committed to operating in an open and principled way. apple has said the complaint

about the app store are baseless from a handful of companies who simply want a free ride, don't want to play by the same rules as everyone else. we, apple says, want to maintain a level playing field where anyone with determination and a great idea can succeed. what's your response to that? tim: i think google is in a better position than apple. google is a semiopen platform where users can install software of their choice. their agreements with oem's carriers prevent actual competition. apple is being entirely disingenuous. for example, every time we have communicated with apple about our desire for an open platform and the freedom to process our own payments, we say we want this for the whole industry. not just for ourselves. we don't want a special deal from apple, google. we want wholesale policy changes affecting all developers. apple's playing field is the

most uneven in the history of technology products. the advantages apple gives itself for the control of the operating system, and they have rules that outright say you cannot build software that competes with categories of apple apps, which we view is key to our platform. the playing field between apple music and spotify is completely uneven. apple receives 100% of revenue from their music service and then they can use that to pay artists. spotify only get 70%. in negotiating terms with artists, apple is in a 30% better position than spotify. what do you want apple to change? tim: well, two things. first of all, unbundling all of the services from each other. the software distribution service should be unbundled from the store. you can install software from the web or any other source.

the payment service should be unbundled or untied from the store itself so developers can use any payment provider they want. we support apple's right to compete as a payment provider and offer their services and be as competitive as possible. they can't exclude all of their competition. two things. number one, make ios and android real open platforms or anyone can install software. the software from other sources can operate on par with apple and google's own software. two, unbundle all of the services tied into the store, distribution service, payment processing and everything else. then, you will have a level playing field for everybody that is actually level. emily: do you think apple and google should be broken up? shouldthink that -- they

fix their policies and practices. i think we should let the market speak for itself. breaking a company up his the ultimate solution to a company that refuses to implement fair business practices. i would certainly hope cooler heads will prevail and apple and google, instead of going through the process microsoft went through -- microsoft lost a decade fighting an antitrust case. playing this passive aggressive game with their customers, with their suppliers, with the governments of the world to try to obstruct. i wish apple and google would just change their policies. i wish they would free their engineers. apple engineers know the security of ios comes from the fact they have the best operating system in the world and the best permission-based security model in the world. apple engineers know they do not need a monopoly on software distribution to protect their users from malware.

to empower thee engineers to make more of these obstructing, stop i think the tech industry can solve this problem this year. by the end of 2020, we could have google and android to competing stores and ios open to competing stores -- i think all companies would benefit. apple and google would not live the next decade fighting all the governments of the world in antitrust. ultimately, i think their services will be better from competition. look at microsoft now versus the crappy version of microsoft a couple of years after the antitrust settlement. it is a far better company. it is a much more valuable company for shareholders. most importantly, it is a fair company. emily: tim sweeney, the ceo of epic games. coming up, the likelihood of major league baseball playing a full season has dwindled with each passing day. what does it mean for the online

world of sports betting? we will talk to the ceo of fanduel next. this is bloomberg. ♪

emily: while the nba returned to action last night, major league baseball has continued to run into roadblocks. covid-19 outbreaks among two major league baseball teams, the miami marlins and st. louis cardinals, have led to more game cancellations. joining us now to discuss what this means for sports in the world of online sports betting is the ceo of fanduel, matthew king. thank you for joining us. this has been very disappointing for my son, i should add.

what is your take on how this plays out? matthew: look, i think these types of issues in baseball were inevitable. when you think about the logistics they have of traveling, the number of games, the frequency of games, stuff like this was bound to come up. it was all about how they handle it. i think there's a lot of people working very hard to try to make it safe. i'm an optimist that they will figure it out, but will probably mean tighten down on some of the restrictions and protocols they have put in place and going a step further than they have already. i think they will figure it out but there will be some bumps in the road. emily: so, how is this impacting your business in the world of online sports betting? the delay of return of sports in general? matthew: the business has actually performed very well. we have the broadest variety of sports products people can play. our business has held up very

well during this whole period. that said, people like certainty. i think you are going to see people who are sad if baseball gets disrupted. but at the end of the day, there's always things people can watch. there's plenty of european sports back. there's obviously the nba and we think the nfl will play. there will always be something for somebody to do on one of our sites. emily: as you just said, basketball restarted last night in orlando and they are taking a different approach than baseball. what kind of activity did you see on your platform compared to normal times? matthew: it was the biggest night of nba we've ever had. most number of users, most amount of handles. demand was off the charts. emily: so, how do you expect that to play out given that there's probably some pent up demand here? matthew: i think there is pent up demand but at the end of the day, it has been pent up for four or five months.

i think you will see a really busy august that rolls into nfl kicking off. i think it will have a lot less college sports and college is a huge part of that business. downnk you will see that but i think you will sports like the nba and nhl offset that loss. emily: the massachusetts senate this week dropped a big sports betting component from an economic development bill that i know you have been following closely. how optimistic -- i know you said you are an optimist -- how optimistic are you about online sports getting -- betting getting legalized in massachusetts and the rest of the country? matthew: we are very optimistic. even pre-covid, we started to see new jersey and pennsylvania a very clear up seconds -- clear acceptance that legalizing sports betting was common sense legislation. having a competitive marketplace protect consumers, raise tax

revenues and gave constituent something they wanted to do. we were seeing momentum even pro covid -- pre-covid. we think that will accelerate coming out of covid. you will certainly see states like massachusetts where idiosyncratic factors may create bumps in the road. it may create delays but when you look at aggregate, we think you will see a lot more online gaming as well. how are your customers evolving in this pandemic? are you seeing new kinds of people given that other outlets may not be available to them in terms of entertainment? matthew: we have seen some retail shift. in our online casino business and online horse racing business, both of those verticals have a big chunk of the market that has gone past retail and brick-and-mortar. when those closed down, we saw a big chunk of retail first customer show up.

even as retailer was reopening, we are keeping that business as well. they: how is fanduel of all it strategy to meet new kinds of demand in the midst of continued uncertainty? the virus is researching across the u.s. and in different places around the world. if there's one thing we know about the next six months is we don't know what those months will hold. matthew: a lot of what we are doing is trying to expand our product offering. i have been proud of the creativity as a team and a lot of creativity comes in the form of free to play games. the beauty of free to play is you can do them quickly. you have a lot more latitude in terms of what you can do. the mission we have given our team's key people engaged and give them something to do during there's not a lot to do or other forms of entertainment. our biggest focus has been on expanding our product offering to make sure we can account for any eventuality. emily: what kind of new products

are you talking about or thinking about? matthew: we have done everything from the depths of the pandemic when there was almost no sport on. we were doing a lot around e-sports and that was a lot of fantasy e-sports. we are also doing a lot of free to play games. nfl around simulated seasons or mlb games, where people were building fantasy lineups based on historic stimulations -- simulations. it is all about creating a way for people to be entertained. that the you imagine sports business will be forever changed by this? if so, how? matthew: i think the biggest impact on the sports business is returny going to be the to stadiums and full stadiums will take time. not because public health reasons, but i think there will be a chunk of people that are uncomfortable and crowded spaces.

challenges will see around attendance for a longer time. i think probably the biggest ande is the acceleration cord cutting that is occurring during covid will change how people consume sports. you will see a lot more streaming of sports and a lot more changes in how people consume sports media. i think that will probably be the most lasting change. emily: interesting. we will be following all of that. matthew king, thank you for joining us. good to have you back here on the show. , i month, coming up after china's sweeping security law, what is happening in hong kong? we will take a look next. this is bloomberg. ♪

emily: finally, we turn to a developing story out of hong kong where there is growing opposition to hong kong chief executive carrie lam's latest announcement that the september legislative council election will be delayed by a year because of the pandemic. --h more, bloomberg's corp. bloomberg stephen engle. stephen: carrie lam says she ordered september's slate of counsel alleges that election postponed for one year in order to ensure public safety amid a third wave of coronavirus outbreak. we had 121 new cases friday on top of a record search on

thursday. democracytion pro canada not buying the reasoning. they say the delay is intended to rob pro-democracy candidates of momentum after the implementation of the highly controversial national security law one month ago. the postponement follows the disqualification of 12 pro-democracy candidates and the arrests as well the day before that of some for people who are accused by hong kong authorities of promoting self-determination for hong kong on the internet. it caps on a week of new redlines being set by the hong kong government on the level of dissent that they will allow. stephen engle, bloomberg news. emily: be sure to catch bloomberg television's one hour television hong kong on edge 2, 7 p.m. in new york and airing throughout the weekend. i want to tell you about those headlines. james murdoch, rupert murdoch'

s son, has resigned from the board of news corp., citing disagreement over editorial content and other strategic decisions. news, the owns fox wall street journal and other assets. ♪ assets. ♪

david: building a bridge, but is it to recovery or an economic bridge to nowhere? this is bloomberg wall street week. i'm david westin. this week, special contributor larry summers of harvard. starbucks ceo kevin johnson. gm's cfo. >> we are cautiously optimistic on the recovery of the industry overall. and clearly, a very fluid environment. david: michael parolee of jp morgan. gdp will be of 5% or below. we believe there will be permanent damage to the economy. david: former ibm ceo and wall street week contributor sam palma sono. sam: