>> from the heart of where money, innovation and power collide. in silicon valley and beyond, this is bloomberg technology

with emily chang. emily: i am emily chang in san francisco and this is bloomberg technology. alphabet's earnings mostly in line with estimates. a sigh of relief for those concerned about the digital ad market but the same can't be said for microsoft which posted the slowest sales growth since 2020. we will look into these mixed results. plus the $52 billion chips that it one step closer to president biden's desk. u.s. tech companies will not have to rely so much on taiwan where house speaker nancy pelosi

may be next month. and more scrutiny for cryptocurrencies, the sec is investigating coinbase over possible trading of unregistered securities. accusing a former coinbase manager of insider trading just last week. we will have all the details. we will exert -- we will get to all of that in a moment. let us start with microsoft and the parent company of google, alphabet. ed ludlow at the top lines from the quarter. >> we are actually a touch higher. 3/10 of 1% after microsoft missed on the top and bottom line here. the story is the stronger dollar is impacting overseas revenue and profit but we are also seeing a bigger than expected pullback in spending and cloud and software services. 12% growth but not the growth we have been used to in this

pandemic. alphabet missed on every top and bottom line metric apart from one. the one that mattered. advertising revenue coming in better than expected. a concern after we had snapper earnings last week was that this was a tough advertising market. search ads held up really well. there was some modest growth in youtube as well but in other areas, alphabet did struggle. it was also interesting to see names like meta and pinterest also riding -- rising in after hours. this is where we finished the day during the tuesday session. this is ahead of the key fed decision on wednesday when we will find out by how much rates go up. amazon, it was a really big drag.

>> what are your big picture takeaways? their results are looking somewhat better. >> i think that there were never misses across the board. i think people have been waiting to see where we had that inflection point. where the beats stop. the market has been selling like these companies have not been performing for the past few quarters. you have the ukraine, russia, all of these shutdowns. they are pretty narrow misses on the top and bottom line.

the cloud number at 40% is still good. this is something i have been looking to. it just seems like narrow misses everywhere. it has slowed. >> shopping indeed. i am expecting to get even more color. this is the best way to

characterize what we are seeing. what she talked about is there are a variety of factors at play here. it is challenging. >> some of the numbers indicate there is still strength. all of these numbers -- we thought that all of this digital transformation, these numbers are better. there is decelerated growth for both google and microsoft but they are up on a year-over-year basis. people are spending more money on technology, more money on advertising when we thought the market was growing at an explosive rate. now we are entering the slowdown. we have interest rate hikes. i think some of the reason there is some enthusiasm about these misses is we have been waiting for this.

we have been waiting to see some of the monetary policy that has come in place. having guidance start to slow down and saying some of what happening is working. i still into enterprise tech and e-commerce tech. we have become hyper pandemic -- focused on them in the pandemic. the companies will want to wade their way through this slowing economy. this will be having them look to scale their businesses with less big overhead resources and slowed hiring which means technology will have to take the brunt of the weight. >> when it came to advertising specifically, she talked about the growth driven by travel.

this is challenging to disaggregate. what do you make of that? is google somehow immune to this given that it is such a broad-based business? >> the numbers indicate that there is prioritization. so google seems to be above the fold whereas we saw what happened to snap and what happens to meta over the past few quarters where there has been more call back. they are seeing more pullback as well but that is more so deceleration. the indicators here is that companies that will go online still believe that google is their best bet if not one of their best bets and that is why we are continuing to see them spend their. i think companies are seeing that across the board. this is a.

of economic slowdown. you cannot entirely save your way through growth in the future. you may want to get a handle about what is going on in there. there are so much consistency in the data. we are having a hard time making final decisions. the fed is having a hard time, the markets are having a hard time. we are seeing some numbers look good and some numbers look credibly bad. >> clearly microsoft is having a hard time. focusing on engagement and the experience. this is challenging the circumstances to separate it out.

twitter and elon musk are fighting about the start date for the delaware trial. twitter wants to begin october 10. musk is asking for october 17. a lawyer says the social media platforms is not producing the requested documents in a timely way. he says twitter is resisting turning over raw data, causing a logjam in the production of evidence the defense needs. coming up, the senate sent to vote on the all important ships act. this is amid rising tensions between the u.s. and china. the tension in d.c. next, this is bloomberg. ♪

>> today, the senate advances $52 billion that would bolster the semiconductor industry. this comes as nancy pelosi seems dead set on visiting taiwan next

month. the chinese government has not considered taiwan to be part of the -- of its territory. let's start with the ships act. how close are we? >> the senate has cleared to procedural votes. they are looking at doing that. there are a lot of senate rules about timing and stuff that prevents them from doing it right now but at this point it seems like they have the votes. we have seen a lot of bipartisan support for this one. we will have some support to clear the senate. we will promise a quick vote on this.

this is something that people want to get done. especially as the house is scheduled to leave town on friday for a long recess. >> difficult to isolate but how will this particular bill impact u.s. china tensions? >> this bill initially started off as something that was meant to bolster u.s. competitiveness with china and it will student -- it will student -- it will still do that in some regard. it is not really the strong anti-china bill it was at the beginning. most provisions got stripped out in the interest of time and getting something done quickly. there are not that many days left for lawmakers to do work. this is probably more of a china friendly bill that will be -- that we are seeing. biden said he would be speaking with the chinese president within the next 10 days. something that will be coming up

during the call is nancy pelosi's proposed trip to taiwan. >> on this proposed trip to taiwan, it would be the first of its kind in 25 years. we heard these warnings from the chinese government, do not come. but it seems like this trip is going to happen. what do you make of this and how this trip will impact the u.s. china relationship? >> president biden was a little hesitant on pelosi going on this trip. but you heard a lot of lawmakers from her own party and republicans saying that pelosi should not back down to china and should not back down to beijing's concerns and should absolutely go. you heard mitch mcconnell say that pelosi would be handing china a victory if she were to cancel her trip now. it seems like at this point even though the executive branch is a little bit timid about what the fallout of this trip could be, a lot of pelosi's colleagues are

absolutely supporting this trip. >> emily wilkins at the capitol. thank you. another twist in the story, alibaba will seek a primary listing in hong kong, paving the way for investors in china to directly buy shares in the company. this will also entrench hong kong as an alternative. pedro, i remember interviewing jack ma on the floor of the new york stock exchange. here we are, years later, alibaba proposing the secondary listing. why now? >> thank you for having me. first, they are getting punished by domestic practices.

on the secondhand, this is because of all of these holding companies. all of this unless they apply clear auditing rules. this move is first and foremost a hedge against delisting. but it can also help with the domestic regulatory risk. just a few months ago, the vice premier, he expressed china's willingness to incorporate on this issue.

on the domestic regulatory front , i think that we have seen some positive signs lately regarding the easing of the tech crackdown. i think by making these moves, alibaba can probably win some positive favor from china's regulators. >> what do you think this means for other u.s. listed chinese companies? will we see a slew of listings? >> this will encourage the chinese adr companies to follow suit from e-commerce platforms.

>> what do you see is next year in terms of alibaba's evolving relationship with the chinese government? >> i think alibaba is definitely trying to work closer in many regards. over the next few months, we will continue to see this large internet companies working closely with regulators to avoid all of these regulatory risks that we face as investors over the last two years.

>> thank you so much for joining us. meantime, we are following new headlines. twitter is setting a date for a special shareholder vote on the proposed takeover by elon musk for $44 billion. elon musk is trying to get out of this deal altogether. they are fighting over the date for the trial to start. twitter now set the date at september 13 after a special meeting with shareholders. interesting given that elon musk does not want this deal to go forward. we have the trial coming up sometime in october. walmart cuts its profit outlook. shopify now cutting jobs as well. what does the future hold for e-commerce and a potential recession? we will talk about all of that and more next, this is bloomberg. ♪

>> can walmart surprise posco to its profit spell doom for e-commerce? this is all due to the rising cost of food and gas. john edwards joined is not to talk about the state of the e-commerce industry and on top of these numbers from walmart, we see shopify cutting 10,000 jobs. this is that has been riding high over the past couple of years. >> shopify made a big bet that the big shift to e-commerce that

we saw during the height of the pandemic is going to be long-lasting and in fact it accelerates faster than anybody had expected before covid. that bet turned out to be completely wrong. they thought people were not going to go back to in person shopping at the pace that they did but people have flocked back to stores and so that led to shopify having to cut a bunch of jobs. >> what does this indicate about amazon results we are expecting later this week? cracked that will be interesting to watch in light of what we heard from walmart. what walmart is seeing there is that it is not so much that spending overall is slowing down but that the mix is shifting in no way that is going to cut into their margins. people are spending less on big-ticket items, less on

discretionary splurge items and shifting their spending to food, fuel, things that are staples that people have to have. that is where walmart's profits came from. the mix is such that it will be much less profitable. that will definitely be something to watch from amazon on thursday because amazon obviously likes to sell a lot of those same big-ticket items people are starting to shy away from. >> we were speaking about this with respect to alphabet and microsoft earnings earlier. we are seeing mixed results, slightly below estimate result. it is causing some confusion

about whether or not we are already in a recession. are we? >> i would say no for now. it is less a complete slow down and spending. high inflation is biting everyone and changing the priorities people have in terms of what they are spending on. companies like mcdonald's, pepsico a couple of weeks ago, people are still spending. people are buying soda, chips and things. it is more of a change in the mix and less a complete slow down. >> the story is not over. we will be watching those amazon results coming out later this week.

thank you so much. we appreciate your insights. another story we are washing, russia says it will opt out of the international space station after 2024. they are planning on focusing on building their own orbital outposts according to the new space chief. this move coming amid tensions between russia and the west over the war on ukraine. russia says it will fulfill its obligation to its partners before he leaves the project. they are scheduled to be decommissioned anyway by 2023. coming up, an update on the state of somewhere. the impact this has had on cybercrime. we will break it all down with wendy litan more. this is bloomberg. ♪

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>> welcome back to bloomberg technology.

i am emily chang in san francisco. microsoft and alphabet the rest of the mega cap tech stocks. >> investor reaction is interesting. you look at microsoft down .2%. what is interesting about it is they that it was a mixed bag. 1% weaker than expected. microsoft executives saying that the number is $100 million and $100 billion deals. it hit a record. they are calling it healthy growth. shares are still higher. 2.7% after hours on tuesday. the real focus is on search. they are talking about how travel in particular has driven a lot of the search activity on google which has helped hold up some of those cuts in the travel sector that are showing worrying

signs. these two stocks have felt some pain. not as bad as the mega pack. we are looking to find the bottom in this market. one of the earnings -- they have a hand in everything. it is over the strong outlook for the current quarter. it has changed the mindset. texas instruments, according to their outlook, things are looking robust. >> i want to dig into the state of cybersecurity and palo alto networks threat intelligence. they are at with a new report into cybercrime trends and prediction and the impact of declining economic positions. how are these two connected? let's ask the head of the palo alto unit.

cyberattacks, cyber threats seem to be quieter at the moment. why is that? >> it does seem that way. i don't know that that is actually the case. we have not seen these mega breaches posted in the news. that is usually good news that we are not seeing as many of these massive leaks. they are being extorted every four hours. we see new victims being posted on these sites. >> there could be an uptick in cybercrime because of the deteriorating situation in the economy. we have been reporting more bad news weather is reports from microsoft or walmart or shopify. talk to us about how we will have an impact on cybercrime. >> what we see is whenever there is money to be made, there are

criminals that are attracted to that opportunity. in over 600 cases, we saw payment requests as high as 30 million u.s. dollars. the average is 925,000 u.s. dollars. we are almost at a million dollars as an average payment. there is a tremendous amount of money to be made. to your point, there is still a much lower barrier to entry for the criminal side then the defense side. the average dwell time is 28 days. that means the longer they are in an environment, the more damage they can cause and that damage correlates to the money they can receive on the back end. >> china is preparing for has

bigger nancy pelosi to visit. we are seeing alibaba prepare for a stock listing in hong kong. i am furious if you are expecting rising u.s. and china attention to lead to an increase in cybercrime as well? >> i think the reality is we have seen a tremendous amount of intellectual property theft coming from different nationstates throughout the world. they are alongside so many other countries. we do see there is an interesting amount of overlap between these cases and certainly nationstate activity. as recent as last week we saw our team released research

according to ransomware cases so i don't think cyber criminal activity is going away anytime soon, whether it is at the economic crime after, we will continue to see more of the. >> what is the relationship with the crypto market? we have seen extreme volatility in the crypto market. as i understand it, that can also be tied to ransomware. >> i think you are seeing massive amounts of money to be made in cybercrime and cryptocurrency has been one economic source that has really fueled that. the fbi points this out as $43 billion. u.s. dollar losses that have occurred over the last six years in these cases. when you compare that to what we are seeing, payments made last year for our clients alone, there is certainly a lot of

money that is transacting and much of that is occurring over cryptocurrency. i think there is a lot of pressure going on from the u.s. government and working with so many international governments to make it more difficult for cyber criminals to use cryptocurrency easily and as badly as they have in the past. we are hoping that continues to have a positive impact for organizations throughout the world. >> all right wendy, great to have you. it is the first major effort by u.s. congress to regulate big tech since the internet. lawmakers can vote before midterm elections. this measure would laid down ground rules for domino companies like amazon, apple and meta. i spoke with the alphabet cfo and asked her about the various antitrust proposals. she says the proposals could break a wide variety of services

and others we offer. we are very focused on what could be landed and we are seeing progress. we are focused on places like privacy legislation and updated protection from children. coming up, coinbase and the fcc at it again. why is it so hard to answer that question? we will break it down, next. this is bloomberg. ♪

>> congress wants to opine on

this, they want to try to find a pathway forward. instead of doing this regulation by enforcement, we should be looking at the legislative process and the open executive order. to really think through this from a public policy perspective. >> bloomberg has learned the crypto platform is facing a u.s. investigation into its crypto listing. the americans will trade the digital assets that should have been listed as securities. also, our bloomberg crypto contributor as well. what is the sec -- fcc contending here?

it could be a big deal. it is coming at a time when a lot of exchanges don't offer any securities. all of the tickets on their platforms are commodities. >> why is it so confusing? why is it so hard to answer that question? >> think about how many renditions this argument has taken. whether you are talking about entities or ipos. the token is south. this is when i really started to get very contentious in the industry and agencies.

there was u.s. when they launch certain product. >> to allison's point, a lot of this is being done through enforcement rather than rulemaking itself. what is a currency, what is a commodity and what is a security? it will be very difficult. >> allison, is this connected to the disk what is the ongoing investigation into coinbase's separate. in the complaint last week, that dealt with a former coinbase

employee leaving information to their friend. they did identify -- there is this other probe that predates those allegations. at the time i was talking to people who said this has an effect on coinbase as well. if coinbase is listing seven of them, it is kind of a backdoor way of saying they need to register. he thinks a lot of these exchanges are often securities. >> what are the next steps?

>> the next steps are interesting. if you look back, the evolving regulatory landscape would be a risk factor for investors. look how much it has been one. coinbase because the stock dropped 20%. the market cap has come down so much. stock exchanges have with the industry likes to think of as quasi-regulatory powers. when you look at these big crypto exchanges which are the primary way to regulate the industry or oversee it, where they look like stocks in the future? will they be more subject to fec -- fcc oversight? will they have more claim over some of these assets as commodities instead?

it is an open question. it will be played out in court in a lot of cases. >> any precedent for this good land? >> none at all because digital assets are sown in. >> not a lot of precedent here in terms of whether digital assets are securities. this is the first time we have really seen the fcc come out and list specific tokens. it is kind of a rare move for the agency. normally they stray away from making specific identifications partly because it is not really in the interest to pigeonhole themselves into these assets or securities. it gives them a little bit more

leeway. >> thank you for clarifying a very confusing situation. thank you both. coming up, airlines are losing more luggage than ever. can they save you from losing your stuff forever? this boiler, not really. that is next. this is bloomberg. ♪

>> the economy is catching up to apple for the first time in a while, it feels like the iphone maker is especially vulnerable to outside economic factors like rising inflation, increasing interest rates and the fluctuating u.s. dollar. the company will report third -- third quarter earnings that many

analysts anticipate will come in about flat from last year. apple reported about 36% year-over-year growth. analysts anticipate apple reporting revenue of $82 billion with about 39 billion of that coming from the iphone, under 20 billion coming from services and 7 billion from the ipad. 8.5 billion coming from the mac and 8.8 billion coming from popular accessories like the airpods and avalanche. these are impressive numbers. some analysts and investors will be concerned about the lack of real growth. apple is expecting a negative hit of about $8 billion to third quarter revenue due to china shutdowns related to covid earlier this year and the ongoing ship shortage. this week's report comes amid the companies plan to slow hiring and spending in some divisions next year as it grapples with the possibility of a recession. morgan stanley -- morgan stanley

and wells fargo have cut their apple stock price target given ongoing concern about consumer spending in the near term. i don't believe any of these are real long-term issues when we consider apple's big product plans for the end of 2022 and into 2023. this will include four new iphone 14 models, new ipads and several new macs. i am mark gurman, this is power on. >> you can subscribe to the weekly power newsletter at bloomberg.com. airlines around the world mishandled 28 million bags of luggage every year. that is just one estimate. it could be significantly higher this year as airports struggle with high demand and fewer employees. now people can use trackers to keep an eye on their belongings. knowing where the suitcase is by not be enough to help you get it back.

you just took a nice trip to europe. >> we are pulling out and a guy across the aisle is waving his phone urgently. he could tell that he was one of the victims of the current chaos. i did wonder if other people are doing this and it turns out they are. knowing where your bag is does not ensure that you will be reunited with it. >> it is right behind that wall. why is this happening? >> that is one way we are it can be useful. these contractors are so overwhelmed right now. that can be useful.

why are they overwhelmed? a lot of businesses were not prepared for the resumption of normal travel activity. >> do you use air tags and tile russian mark >> i kind of came out of this convinced that even though you might not be able to do anything about your missing values, putting an air tag in luggage if you have to check it is a good idea. you might not want to wait that extra hour in the airport if you know your bag is not there but if you will check a bag, you will be at the mercy of the airline. >> don't put anything important in it. i want to ask you about this, microsoft not good, alphabet, slightly below estimates.

she used the word uncertainty multiple times. she says there are so many different factors at play here. the word we are using to talk about this is uncertainty. what is your take away? >> compared to the bloodbath of last week, today has been a virtual celebration. headwinds, uncertainty when it comes to buying behavior, when it comes to advertising behavior, the cloud spending is a little bit below expected of microsoft and google and then you have this currency question with a strong u.s. dollar and the lower value of oversee sales. i think it will weigh on all the big tech companies. >> you covered some big economic cycles. are we in a recession or not? how will this impact big tech? what are you watching?

>> i am the farthest thing from an economic evangelist here. i think for amazon, we will look at e-commerce sales, cloud growth, aws and seeing a little bit of a spending pullback. these big tech companies are very well whipped to whether this. i don't think they will have that significant of a problem longer-term. it is the companies that seem engulfed in the turmoil that is very vulnerable. >> who is to say that apple was depends on device sales significantly is not going to feel the impact of this? >> they probably will. mark gurman has written a lot about that, the strength of the apple model, the health of the ios ecosystem seems so much

stronger right now. i don't personally imagine a protracted fall back. >> thank you. that does it for this edition of bloomberg technology. tomorrow we will speak with mitchell green. all of this after spotify result and what he has to say about tiktok and meta-'s continued competition. i am emily chang in san francisco. this is bloomberg. ♪

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