Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Available-for-sale debt securities

The following tables summarize our debt securities, for which we did not elect the fair value option, by significant investment categories as of December 31, 2019 and June 30, 2020 (in millions):

	As of December 31, 2019
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	2,294	$	0	$	0	$	2,294	$	2,294	$	0
Government bonds	55,033		434		(30)		55,437		4,518		50,919
Corporate debt securities	27,164		337		(3)		27,498		44		27,454
Mortgage-backed and asset-backed securities	19,453		96		(41)		19,508		0		19,508
Total	$	103,944	$	867	$	(74)	$	104,737	$	6,856	$	97,881

	As of June 30, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
	(unaudited)
Level 2:
Time deposits(1)	$	3,588	$	0	$	0	$	3,588	$	3,588	$	0
Government bonds	55,913		1,098		(2)		57,009		1,218		55,791
Corporate debt securities	23,277		715		(5)		23,987		0		23,987
Mortgage-backed and asset-backed securities	16,398		373		(14)		16,757		0		16,757
Total	$	99,176	$	2,186	$	(21)	$	101,341	$	4,806	$	96,535

(1)The majority of our time deposits are domestic deposits.

Investments by maturity date

The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities (in millions, unaudited):

	As of June 30, 2020
Due in 1 year or less	$	24,027
Due in 1 year through 5 years	60,253
Due in 5 years through 10 years	1,993
Due after 10 years	12,571
Total	$	98,844

Schedule of unrealized loss on debt securities

The following tables present fair values and gross unrealized losses recorded to AOCI as of December 31, 2019 and June 30, 2020, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):

	As of December 31, 2019
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	6,752	$	(20)	$	4,590	$	(10)	$	11,342	$	(30)
Corporate debt securities	1,665		(2)		978		(1)		2,643		(3)
Mortgage-backed and asset-backed securities	4,536		(13)		2,835		(28)		7,371		(41)
Total	$	12,953	$	(35)	$	8,403	$	(39)	$	21,356	$	(74)

	As of June 30, 2020
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(unaudited)
Government bonds	$	3,152	$	(2)	$	14	$	0	$	3,166	$	(2)
Corporate debt securities	1,043		(3)		9		0		1,052		(3)
Mortgage-backed and asset-backed securities	824		(10)		269		(4)		1,093		(14)
Total	$	5,019	$	(15)	$	292	$	(4)	$	5,311	$	(19)

Gains and losses on equity securities

Gains and losses recorded in other income (expense), net, for our marketable and non-marketable equity securities are summarized below (in millions, unaudited):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2020		2019		2020
Net gain on equity securities sold during the period	$	80	$	18	$	130	$	233
Net unrealized gain on equity securities held as of the end of the period(1)	2,619		1,437		3,652		408
Total gain recognized in other income (expense), net	$	2,699	$	1,455	$	3,782	$	641

⁽¹⁾Includes net gain related to non-marketable equity securities of $890 million and $91 million for the three months ended June 30, 2019 and 2020, respectively. Includes a net gain of $1.3 billion and a net loss of $850 million for the six months ended June 30, 2019 and 2020, respectively.

Cumulative net gains on equity securities sold

	Equity Securities Sold
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2020		2019		2020
Total sale price	$	389	$	590	$	629	$	1,499
Total initial cost	207		424		327		685
Cumulative net gains	$	182	$	166	$	302	$	814

Summary of unrealized gains and losses for marketable and non-marketable equity securities

The carrying values for our marketable and non-marketable equity securities are summarized below (in millions):

	As of December 31, 2019
	Marketable Securities		Non-Marketable Securities		Total
Total initial cost	$	1,935	$	8,297	$	10,232
Cumulative net gain(1)	1,361		3,056		4,417
Carrying value	$	3,296	$	11,353	$	14,649

⁽¹⁾Non-marketable securities cumulative net gain is comprised of $3.5 billion unrealized gains and $445 million unrealized losses (including impairment).

	As of June 30, 2020
	Marketable Securities		Non-Marketable Securities		Total
	(unaudited)
Total initial cost	$	2,358	$	9,173	$	11,531
Cumulative net gain(1)	2,136		2,106		4,242
Carrying value	$	4,494	$	11,279	$	15,773

⁽¹⁾Non-marketable securities cumulative net gain is comprised of $3.9 billion unrealized gains and $1.8 billion unrealized losses (including impairment).

Marketable equity securities

The following table summarizes marketable equity securities measured at fair value by significant investment categories as of December 31, 2019 and June 30, 2020 (in millions):

	As of December 31, 2019				As of June 30, 2020
	Cash and Cash Equivalents		Marketable Securities		Cash and Cash Equivalents		Marketable Securities
					(unaudited)
Level 1:
Money market funds	$	4,604	$	0	$	4,752	$	0
Marketable equity securities(1)	0		3,046		0		3,597
	4,604		3,046		4,752		3,597
Level 2:
Mutual funds	0		250		0		897
Total	$	4,604	$	3,296	$	4,752	$	4,494

(1) The balance as of December 31, 2019 includes investments that were reclassified from non-marketable equity securities following the initial public offering of the issuers.

Summary of unrealized gains and losses for non-marketable equity securities

The following is a summary of unrealized gains and losses recorded in other income (expense), net, and included as adjustments to the carrying value of non-marketable equity securities (in millions, unaudited):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2020		2019		2020
Unrealized gains	$	962	$	189	$	1,418	$	545
Unrealized losses (including impairment)	(72)		(98)		(138)		(1,395)
Total unrealized gain (loss) for non-marketable equity securities	$	890	$	91	$	1,280	$	(850)

Schedule of gross notional amounts of derivative instruments

The gross notional amounts of our outstanding derivative instruments were as follows (in millions):

	As of December 31, 2019		As of June 30, 2020
			(unaudited)
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts
Cash flow hedges	$	13,207	$	7,245
Fair value hedges	$	455	$	458
Net investment hedges	$	9,318	$	9,253
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	$	43,497	$	30,918
Other contracts	$	117	$	2,634

Schedule of derivative instruments

The fair values of our outstanding derivative instruments were as follows (in millions):

		As of December 31, 2019
	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts	Other current and non-current assets	$	91	$	253	$	344
Other Contracts	Other current and non-current assets	0		1		1
Total		$	91	$	254	$	345
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	173	$	196	$	369
Other Contracts	Accrued expenses and other liabilities, current and non-current	0		13		13
Total		$	173	$	209	$	382

		As of June 30, 2020
	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
		(unaudited)
Derivative Assets:
Level 2:
Foreign exchange contracts	Other current and non-current assets	$	148	$	197	$	345
Other contracts	Other current and non-current assets	0		17		17
Total		$	148	$	214	$	362
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	172	$	45	$	217
Other contracts	Accrued expenses and other liabilities, current and non-current	0		283		283
Total		$	172	$	328	$	500

Schedule of gain (loss) on derivative instruments

The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income ("OCI") are summarized below (in millions, unaudited):

	Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2020		2019		2020
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	$	(42)	$	(44)	$	(48)	$	368
Amount excluded from the assessment of effectiveness	11		(49)		(19)		3
Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	(83)		(121)		(19)		(41)
Total	$	(114)	$	(214)	$	(86)	$	330

 The effect of derivative instruments on income is summarized below (in millions, unaudited):

	Gains (Losses) Recognized in Income
	Three Months Ended
	June 30,
	2019				2020
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded	$	38,944	$	2,967	$	38,297	$	1,894
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	85	$	0	$	140	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	23		0		11		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0		(13)		0		9
Derivatives designated as hedging instruments	0		13		0		(9)
Amount excluded from the assessment of effectiveness	0		10		0		1
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		57		0		33
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	0		95		0		(69)
Other Contracts	0		0		0		(211)
Total gains (losses)	$	108	$	162	$	151	$	(246)

	Gains (Losses) Recognized in Income
	Six Months Ended
	June 30,
	2019				2020
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded	$	75,283	$	4,505	$	79,456	$	1,674
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	213	$	0	$	166	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	32		0		34		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0		9		0		(8)
Derivatives designated as hedging instruments	0		(9)		0		8
Amount excluded from the assessment of effectiveness	0		20		0		2
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		111		0		111
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	0		(154)		0		160
Other Contracts	0		0		0		(239)
Total gains (losses)	$	245	$	(23)	$	200	$	34

Offsetting assets

Offsetting of Assets

	As of December 31, 2019
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Non-Cash Collateral Received		Net Assets Exposed
Derivatives	$	365	$	(21)	$	344	$	(88)	(1)	$	(234)	$	0	$	22
	As of June 30, 2020
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Non-Cash Collateral Received		Net Assets Exposed
	(unaudited)
Derivatives	$	397	$	(35)	$	362	$	(203)	(1)	$	(101)	$	(22)	$	36

(1)The balances as of December 31, 2019 and June 30, 2020 were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with our master netting agreements.

Offsetting liabilities

Offsetting of Liabilities

	As of December 31, 2019
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Non-Cash Collateral Pledged		Net Liabilities
Derivatives	$	390	$	(21)	$	369	$	(88)	(2)	$	0	$	0	$	281
	As of June 30, 2020
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Non-Cash Collateral Pledged		Net Liabilities
	(unaudited)
Derivatives	$	535	$	(35)	$	500	$	(203)	(2)	$	(2)	$	(263)	$	32

⁽²⁾ The balances as of December 31, 2019 and June 30, 2020 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.