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Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

The following tables summarize our debt securities, for which we did not elect the fair value option, by significant investment categories (in millions):


	As of December 31, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	3,564	$	0	$	0	$	3,564	$	3,564	$	0
Government bonds	55,156		793		(9)		55,940		2,527		53,413
Corporate debt securities	31,521		704		(2)		32,223		8		32,215
Mortgage-backed and asset-backed securities	16,767		364		(7)		17,124		0		17,124
Total	$	107,008	$	1,861	$	(18)	$	108,851	$	6,099	$	102,752


	As of June 30, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	6,311	$	0	$	0	$	6,311	$	6,311	$	0
Government bonds	50,959		497		(50)		51,406		404		51,002
Corporate debt securities	34,476		444		(41)		34,879		0		34,879
Mortgage-backed and asset-backed securities	17,098		199		(33)		17,264		0		17,264
Total	$	108,844	$	1,140	$	(124)	$	109,860	$	6,715	$	103,145

(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 by stated contractual maturity dates (in millions):


	As of June 30, 2021
Due in 1 year or less	$	20,663
Due in 1 year through 5 years	69,749
Due in 5 years through 10 years	3,297
Due after 10 years	12,245
Total	$	105,954

Schedule of unrealized loss on debt securities

The following tables present fair values and gross unrealized losses recorded to AOCI, 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, 2020
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	5,516	$	(9)	$	3	$	0	$	5,519	$	(9)
Corporate debt securities	1,999		(1)		0		0		1,999		(1)
Mortgage-backed and asset-backed securities	929		(5)		242		(2)		1,171		(7)
Total	$	8,444	$	(15)	$	245	$	(2)	$	8,689	$	(17)


	As of June 30, 2021
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	19,730	$	(50)	$	0	$	0	$	19,730	$	(50)
Corporate debt securities	9,681		(24)		0		0		9,681		(24)
Mortgage-backed and asset-backed securities	5,044		(32)		174		(1)		5,218		(33)
Total	$	34,455	$	(106)	$	174	$	(1)	$	34,629	$	(107)

Gains and losses on equity securities

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Net gain (loss) on equity securities sold during the period	$	18	$	138	$	233	$	506
Net unrealized gain (loss) on equity securities held as of the end of the period	1,437		2,634		408		7,103
Total gain (loss) recognized in other income (expense), net	$	1,455	$	2,772	$	641	$	7,609

In the table above, net gain (loss) on equity securities sold during the period reflects the difference between the sale proceeds and the carrying value of the equity securities at the beginning of the period or the purchase date, if later.

Cumulative net gains (losses) on equity securities sold


	Equity Securities Sold
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Total sale price	$	590	$	2,629	$	1,499	$	3,353
Total initial cost	424		409		685		766
Cumulative net gains(1)	$	166	$	2,220	$	814	$	2,587

(1)Cumulative net gains excludes cumulative losses of $684 million resulting from our equity derivatives, which hedged the changes in fair value of certain marketable equity securities sold during the second quarter of 2021. The associated derivative liabilities arising from these losses were settled against our holdings of the underlying equity securities.

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, 2020
	Marketable Securities		Non-Marketable Securities		Total
Total initial cost	$	2,227	$	14,616	$	16,843
Cumulative net gain (loss)(1)	3,631		4,277		7,908
Carrying value(2)	$	5,858	$	18,893	$	24,751

(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $6.1 billion unrealized gains and $1.9 billion unrealized losses (including impairment).

(2)The long-term portion of marketable equity securities of $429 million is included within other non-current assets.


	As of June 30, 2021
	Marketable Securities(2)		Non-Marketable Securities		Total
Total initial cost	$	2,662	$	14,743	$	17,405
Cumulative net gain (loss)(1)	4,208		8,730		12,938
Carrying value(2)	$	6,870	$	23,473	$	30,343

(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $10.4 billion unrealized gains and $1.7 billion unrealized losses (including impairment).

(2)The long-term portion of marketable equity securities of $591 million is included within other non-current assets.

Marketable equity securities

The following table summarizes marketable equity securities measured at fair value by significant investment categories (in millions):


	As of December 31, 2020				As of June 30, 2021
	Cash and Cash Equivalents		Marketable Securities		Cash and Cash Equivalents		Marketable Securities
Level 1:
Money market funds	$	12,210	$	0	$	9,516	$	0
Marketable equity securities(1)(2)	0		5,470		0		6,514
	12,210		5,470		9,516		6,514
Level 2:
Mutual funds	0		388		0		356
Total	$	12,210	$	5,858	$	9,516	$	6,870

(1)The balance as of December 31, 2020 and June 30, 2021 includes investments that were reclassified from non-marketable equity securities following the commencement of public market trading of the issuers or acquisition by public entities (certain of which are subject to short-term lock-up restrictions).

(2)As of December 31, 2020 and June 30, 2021 the long-term portion of marketable equity securities of $429 million and $591 million, respectively, is included within other non-current assets.

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):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Unrealized gains	$	189	$	1,852	$	545	$	5,128
Unrealized losses (including impairment)	(98)		(65)		(1,395)		(67)
Total unrealized gain (loss) for non-marketable equity securities	$	91	$	1,787	$	(850)	$	5,061

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, 2020		As of June 30, 2021
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts
Cash flow hedges	$	10,187	$	15,941
Fair value hedges	$	1,569	$	2,578
Net investment hedges	$	9,965	$	10,167
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	$	39,861	$	43,795
Other contracts	$	2,399	$	2,933

Schedule of derivative instruments

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


		As of December 31, 2020
	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	$	33	$	316	$	349
Other contracts	Other current and non-current assets	0		16		16
Total		$	33	$	332	$	365
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	395	$	185	$	580
Other contracts	Accrued expenses and other liabilities, current and non-current	0		942		942
Total		$	395	$	1,127	$	1,522


		As of June 30, 2021
	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	$	355	$	115	$	470
Other contracts	Other current and non-current assets	0		39		39
Total		$	355	$	154	$	509
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	61	$	201	$	262
Other contracts	Accrued expenses and other liabilities, current and non-current	0		93		93
Total		$	61	$	294	$	355

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):


	Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	$	(44)	$	(60)	$	368	$	102
Amount excluded from the assessment of effectiveness	(49)		(4)		3		45

Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	(121)		(179)		(41)		199
Total	$	(214)	$	(243)	$	330	$	346

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


	Gains (Losses) Recognized in Income
	Three Months Ended
	June 30,
	2020				2021
	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	$	38,297	$	1,894	$	61,880	$	2,624

Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	140	$	0	$	(3)	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	11		0		(4)		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0		9		0		28
Derivatives designated as hedging instruments	0		(9)		0		(28)
Amount excluded from the assessment of effectiveness	0		1		0		2
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		33		0		21
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	0		(69)		0		(64)
Other Contracts	0		(211)		0		(142)
Total gains (losses)	$	151	$	(246)	$	(7)	$	(183)


	Gains (Losses) Recognized in Income
	Six Months Ended
	June 30,
	2020				2021
	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	$	79,456	$	1,674	$	117,194	$	7,470

Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	166	$	0	$	(108)	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	34		0		(8)		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0		(8)		0		28
Derivatives designated as hedging instruments	0		8		0		(28)
Amount excluded from the assessment of effectiveness	0		2		0		4
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		111		0		41
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	0		160		0		(404)
Other Contracts	0		(239)		0		181
Total gains (losses)	$	200	$	34	$	(116)	$	(178)

Offsetting assets

The gross amounts of our derivative instruments subject to master netting arrangements with various counterparties, and cash and non-cash collateral received and pledged under such agreements were as follows (in millions):

Offsetting of Assets


	As of December 31, 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
Derivatives	$	397	$	(32)	$	365	$	(295)	(1)	$	(16)	$	0	$	54

	As of June 30, 2021
							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	$	554	$	(45)	$	509	$	(208)	(1)	$	(190)	$	0	$	111

(1)The balances as of December 31, 2020 and June 30, 2021 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, 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
Derivatives	$	1,554	$	(32)	$	1,522	$	(295)	(2)	$	(1)	$	(943)	$	283

	As of June 30, 2021
							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	$	400	$	(45)	$	355	$	(208)	(2)	$	(2)	$	(86)	$	59

(2) The balances as of December 31, 2020 and June 30, 2021 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.