Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

The following tables summarize our debt securities by significant investment categories as of December 31, 2018 and 2019 (in millions):



	As of December 31, 2018
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits⁽¹⁾	$	2,202	$	0	$	0		$	2,202	$	2,202	$	0
Government bonds	53,634		71		(414		)	53,291		3,717		49,574
Corporate debt securities	25,383		15		(316		)	25,082		44		25,038
Mortgage-backed and asset-backed securities	16,918		11		(324		)	16,605		0		16,605
Total	$	98,137	$	97	$	(1,054	)	$	97,180	$	5,963	$	91,217



	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

⁽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):



	As of December 31, 2019
Due in 1 year	$	20,392
Due in 1 year through 5 years	63,151
Due in 5 years through 10 years	2,671
Due after 10 years	11,667
Total	$	97,881

Schedule of unrealized loss on debt securities

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2018 and 2019, 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, 2018
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Government bonds	$	12,019	$	(85	)	$	23,877	$	(329	)	$	35,896	$	(414	)
Corporate debt securities	10,171		(107		)	11,545		(209		)	21,716		(316		)
Mortgage-backed and asset-backed securities	5,534		(75		)	8,519		(249		)	14,053		(324		)
Total	$	27,724	$	(267	)	$	43,941	$	(787	)	$	71,665	$	(1,054	)



	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	)

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):



	Year Ended December 31,
	2018		2019
Net gain (loss) on equity securities sold during the period	$	1,458	$	(301	)
Net unrealized gain (loss) on equity securities held as of the end of the period⁽¹⁾	4,002		2,950
Total gain (loss) recognized in other income (expense), net	$	5,460	$	2,649

⁽¹⁾

Includes net gains of $4.1 billion and $1.8 billion related to non-marketable equity securities for the years ended December 31, 2018 and 2019, respectively.

Cumulative net gains on equity securities sold



	Equity Securities Sold During the Year Ended December 31,
	2018		2019
Total sale price	$	1,965	$	3,134
Total initial cost	515		858
Cumulative net gains	$	1,450	$	2,276

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

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



	As of December 31, 2018
	Marketable Securities		Non-Marketable Securities		Total
Total initial cost	$	1,168	$	8,168	$	9,336
Cumulative net gain⁽¹⁾	54		4,107		4,161
Carrying value	$	1,222	$	12,275	$	13,497


⁽¹⁾	Non-marketable securities cumulative net gain is comprised of $4.3 billion unrealized gains and $178 million unrealized losses (including impairment).



	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).

Marketable equity securities

The following table summarizes marketable equity securities measured at fair value by significant investment categories as of December 31, 2018 and 2019 (in millions):



	As of December 31, 2018				As of December 31, 2019
	Cash and Cash Equivalents		Marketable Securities		Cash and Cash Equivalents		Marketable Securities
Level 1:
Money market funds	$	3,493	$	0	$	4,604	$	0
Marketable equity securities⁽¹⁾	0		994		0		3,046
	3,493		994		4,604		3,046
Level 2:
Mutual funds	0		228		0		250
Total	$	3,493	$	1,222	$	4,604	$	3,296

⁽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.

Total unrealized gain (loss) 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):



	Year Ended December 31,
	2018			2019
Unrealized gains	$	4,285		$	2,163
Unrealized losses (including impairment)	(178		)	(372		)
Total unrealized gain (loss) for non-marketable equity securities	$	4,107		$	1,791

Schedule of derivative instruments

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



		As of December 31, 2018
	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	$	459	$	54	$	513
Total		$	459	$	54	$	513
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	5	$	228	$	233
Total		$	5	$	228	$	233



		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
Total		$	91	$	253	$	344
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	173	$	196	$	369
Total		$	173	$	196	$	369

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
	Year Ended December 31,
	2017			2018		2019
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	$	(955	)	$	332	$	38
Amount excluded from the assessment of effectiveness	0			26		(14		)
Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	0			136		131
Total	$	(955	)	$	494	$	155

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



	Gains (Losses) Recognized in Income
	Year Ended December 31,
	2017						2018						2019
	Revenues			Other income (expense), net			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	$	110,855		$	1,015		$	136,819		$	7,389		$	161,857	$	5,394

Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	(169	)	$	0		$	(139	)	$	0		$	367	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	0			0			1			0			88		0
Amount excluded from the assessment of effectiveness	0			83			0			0			0		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0			197			0			(96		)	0		(19		)
Derivatives designated as hedging instruments	0			(197		)	0			96			0		19
Amount excluded from the assessment of effectiveness	0			23			0			37			0		25
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0			0			0			78			0		243
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts
Derivatives not designated as hedging instruments	0			(230		)	0			54			0		(413		)
Total gains (losses)	$	(169	)	$	(124	)	$	(138	)	$	169		$	455	$	(145	)

Offsetting assets

As of December 31, 2018 and 2019, information related to these offsetting arrangements were as follows (in millions):

Offsetting of Assets



	As of December 31, 2018
								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	$	569	$	(56	)	$	513	$	(90	)	⁽¹⁾	$	(307	)	$	(14	)	$	102

	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

⁽¹⁾

The balances as of December 31, 2018 and 2019 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, 2018
								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	$	289	$	(56	)	$	233	$	(90	)	⁽²⁾	$	0	$	0	$	143

	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

⁽²⁾

The balances as of December 31, 2018 and 2019 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.