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Data Sheet—Friday, January 30, 2015

Good morning, Data Sheet readers! A busy week ends with Google disappointment and a surprise Amazon profit. It’s also National Croissant Day, and I encourage you to indulge in buttery goodness as you read through this morning’s newsletter. (I certainly did.) Heather Clancy will return from vacation on Monday; it’s been a pleasure serving you this week. If you’d like to say hello, find me @editorialiste. Happy Friday.

WHAT YOU MISSED

Google’s R&D spending is on the rise, eating into its revenue growth and disappointing investors. We love a Google long shot, but only for so long, it seems.

Surprise! Amazon posts a quarterly profit, albeit a relatively small one, after two quarters of disappointment. Just when you think you’ve figured Bezos and company out, they pull a fast one on you. (For Adam Lashinsky analysis, read on.)

VPNs are under fire in China. Who’s to blame? The government, of course.

The FCC’s AWS-3 spectrum auction ended at a record $44.9 billion in bids. The biggest spender? Rumor has that it’s AT&T.

Microsoft will invest $70 million in “rogue” Android startup Cyanogen. “Scroogled,” but in a different way.

Jay-Z dropped $56 million on a Scandinavian streaming company. 99 problems, but Daniel Ek ain’t one. (You feel me?)

…but that’s not stopping Spotify from raising $500 million.

“It depends on what the meaning of the word ‘broadband’ is.”

VMware and Google partnered to make four Google cloud services available to corporate customers of VMware’s vCloud Air hybrid cloud.

Seattle-based Tune raises $27 million from Icon and Accel, among others. It’s an “enterprise platform for mobile marketing.”

London’s first cyber security incubator has launched.

YOU OUGHTA KNOW

Prosecutors traced $13.4 million in Bitcoin from the Silk Road to the laptop of Ross Ulbricht, the fellow accused of running it. Ruh roh.

Twitch, the gaming video service, doubles its users. Amazon owns it.

Secret’s co-founder steps down. People still wonder what Secret is.

TUAW, as in The Unofficial Apple Weblog, will shutter.

The Uber-India-rape situation takes its latest turn.

BURNING QUESTIONS

Is the best Gmail app for the iPhone made by Microsoft?

Is this Newsweek cover story about Silicon Valley sexism sexist?

Whither Israel’s tech scene?

AMAZON OMERTÀ

In an essay, Fortune senior editor-at-large Adam Lashinsky weighs in on Amazon after the company’s earnings call last night.

Jeff Bezos is a smart man. Unlike Apple CEO Tim Cook and Facebook CEO Mark Zuckerberg, Bezos takes a pass on his company’s quarterly earnings calls with investors. After all, he must have a long list of things to do that are more important than discussing his company’s financial performance with the owners of his company.

Perhaps following his lead, his chief financial officer, Thomas Szkutak, tries as hard as possible not to discuss the company’s performance with the owners of Jeff Bezos’s company either. “I can’t help you out much there,” is one of his favorite responses to investor questions.

Here’s a classic example:

Analyst: Noting that you announced just yesterday you’ll be offering email as a web service, do you have plans to expand into other software-as-a-service offerings? (This would put Amazon into competition with the likes of Salesforce.com, Microsoft, Oracle, Workday and many others who sell online productivity applications.)

Szkutak: “We’re excited about our web services offerings. The team has done an incredible job. In terms of what we might or might not do in the future we’re not talking about that road map. You’ll have to stay tuned.”

Investors also will have to stay tuned for Amazon to tell them how many customers it has for its Prime all-you-can-eat free-delivery and media-streaming subscription service. Amazon said Prime membership grew 53% last year. As for growing 53% to what exactly, Szkutak referred to Prime’s “sizable base” as being in the “tens of millions.” How are sales going of Amazon’s train wreck of a smartphone offering, the Fire? Szkutak noted that he told investors last quarter Amazon held $80 million of inventory in Fire phones, but that while the company is continuing to “sell through” that pile of hardware he had “no update.”

This might be a good place to pause and note that Amazon had what passes for a good quarter. For instance, it made money, which it doesn’t always do. It earned $214 million, down 10% from the year-earlier quarter, on a 15% sales increase to $29.3 billion. Because this decline in profitability was better than Wall Street had expected, Amazon’s share price shot up more than 12% Thursday in after-hours trading.

There was one significant piece of news out of Amazon’s financial release. Beginning this quarter the retailer will report financial results for its Amazon Web Services business separately. This is significant because–prepare to be shocked–Amazon typically does everything it can to muddy the waters about how its specific businesses perform. Securities regulators expect companies to put into segments significant and distinctly different businesses, which AWS obviously has become. Or, in Szkutak’s words, after being asked why Amazon was breaking out AWS now: “We just think it’s an appropriate way to look at our business.”

Amazon collated a lot of the stuff it did during the year into its press release announcing its earnings. If reading that comprehensive list is of interest, it’s here. If you want more information than that, I’m afraid you’re going to have to stay tuned.

FORTUNE FIVE

How female founders can join the Unicorn Club, by Colleen Leahey.

What if we put servers in space? by Kirk Kardashian.

Women are not making progress in male-dominated VC world, by Dan Primack.

The bitter battle over a big Canadian oil pipeline (no, not Keystone), by Richard Martin.

Can you launch a career outside of the U.S.? by Anne Fisher.

ONE MORE THING

“There have been people who have turned up their noses when we shake our Manhattans.” Drink different, as they might—should, perhaps—say.

MARK YOUR CALENDAR

IBM Interconnect: Cloud and mobile strategy. (Feb. 22 – 26; Las Vegas)

Gartner CIO Leadership Forum: Digital business strategy. (March 1 – 3; Phoenix)

Microsoft Convergence: Dynamics solutions. (March 16 – 19; Atlanta)

IDC Directions 2015: Innovation in the 3rd Platform era. (March 18; Boston)

Cisco Leadership Council: CIO-CEO thought leadership. (March 18 – 20; Kiawah Island, South Carolina)

Gartner Business Intelligence & Analytics Summit: Crossing the divide. (March 30 – April 1; Las Vegas)

Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)

RSA Conference: The world talks security. (April 20 – 24; San Francisco)

Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 – 28; Orlando, Fla.)

MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)

NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)

EMC World: Data strategy. (May 4 – 7; Las Vegas)

SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)

Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)

Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)

HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)