INVESTMENTS

Short-term and Long-term Investments in Marketable Securities

The Company has classified its investments in marketable debt securities as available-for-sale securities. These securities are reported at estimated fair value with the aggregate unrealized gains and losses related to these investments, net of taxes, reflected as a part of "Accumulated other comprehensive loss" in the Unaudited Consolidated Balance Sheets. Classification as a short-term or long-term investment is based upon the maturity of the debt securities. Investments of a strategic nature that have been made for the purpose of affiliation or potential business advantage are included in "Long-term investments" in the Unaudited Consolidated Balance Sheets. As of March 31, 2019, the Company does not consider any of its investments to be other-than-temporarily impaired.

The Company's investments in marketable equity securities, which are included in "Long-term investments" in the Unaudited Consolidated Balance Sheets, are reported at estimated fair value with changes in fair value of these equity securities recognized in "Net unrealized gains on marketable equity securities" in the Unaudited Consolidated Statements of Operations.

The following table summarizes, by major security type, the Company's investments in marketable securities at March 31, 2019 (in millions):



	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments in marketable securities:
Debt securities:
International government securities	$	218	$	—	$	—		$	218
U.S. government securities	242		—		(1		)	241
Corporate debt securities	1,519		1		(6		)	1,514
U.S. government agency securities	1		—		—			1
Commercial paper	4		—		—			4
Time deposits and certificates of deposit	3		—		—			3
Total	$	1,987	$	1	$	(7	)	$	1,981

Long-term investments in marketable securities:
Debt securities:
International government securities	$	879	$	5	$	—		$	884
U.S. government securities	250		—		(4		)	246
Corporate debt securities	3,794		12		(23		)	3,783
Ctrip convertible debt securities	1,275		69		—			1,344
Marketable equity securities	1,105		383		(1		)	1,487
Total	$	7,303	$	469	$	(28	)	$	7,744

The Company's investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. At March 31, 2019, the weighted-average life of the Company’s investments in marketable debt securities, excluding its investment in Ctrip.com International Ltd. ("Ctrip") convertible debt securities, was approximately 1.4 years with an average credit quality of A+/A1/A+.

The Company invests in international government securities with high credit quality. At March 31, 2019, investments in international government securities principally included debt securities issued by the governments of the Netherlands, France, Belgium, Germany, Austria and Finland.

The following table summarizes, by major security type, the Company's investments in marketable securities at December 31, 2018 (in millions):



	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments in marketable securities:
Debt securities:
International government securities	$	314	$	—	$	—		$	314
U.S. government securities	658		—		(2		)	656
Corporate debt securities	2,693		—		(12		)	2,681
U.S. government agency securities	1		—		—			1
Commercial paper	7		—		—			7
Time deposits and certificates of deposit	1		—		—			1
Total	$	3,674	$	—	$	(14	)	$	3,660

Long-term investments in marketable securities:
Debt securities:
International government securities	$	797	$	3	$	—		$	800
U.S. government securities	299		—		(6		)	293
Corporate debt securities	4,445		4		(48		)	4,401
Ctrip Convertible debt securities	1,275		—		(98		)	1,177
Marketable equity securities	1,105		3		(72		)	1,036
Total	$	7,921	$	10	$	(224	)	$	7,707

Investments in Ctrip

In May 2015 and August 2014, the Company invested $250 million and $500 million, respectively, in five-year senior convertible notes issued at par value by Ctrip. In December 2015, the Company invested $500 million in a Ctrip ten-year senior convertible note issued at par value, which included a put option allowing the Company, at its option, to require a prepayment in cash from Ctrip at the end of the sixth year of the note. In September 2016, the Company invested $25 million in a Ctrip six-year senior convertible note issued at par value, which included a put option allowing the Company, at its option, to require prepayment in cash from Ctrip at the end of the third year of the note. The Company determined that the economic characteristics and risks of the put option are clearly and closely related to the note, and therefore did not meet the requirement for separate accounting as embedded derivatives. The Company evaluated the conversion features for all Ctrip senior convertible notes and only the conversion feature associated with the September 2016 investment met the definition of an embedded derivative (see Note 6). The Company monitors the conversion features of these notes to determine whether they meet the definition of an embedded derivative during each reporting period. The Ctrip convertible notes have been marked-to-market in accordance with the accounting guidance for available-for-sale securities. At March 31, 2019, the Company had also invested $655 million in Ctrip American Depositary Shares ("ADSs"). For the three months ended March 31, 2019 and 2018, "Net unrealized gains on marketable equity securities" in the Unaudited Consolidated Statements of Operations included a net unrealized gain of $360 million and $55 million, respectively, related to Ctrip ADSs. At March 31, 2019, the Company did not have significant influence over Ctrip.

Investment in Meituan Dianping

In October 2017, the Company invested $450 million in preferred shares of Meituan Dianping, the leading e-commerce platform for local services in China. The investment has been classified as a marketable equity security since Meituan Dianping's initial public offering in September 2018. For the three months ended March 31, 2019, "Net unrealized gains on marketable equity securities" in the Unaudited Consolidated Statement of Operations included an unrealized gain of $91 million related to this investment. At March 31, 2019, the Company did not have significant influence over Meituan Dianping.

Long-term Investments without Readily Determinable Fair Value

The Company held investments in equity securities of private companies, which are typically at an early stage of development, of $501 million at both March 31, 2019 and December 31, 2018, principally related to the Company's investment of $500 million in July 2018 in preferred shares of Didi Chuxing, the leading mobile transportation and ride-hailing platform in China. These investments are measured at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer and are included in "Long-term investments" in the Company's Unaudited Consolidated Balance Sheets. The Company determined that no adjustments were required to the carrying value of these investments at March 31, 2019.

Other Long-term Investments

The Company held an investment of $200 million in preferred shares of Grab, a leading on-demand transportation and mobile service platform in Southeast Asia, which is included in "Long-term investments" in the Company's Unaudited Consolidated Balance Sheets at March 31, 2019 and December 31, 2018. The preferred shares are convertible to ordinary shares at the Company’s option and are mandatorily convertible upon an initial public offering. The preferred shares also contain a redemption feature that can be exercised by the Company after June 2023. These features have been evaluated as embedded derivatives, however, they do not meet the requirements to be accounted for separately. The investment is classified as a debt security for accounting purposes and categorized as available-for-sale. The investment is reported at estimated fair value with the aggregate unrealized gains and losses, net of taxes, reflected as a part of "Accumulated other comprehensive loss" in the Unaudited Consolidated Balance Sheet.