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INVESTMENTS
 9 Months Ended
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS 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 tax, reflected as a part of "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. Classification as short-term or long-term investments is based upon the maturities of the debt securities and the Company's expectations regarding the timing of sales and redemptions. Investments of a strategic nature that have been made for the purpose of affiliation or potential business advantage or in connection with a commercial relationship are included in "Long-term investments" in the Consolidated Balance Sheets. As of September 30, 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 Consolidated Balance Sheets, are reported at estimated fair value with changes in fair value of these equity securities recognized in "Net unrealized (losses) 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 September 30, 2019 (in millions): 
 
 
Cost
 
Gross
Unrealized Gains
 
Gross
Unrealized Losses
 
Fair
 Value
Short-term investments in marketable securities:
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
 
International government securities
 
$
108

 
$
—

 
$
—

 
$
108

U.S. government securities
 
154

 
—

 
(1
)
 
153

Corporate debt securities
 
704

 
—

 
(1
)
 
703

Time deposits and certificates of deposit
 
9

 
—

 
—

 
9

Total
 
$
975

 
$
—

 
$
(2
)
 
$
973

 
 
 
 
 
 
 
 
 
Long-term investments in marketable securities:
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
 
International government securities
 
$
28

 
$
—

 
$
—

 
$
28

U.S. government securities
 
178

 
—

 
—

 
178

Corporate debt securities
 
1,166

 
3

 
(3
)
 
1,166

Trip.com Group convertible debt securities
 
775

 
—

 
(34
)
 
741

Marketable equity securities
 
1,105

 
389

 
(39
)
 
1,455

Total
 
$
3,252

 
$
392

 
$
(76
)
 
$
3,568


 
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

Trip.com Group convertible debt securities
 
1,275

 
—

 
(98
)
 
1,177

Marketable equity securities
 
1,105

 
3

 
(72
)
 
1,036

Total
 
$
7,921

 
$
10

 
$
(224
)
 
$
7,707

 

The Company's investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. At September 30, 2019, the weighted-average life of the Company’s investments in marketable debt securities, excluding its investment in Trip.com Group convertible debt securities, was approximately 1.2 years with an average credit quality of A+/A1/A+.

The Company invests in international government securities with high credit quality. At September 30, 2019, investments in international government securities principally included debt securities issued by the governments of Germany, France, Finland, Austria and Canada. 
Investments in Trip.com Group
At September 30, 2019, the Company had invested $775 million in senior convertible notes issued at par value by Trip.com Group with maturity dates ranging from May 2020 to December 2025. The strategic investments in Trip.com Group, including $250 million of convertible notes due May 2020, were classified as "Long-term investments" in the Consolidated Balance Sheet at September 30, 2019. In August 2019, the Company's August 2014 investment of $500 million in Trip.com Group's convertible notes was repaid on maturity. The Trip.com Group convertible notes have been marked-to-market in accordance with the accounting guidance for available-for-sale securities, with the aggregate unrealized gains and losses, net of tax, reflected as a part of "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The Company has also invested $655 million in Trip.com Group American Depositary Shares ("ADSs"), which had a fair value of $633 million and $585 million at September 30, 2019 and December 31, 2018, respectively. "Net unrealized (losses) gains on marketable equity securities" in the Unaudited Consolidated Statements of Operations includes a net unrealized loss of $165 million and a net unrealized gain of $48 million for the three and nine months ended September 30, 2019, respectively, and net unrealized losses of $226 million and $150 million for the three and nine months ended September 30, 2018, respectively, related to Trip.com Group ADSs.

Certain Trip.com Group convertible notes include a put option allowing the Company, at its option, to require a prepayment in cash from Trip.com Group at certain points of time. The Company determined that the economic characteristics and risks of the put options are clearly and closely related to the notes, and therefore did not meet the requirement for separate accounting as embedded derivatives. 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 conversion feature associated with the $25 million convertible notes issued in 2016 meets the definition of an embedded derivative that requires separate accounting. The
embedded derivative is bifurcated for fair value measurement purposes only and is reported in the Consolidated Balance Sheets with its host contract in "Long-term investments." The mark-to-market adjustments of the embedded derivative are included in "Foreign currency transactions and other" in the Company's Unaudited Consolidated Statements of Operations.

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. The investment had a fair value of $822 million and $451 million at September 30, 2019 and December 31, 2018, respectively. "Net unrealized (losses) gains on marketable equity securities" in the Unaudited Consolidated Statement of Operations includes unrealized gains of $116 million and $371 million, respectively, for the three and nine months ended September 30, 2019, and an unrealized gain of $257 million for both the three and nine months ended September 30, 2018 related to this investment.
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 September 30, 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 Consolidated Balance Sheets. The Company determined that no adjustments were required to the carrying value of these investments at September 30, 2019.
Other Long-term Investments
The Company held investments in preferred shares of private companies of $250 million and $200 million at September 30, 2019 and December 31, 2018, respectively. These investments are classified as debt securities for accounting purposes and categorized as available-for-sale. 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 certain points of time. These features have been evaluated as embedded derivatives, however, they do not meet the requirements to be accounted for separately. The investments are reported at estimated fair value in "Long-term investments" in the Company's Consolidated Balance Sheets, with the aggregate unrealized gains and losses, net of tax, reflected as a part of "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.