TikTok’s London office is based out of a WeWork building in Holborn called Aviation House.
WeWork
WeWork, the U.S. office rental startup, filed for Chapter 11 bankruptcy, threatening office closures across the U.S. where it has become a major destination for tech firms.
The company’s restructuring may also have implications for its London operations, where it is one of the biggest tenants.
According to CoStar, the commercial real estate data company, the company has 36 offices in London, spanning more than 2.89 million square feet.
The company, which was valued at $47 billion at the height of its rise in 2019, said Monday that the bankruptcy filing is limited to WeWork’s locations in the U.S. and Canada.
But uncertainty remains for WeWork’s operations in London and the international offices.
At least one property group has already looked to end its lease agreement with WeWork in the past week, as the firm’s liquidity position looks more precarious.
Trouble afoot for commercial property in London?
WeWork is a major renter of property in London.
CoStar, citing analysis of WeWork’s websites and CoStar’s own data, said M&G and Nuveen are both landlords for two of the buildings WeWork is currently present in.
The largest single landlord with exposure to WeWork’s financial troubles is Almacantar’s 290,000-square-foot Southbank West in Waterloo, CoStar said.
M&G, Nuveen and Almacantar were not immediately available for comment when contacted by CNBC.
The most exposed London submarket is City Core North, where WeWork occupies 684,000 square feet.
WeWork was not immediately available for comment when contacted by CNBC.
Deepak Tailor, CEO of LatestFreeStuff, a startup that offers customers freebies online, said that he doesn’t know what will happen with the office building that his firm is currently occupying in Tower Bridge.
“We’ve actually got an agreement with them for another seven months,” Tailor, who is based in London, told CNBC.
“We’re a bit locked in. I don’t know where we stand from a legal point of view at the moment … From the comms we’ve received, it looks like they’re trying to carry on as normal,” he added.
Tailor has been at his WeWork building for eight years, he said, and found it accommodating as a space to work from, with the office offering free beers on tap.
Now, he fears those free beers will soon dry up. “I don’t know if I trust them as a brand anymore after this,” Tailor told CNBC.
WeWork has suffered one of the most spectacular corporate collapses in recent history over the past few years.
The company tried and failed to go public five years ago, and has since been heavily affected by the Covid-19 pandemic, which caused further pain as many companies abruptly ended their leases.
The economic slump that followed also caused clients to cease their WeWork memberships.
The company has said its spaces remain open and operational, and that it will continue to provide members with its co-working experiences.
Lease forfeited
Helical, the property investment firm, recently revealed it had forfeited its lease to WeWork on six floors at The Bower office development in London.
Helical said this was due to “non-payment of rent for the September quarter.” The firm entered into a short-term license arrangement with WeWork, which has since re-occupied the building.
WeWork is required to pay Helical a fee equivalent for the whole of the September quarter’s rent and service charge due under the terms of its previous contractual arrangements, Helical said.
Helical said it was “working on next steps for the space” and would provide an update its Nov. 22 half-year results.
WeWork is a tenant, rather than a property investment firm in its own right. The company rents properties from commercial real estate firms, and then lets them out to companies at higher prices to pocket a small profit on the difference. Several investors have raised skepticism with the company’s business model.
– CNBC’s Rohan Goswami and Ari Levy contributed to this report
Mark Zuckerberg, CEO of Meta testifies before the Senate Judiciary Committee at the Dirksen Senate Office Building on January 31, 2024 in Washington, DC.
Alex Wong | Getty Images
Facebook parent company Meta on Thursday was hit with a major investigation from the European Union into alleged breaches of the bloc’s strict online content law over child safety risks.
The European Commission, the EU’s executive body, said in a statement that it is investigating whether the social media giant’s Facebook and Instagram platforms “may stimulate behavioural addictions in children, as well as create so-called ‘rabbit-hole effects’.”
The Commission added that it is concerned about age verifications on Meta’s platforms, as well as privacy risks linked to the company’s recommendation algorithms.
“We want young people to have safe, age-appropriate experiences online and have spent a decade developing more than 50 tools and policies designed to protect them,” a Meta spokesperson told CNBC by email.
“This is a challenge the whole industry is facing, and we look forward to sharing details of our work with the European Commission.”
The Commission said that its decision to initiate an investigation comes of the back of a preliminary analysis of risk assessment report provided by Meta in September 2023.
Thierry Breton, the EU’s commissioner for internal market, said in a statement that the regulator is “not convinced [that Meta] has done enough to comply with the DSA obligations to mitigate the risks of negative effects to the physical and mental health of young Europeans on its platforms.”
The EU said it will carry out an in-depth investigation into Meta’s child protection measures “as a matter of priority.” The bloc can continue to gather evidence via requests for information, interviews, or inspections.
The initiation of a DSA probe allows the EU to take further enforcement steps, including interim measures and non-compliance decisions, the Commission said. The Commission added it can also consider commitments made by Meta to remedy its concerns.
Meta and fellow U.S. tech giants have been increasingly finding themselves in the spotlight of EU scrutiny since the introduction of the bloc’s landmark Digital Services Act, a ground-breaking law from the European Commission seeking to tackle harmful content.
Under the EU’s DSA, companies can be fined up to 6% of their global annual revenues for violations. The bloc is yet to issue fines to any tech giants under its new law.
In December 2023, the EU opened infringement proceedings into X, the company previously known as Twitter, over suspected failure to combat content disinformation and manipulation.
The Commission is also investigating Meta over alleged infringements of the DSA related to its handling of election disinformation.
In April, the bloc launched a probe into the firm and said it’s concerned Meta hasn’t done enough to combat disinformation ahead of upcoming European Parliament elections.
The EU is not the only authority taking action against Meta over child safety concerns.
In the U.S., the attorney general of New Mexico is suing the firm over allegations that Facebook and Instagram enabled child sexual abuse, solicitation, and trafficking.
A Meta spokesperson at the time said that the company deploys “sophisticated technology” and takes other preventive steps to root out predators.
A man walks past Microsoft’s local headquarters in Beijing on July 20, 2021.
Noel Celis | Afp | Getty Images
Microsoft has reportedly asked China-based cloud computing and artificial intelligence operations employees to consider relocating out of the country, as Washington cracks down on Beijing’s access to the advanced technology.
The Wall Street Journal broke the story on Thursday, reporting that the staff, mostly comprising Chinese engineers, had been offered the opportunity to transfer to countries including the U.S., Ireland, Australia, and New Zealand, according to unnamed sources.
One source told WSJ that Microsoft had made the offer to about 700 to 800 people in total who were involved in machine learning and other work related to cloud computing.
CNBC could not independently verify the report.
In a statement shared with CNBC, a Microsoft spokesperson confirmed that the company had “shared an optional internal transfer opportunity with a subset of employees” without supplying details on the number and affiliation of staff affected.
“We remain committed to the region and will continue to operate in this and other markets where we have a presence,” the spokesperson said, adding that the potential transfers would not impact operations.
Microsoft employs roughly 7,000 engineers for its Asia-Pacific research-and-development group, with most of this workforce based in China, the WSJ reports.
The move comes amid U.S. efforts to prevent China from developing cutting-edge AI technology, which could be used for military purposes. In the past two years, the U.S. has placed waves of restrictions on China limiting its ability to buy advanced chips and chip-making equipment that can be deployed to train AI models.
There is currently little government oversight stopping companies like Microsoft, one of the U.S.’s largest cloud-computing and AI players, from selling or offering AI model services to foreign entities.
The U.S. reportedly fears that AI models, which mine vast amounts of data to generate content, could be used for cyber attacks or to create biological weapons.
Microsoft has been deeply ingrained in China for more than three decades, even as other Western tech companies were pushed out by strict regulation. The company says that China is home to its largest R&D center outside of the U.S.
Shailendra Singh, managing director of Peak XV Partners.
Lionel Ng | Bloomberg | Getty Images
India offers a “very favorable” environment for companies to launch initial public offerings, said Shailendra Singh, managing director at Peak XV Partners, formerly Sequoia Capital India & Southeast Asia.
“My general view is, especially in Indian public markets, the regulatory framework, what Securities and Exchange Board of India does, what Reserve Bank of India does, what other regulators do is actually really good,” Singh told CNBC.
Singh, who has been at the VC firm for 18 years and led it since 2011, said India has created “a very favorable environment” for companies to list there. “It’s both safe and dynamic in India for a young company to be able to go public.”
There were 220 IPOs in India last year, up 48% from 2022, making it the second-largest IPO market in the world, according to an EY report. Though Mainland China took the top spot, the number of IPOs there slid 29% to 302.
The Indian IPO market is set to remain strong in 2024, buoyed by optimistic investor sentiment, a robust economy, and expectations of lower inflation and rate cuts, EY said.
“The Indian capital markets have evolved quite a bit. The markets have deepened in terms of liquidity. There’s lots of interest in tech companies coming up because … we are beginning to see a large number of companies with triple-digit million revenues and profits,” Singh said.
India is emerging as a bright spot amid global macroeconomic uncertainty, mainly driven by optimism over the country’s resilient economic fundamentals, KPMG said last month in its report “IPOs in India.”
On why some Indian firms prefer to list locally, Singh said: “Founders are realizing that the U.S. markets may not always understand Indian companies.”
As many as 20 companies including Zomato and Mamaearth in Peak XV’s portfolio have listed via IPOs, the firm said. Peak XV Partners, one of Asia’s largest tech investors, manages $9 billion in assets.
The venture capital firm has invested in more than 400 companies across the technology, software, financial services and consumer sectors including India’s fintech firm Pine Labs, Indonesian coffee chain Kopi Kenangan, Singapore-based online marketplace Carousell and edtech companies Byju’s and Unacademy.
Favorite sectors in India
India has multiple “pretty exciting” investment areas, Singh said, naming cross-border software, fintech and consumer as the firm’s biggest sectors for investments.
Cross-border software is a key area Peak XV is betting on, given the potential of software companies being built in India for the whole world, he said.
“Our second-[biggest] sector tends to be fintech. We are a very strong fintech investor. I think India is one of the world’s most fertile markets because of Aadhaar, UPI and the India stack.”
In the consumer-centric sector, he listed consumer brands, ed-tech and healthcare as the the firm’s focus for investments.
“We will see plenty of good education companies being built in the long-term,” Singh said, given that consumers in places like India and China understand that the path to upward social mobility is through education.
There are also emerging areas such as deep tech and semiconductors, which are interesting though it’s still early days, he said. “We are [just] starting to make bets.”