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This is an audio transcript of the FT News Briefing podcast episode: WeWork 2.0?

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, August 17th. And this is your FT News Briefing.

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Amazon says US regulators are harassing Jeff Bezos and other top executives. SoftBank’s rotten year keeps getting worse, and WeWork’s infamous founder Adam Neumann is back with a new venture.

Robin Wigglesworth
So far, you know, most people I’ve spoken to seem completely baffled by the whole thing.

Marc Filippino
But it is still attracting some really big name investors. I’m Marc Filippino, and here’s the news you need to start your day.

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US regulators have been investigating whether Amazon uses deceptive tactics to lure customers into signing up for the company’s hugely profitable Prime subscription service. But now, Amazon is pushing back. It’s accusing the Federal Trade Commission of harassing top executives, including Jeff Bezos and current CEO Andy Jassy. Here’s the FT’s Dave Lee with the details.

Dave Lee
Basically, Amazon thinks and has said the FTC is out to get them. That it has, you know, an agenda, a vendetta. This is mostly because the new chair of the FTC, Lina Khan, has risen to prominence because of academic papers she’s written that basically says she believes Amazon is a monopoly and needs to be broken up. In this particular investigation, Amazon’s complaint is, firstly, they’re saying the FTC staff have been acting erratically. You know, they said they were suddenly making loads of demands on Amazon staff, giving them only a few weeks to comply. After previously kind of going silent on this issue for several months, and one of the things the FTC did, according to this filing, is they served 19 employees and executives at Amazon, some current, some former, with what’s known as civil investigative demands. They’re basically subpoenaed to testify. And, you know, Amazon said they did that separately from Amazon’s legal team, ie they went directly to these employees and executives, and they’ve been there standing in the way of Amazon being able to represent those employees and executives.

Marc Filippino
Yeah, which, which Amazon says is against the law. So as far as harassment goes, Dave, does Amazon have a point here?

Dave Lee
I mean, it does certainly suggest that the FTC has more recently become much more aggressive toward these companies. You know, Amazon was given a matter of weeks to reply to those CIDs, which is a very, very short timeframe. Now, whether Amazon has a point or not depends on your view of, you know, maybe this is how the FTC should have perhaps always been operating when it comes to enforcement. But, you know, there are, you know, there are some that are seeing this as a step up in terms of the pressure and aggression from the FTC. And we’re seeing that not just in this Amazon case but in the way that the FTC is tackling issues around Meta, the Facebook parent company, and also some of the other tech companies as well. So this is in a new era of FTC enforcement.

Marc Filippino
Dave Lee is the FT’s San Francisco correspondent.

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SoftBank is having a miserable month, a miserable year, actually. The world’s largest technology investor last week reported a record $23bn loss. Its shares are down more than half from last year’s peak, and several top executives have left or stepped down. Now, the FT’s Arash Massoudi reports that one of SoftBank’s big investors, the hedge fund Elliott Management, has dumped almost all of its position.

Arash Massoudi
We don’t have a precise date, but we know that it took place roughly around the time when the stock market was tanking and in particular the stock market for technology stocks. So that’s probably in the February to, say, June period. And we’ve also reported that they had previously sold down part of their stake and took a big profit last year at some point in the middle of the year. And SoftBank shares at that time were performing much better than they are today.

Marc Filippino
Arash says Elliott had been losing its patience with SoftBank and its founder Masayoshi Son for a while now.

Arash Massoudi
Elliott and other investors, in fact, in SoftBank were becoming frustrated that SoftBank was not proceeding with share buybacks. And if you recall, at that time, Masayoshi Son actually doubled down on investing on start-ups. And this is just at the peak, peak of the bull market in tech stocks, end of last year and into early this year was the top of the market. And Masa Son doubled down on spending the cash that he had on hand on tech stocks, many of which have already blown up in his face. So there was already a growing frustration within the Elliott camp that Masa Son was more focused on investing and taking risk than he was returning cash to shareholders.

Marc Filippino
Arash Massoudi is the FT’s corporate finance and deals editor.

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Adam Neumann is the eccentric entrepreneur who founded WeWork and took the office sharing company to a $47bn valuation before blowing it up. He failed to take WeWork public a few years ago and was kicked out of the company. But now Neumann has another real estate venture in the works, and he just netted a $350mn investment from a top venture capital firm. Robin Wigglesworth is our Alphaville editor and he has something to say about all this. Hey, Robin.

Robin Wigglesworth
Hi, Marc. How are things?

Marc Filippino
Things are good. So Neumann’s new venture is also in real estate. It’s called the flow. Can you tell us what it is exactly?

Robin Wigglesworth
(Laughter) That’s hard to say, really, because it seems he’s managed to basically sell a very, very rough idea to Marc Andreessen of Andreessen Horowitz for $350mn. But it seems like he’s basically going to do what he did with WeWork for commercial property, he’s now going to try to do with residential property instead.

Marc Filippino
Robin, forgive me for maybe being a little clueless here, but isn’t the residential version of WeWork Airbnb?

Robin Wigglesworth
Well, basically, yes. I mean, that is one thing, or it could be gated communities. It could be student dormitories, right? This is not new. I mean, it is obviously a popular pastime of me and others saying to VCs that they’re basically trying to reinvent things that have been around for decades, if not centuries in some cases. Adam Neumann managed to extract quite a few hundred millions of dollars out of SoftBank, the main investor of WeWork, for walking away, and he seems he’s turned that money into a portfolio of residential property in places like Florida, and he’s going to use that for this new venture. But what they’re going to do beyond installing beer taps and tequila bottles and giving the swish branding is beyond me.

Marc Filippino
So first of all, let’s just back up a little bit. Andreessen Horowitz is a big Silicon Valley venture capital firm. What does it say about why put faith in someone like Adam Neumann, whose last venture flopped?

Robin Wigglesworth
I mean, flopped is very charitable, right? I mean, it completely bombed in many respects. No, and that’s the weird thing. Andreessen Horowitz, and led by Marc Andreessen, is definitely part of Silicon Valley’s royalty. They are seen as one of the smartest investor in early-stage companies in the world, and this is the single biggest check they’ve ever cut to anybody. So, you know, people are kind of looking to see what he might be seeing that they’re missing. But so far, you know, most people I’ve spoken to seem completely baffled by the whole thing.

Marc Filippino
Yeah. It also makes me think, you know, maybe people are squinting to try and see something that’s actually not there. Does this say something a little more largely about maybe there’s we’ve run out of places to put money into or trying to stretch things?

Robin Wigglesworth
Yes, and I think that might be indicative of a venture capital world that has raised an insane amount of money in recent years on the back of, you know, incredible returns. And now that the water is receding because of higher inflation and rising interest rates and the venture capital world doesn’t look quite as hot, some people are kind of retrenching. But these venture capital firms have raised a lot of money already that they have to deploy or hand back to investors. So maybe this is just them flinging money at big ideas before they have to maybe hand some of this money back to investors. But we’ll wait and see because, I mean, Adam Neumann did build WeWork up. Maybe he’ll manage to do something that is more than just a fancy gated community for young hipsters.

Marc Filippino
So it sounds like you may not put your money into this.

Robin Wigglesworth
No, I think I can think of probably at least a half dozen other heinously crazy day ideas I’d rather finance with the Wiggles capital’s money before I invest in WeWork 2.0.

Marc Filippino
Fair enough. Robin Wigglesworth is the editor of the FT’s Alphaville blog. Thanks, Robin.

Robin Wigglesworth
Thanks for having me on again.

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Marc Filippino
Before we go, you ever wish you could get a Harvard MBA for free? The prestigious business school just announced it will do just that for lower income students. It’ll waive the $76,000 a year fee for about a 10th of its incoming class. It’s a response to concerns in the US over the cost of higher education and social mobility. But even after the hefty tuition is waived, students will have to come up with about $35,000 for living costs and insurance, which the school won’t cover.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.


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