Financial Times Europe - 07.04.2020

6 ★ FINANCIAL TIMES Tuesday 7 April 2020

C O M PA N I E S & M A R K E T S

DAV E L E E— S A N F R A N C I S C O

Uber has started listing regular job
openings at other companies in its app,
including at 7-Eleven, Amazon and
McDonald’s, as it tries to help drivers
who have suffered a sharp drop in
demand.

The company also said its more than
240,000 drivers who hold a commercial
license would be paired with logistics
companies, such as those that offer
long-haul freight, for other employment
opportunities.
The move is in line with Uber’s long-
term strategy of becoming a wholesaler
of temporary workers to multiple
industries beyond transport and deliv-
ery. In 2019, it launched Uber Works, a
short-term staffing service, in Chicago,
Dallas and Miami.
From yesterday, US-based users of the
Uber Driver app will see a new Work

Hub section listing other ways of mak-

ing money.

The hub will include information on

the existing Uber Works programme,

but it will also include external job

openings from about 15 companies that

are hiring nationally and at volume.

These include the likes of Amazon,

Domino’s Pizza, Walgreens and PepsiCo.

The hirings will be made directly by the

companies, with no commission or

arrangement regarding pay with Uber, a

spokesman said.

The group said the Work Hub would

“soon” launch in other markets. In the

meantime, the company has emailed

drivers in the UK suggesting they look

into job opportunities at delivery serv-

ice Ocado.

“They’re doing essential work to keep

our communities moving as we fight

this virus, but with fewer trips happen-

ing they need more ways to earn,” said

Dara Khosrowshahi, Uber’s chief execu-

tive, in a statement. “With the Work

Hub, we hope drivers can find more

work opportunities, whether that’s with

another of Uber’s businesses, or at

another company.”

Uber and other gig economy compa-

nies are still fighting court battles

against giving drivers more employ-

ment rights. Many of the jobs that will

be listed on the Work Hub offer benefits

such as sick leave and paid holiday —

which Uber has insisted its drivers, on

the whole, do not want if it means losing

flexibility over when to drive.

“I’m glad to see that Uber drivers will

be getting connected to other work

opportunities but that does not relieve

Uber from complying with the law and

providing the workplace protections it

should be providing,” said Shannon

Liss-Riordan, an employment lawyer

who represents gig economy workers.

Technology

Uber starts listing other jobs for its drivers

JAV I E R E S P I N OZ A— B R U S S E L S

The EU is focusing the next stage of its

competition probe into Facebook on

whether the social media network is

distorting the classified advertising

market by promoting its free Market-

place service to its 2bn users.

Investigators have sent a 14-page ques-

tionnaire to competitors asking them to

outline the effect that Facebook is hav-

ing on their classified-ads business. In

Europe, German media group Axel

Springer and Norway’s Schibsted are

both rivals.

“Did the launch of Facebook Market-

place impact your online classified ads

services business in each (European

Economic Area) country in which you

are present?” asks one of the questions.

Launched in 2016, Marketplace is

Facebook’s version of the free US adver-

tising site Craigslist. It allows Facebook

users to buy and sell anything from

sofas and barbecues to mobile phones.

On Facebook’s last earnings call in

January, Sheryl Sandberg, chief operat-

ing officer, said: “Marketplace is grow-

ing nicely. It’s now used by hundreds of

millions of people every month. We also

rolled out ads in Marketplace, which are

available in 94 markets, which means

advertisers can extend their news feed

ads to Marketplace. It’s very early, but

we’re seeing good results.”

The latest questionnaire is at least the

third that EU officials have sent out as

they look to build a competition case

against Facebook. Investigators have

continued to work on the case despite

requests for a delay because of coronavi-

rus, and people with direct knowledge

of the probe said that the EU was hoping

to charge Facebook in the summer.

They warned, however, that the timing

could still slip. The EU is also investigat-

ing the social network’s Libra crypto-

currency over antitrust concerns.

Competitors have alleged the social

network leverages its dominant posi-

tion to push its services for free to users

while taking advantage of the data it

gathers from users.

Facebook said: “Compliance with

competition rules and other legal

requirements is a key consideration for

Facebook. We stand ready to answer

any questions the European Commis-

sion may have.”

Additional reporting by Hannah Murphy in

San Francisco

Technology

EU’s Facebook probe turns to classified ads

JA N E C R O F T— LO N D O N
JO E M I L L E R— F R A N K F U RT

Volkswagen suffered a big setback in
one of the UK’s largest consumer law-
suits yesterday after the High Court
ruled the company fitted its cars with
“defeat device” software that circum-
vented pollution emissions limits.
VW now faces further litigation,
which will determine whether it is liable
to pay damages to more than 90,
British claimants, and how much they
will receive.
The world’s largest carmaker has paid

out more than €31bn in costs related to

“Dieselgate”, including $10bn in a settle-

ment reached with US consumers

months after the scandal broke in 2015.

In February, VW agreed a €830m set-

tlement with more than 400,000 claim-

ants in Germany, where it also faces

many individual cases.

However, the carmaker is still fighting

the High Court lawsuit in the UK, where

customers claim they are due damages

after they were sold cars that artificially

lowered emissions of nitrogen oxide

during testing.

VW said it was considering an appeal

on the decisions reached yesterday,

before proceeding to the main trial.

Lawyers for the carmaker argue that

the vehicles in question have always

been safe, roadworthy and legal to drive

in the UK, and that an update rolled out

in the aftermath of Dieselgate dealt with

the software issue.

Mr Justice Waksman ruled yesterday

that VW’s vehicles were installed with a

defeat device and also that as a matter of

EU law, he was bound by the findings of

the German Federal Motor Transport

Authority (KBA) in 2015 that VW

vehicles contained a prohibited work-

around.

In his ruling, the judge said he was

“far from alone” in reaching his conclu-

sions, as the KBA and “numerous courts

and other bodies in various jurisdic-

tions” all agreed that the software func-

tion had been used to cheat emissions

tests.

He said his conclusions did not

depend on court decisions elsewhere

because “the answer is so plain in any

event”. He was also critical of parts of

VW’s defence, describing some of

its arguments as “specious” and “hope-

less”.

Lawyers representing the 91,000 Brit-

ish consumers welcomed the ruling.

Gareth Pope, lawyer at Slater and Gor-

don, said: “This damning judgment con-

firms what our clients have known for a

long time, but which VW has refused to

accept: namely that VW fitted defeat

devices into millions of vehicles in the

UK in order to cheat emissions tests.”

Bozena Michalowska-Howells, a law-

yer at Leigh Day that is representing

some claimants, urged the carmaker to

consider settlement negotiations “so

our clients are not forced to drag VW

through the courts and be faced with

further years of litigation to determine

their losses”.

VW said it was “disappointed”, but the

ruling related to “preliminary issues”

and it would continue to defend its posi-

tion “robustly”.

It said: “To be clear, today’s decision

does not determine liability or any

issues of causation or loss for any of the

causes of actions claimed.

“These remain to be determined by

the court as the case continues.”

Automobiles

VW installed ‘defeat devices’, UK court rules

Carmaker faces further

litigation after setback

on emissions software

‘Thisdamning judgment

confirms what our

clients have known

for a long time’

B E N JA M I N PA R K I N— N E W D E L H I

India’s banks and shadow lenders

face a surge in bad debts from the

nationwide economic lockdown aimed

at combating the coronavirus out-

break, risking a wave of corporate

defaults.

Rating agencies and analysts are con-

cerned the strict, 21-day lockdown

imposed by Prime Minister Narendra

Modi — which has shut down all but the

most essential economic activity — has

threatened the health of the banking

sector, particularly the 10,000 or so less-

regulated shadow lenders.

Shadow banks have benefited from

rapid growth over the past decade by

serving clients shut out of the formal

financial system with smaller loans for

everything from new machinery to

trucks to mortgages. They account for a

fifth of all new credit creation and ana-

lysts believe they could be hardest hit by

the pandemic.

Small businesses “are always on the

edge, they’re on the brink in terms of

their finances,” said Nirmal Jain,

founder of financial group IIFL, which

also has a non-bank financial group. “If

[the lockdown is] over a couple of weeks

from now, people will manage. There

won’t be casualties. But if it gets pro-

longed, then there will be a serious prob-

lem.”

Concerns over the health of India’s

financial system have already resulted

in a run on one private-sector bank,

IndusInd, which has lost 10 per cent of

its deposits over the past month. The

share price of the company, founded by

the wealthy Hinduja family, has fallen

more than 70 per cent in the past few

weeks.

India’s financial system had already

been hit over the past 18 months by a

jump in soured loans. The implosion of

shadow bank IL&FS in late 2018

sparked a panic known as India’s “Leh-

man moment”. The near-collapse in

March of Yes Bank spooked Indian

depositors and culminated in a govern-

ment-led rescue.

Many of the financial system’s prob-

lems stem from large-scale lending to

infrastructure projects that ran into

problems, such as power plants and

roads. But the abrupt nature of the coro-

navirus has now also affected smaller

loans to restaurant owners, truck driv-

ers and consumers, which had come to

be viewed by lenders as safer bets. These

borrowers, part of India’s huge informal

sector that accounts for an estimated 80

per cent of employment, risk losing

their income due to the lockdown.

“In the past, large corporate lending,

lumpy lending, was a risk,” said Ashish

Gupta, head of India research at Credit

Suisse. “Granular lending was seen as a

lot more safe. But this time even the

smaller lending is becoming a risk.”

Economic growth in India, where the

number of confirmed coronavirus

infections has risen past 3,500, was

already expected to slow to a decade-

long low, complicating efforts to clean

up loan books.

Since the lockdown of India’s econ-

omy began in late March, rating agen-

cies have downgraded shadow lenders

based on the immediate risks they face.

Moody’s last week lowered its rating for

Indiabulls, one of the largest housing

financiers, while Fitch downgraded

three others, including IIFL.

In addition to the risk that customers

default, shadow lenders could struggle

to raise new funds from banks, mutual

funds and other sources of to meet their

own obligations, analysts said.

Banks

India’s shadow

lenders face

rise in bad

debts from

lockdown

Aquestionnaire

has been sent to

peers for them to

outline the effect

Facebook is having

on their business

HA N N A H KU C H L E R— N E W YO R K
DO N ATO PAO LO M A N C I N I— LO N D O N

GlaxoSmithKlineis investing $250m in
San Francisco-based start-upVir Bio-
technologyto develop antibodies that
could be used to treat coronavirus.

The UK-based pharmaceutical com-
pany is acquiring a 6 per cent stake in
Vir Biotechnology by paying 10 per cent
more than the smaller group’s closing
price on Friday.
The announcement sent shares in Vir
up almost 20 per cent to $34.75 in early
trading in New York.
Many companies are hoping that anti-
bodies could be the quickest way to bol-
ster the immune systems of the sickest
patients and even help prevent health-
care workers from becoming ill.
Vir already has two viral antibodies
for Covid-19 that were developed from a
patient who had Severe Acute Respira-
tory Syndrome, or Sars, although other
antibodies can be produced artificially.
GSK said the Vir proteins had been
“highly potent” when targeted at the
coronavirus in the lab.
While antibody treatments represent
one hope for combating coronavirus,
other pharma companies are seeking to
develop or repurpose antiviral drugs,
such as those used to treat HIV/Aids,
and anti-inflammatory medicines.
Hal Barron, chief scientific officer at
GSK, said the companies will unite to
work on Vir’s “very promising antibod-
ies for targeting Covid-19” and many
other diseases.
George Scangos, chief executive of Vir
Biotechnology, said multiple therapeu-
tic approaches will be needed to stop the
pandemic. “It is likely that the current
coronavirus outbreak will not be the
last,” he said.
Bruno Bulic, an analyst at Baader Hel-
vea, said Vir’s approach was more “pro-
mising” than other potential treat-
ments, including some fromGileadand
AbbVie, that sought to disrupt the virus
using drugs for other purposes.
“It’s shooting in the dark, really,” he
said.
The news follows deals between Am-
gen and Adaptive Biotechnologies, and
Eli Lilly and AbCellera, to explore using
antibodies to treat Covid-19. Both
Takeda, the Japanese pharma company,
and Regeneron, the New York biotech,
have been trying to identify the most
robust antibodies from recovered
patients.

Pharmaceuticals

GSK invests

$250m in Vir

to find virus

treatment

AR A S H M A S S O U D I , A L I C E H A N C O C K A N D

A N D R E W E N G L A N D

Saudi Arabia’s Public Investment Fund

has built an 8.2 per cent stake in strug-

gling cruise operator Carnival, mark-

ing the Gulf fund’s latest high-profile

direct investment after previous bets

on companies such as Tesla and Uber.

The PIF’s position amounts to a $430m

stake based on the US-traded com-

pany’s share price, which rose 23 per

cent yesterday, but is still down by

almost 80 per cent this year.

The PIF, which is used by Crown

Prince Mohammed bin Salman to

advance and diversify Saudi Arabia’s

economic interests, revealed that it

owned 43.5m shares in a regulatory fil-

ing signed by its head, Yasir al-Ru-

mayyan, who is a close ally of the prince.

The purchase marks a rare sign of

investor confidence in an industry that

has been battered by the effects of the

coronavirus pandemic, which has killed

passengers and left cruise ships plead-

ing with countries to be allowed to dock.

All big cruise operators have sus-

pended operations until at least May

and share prices have tumbled in

response to their struggles. Carnival has

said it will burn through $1bn a month

even with all its ships in dock, including

payouts on customer deposits for can-

celled bookings and future committed

ship orders.

Last week it raised a total of $6.25bn

in debt and equity from investors as it

raced to secure funds to meet its cash

needs for the next several months. The

fundraising included the sale of $500m

of new shares at $8 each.

Multiple people with knowledge of

that deal confirmed that the PIF did not

acquire its stake through the offering.

That means the PIF bought the stake in

the open market, with an unknown pur-

chase price. It did not own any shares in

Carnival before the start of 2020. Shares

have fallen from $51 in January to less

than $8 last week before rebounding to

$10.44 yesterday afternoon.

The PIF has had a mixed record in

direct investing, with a 2016 bet on ride-

hailing group Uber still trading well

below the $62.5bn valuation it bought in.

The fund’s now exited position in Tesla

was revealed by the Financial Times in

August 2018 and prompted its founder

Elon Musk to make his “funding secured”

tweet, which ultimately led Mr Musk

and Tesla to face regulatory penalties.

A person close to the Saudi royal court

said: “Any investor should look at global

opportunities — the lessons learnt from

2008, buy undervalued assets.”

This person added that the PIF would

be active in dealmaking in the coming

weeks. “You will see a lot of acquisitions

in the next few weeks. This is a good

opportunity... keeping in mind their

main effort right now should be geared

to the domestic [economy].”

Carnival declined to comment.

See Markets Insight

Travel & leisure

Saudi Arabia fund reels in 8.2% Carnival stake

PIFbought

the stake in

the open

market,

with an

unknown

purchase

price

Carnival’s Ruby

Princess docks

at Port Kembla,

Australia,

yesterday.

Saudi Arabia’s

PIF, used by

Crown Prince

Mohammed bin

Salman, right,

owns 43.5m

shares in

Carnival— Dean

Lewins/EPA-EFE/

Shutterstock

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