Microsoft is set to shut its Skype office in London, putting 400 jobs at risk, the Financial Times reports.
Skype counts among one of Europe's most valuable unicorns - tech firms valued over $1bn (£768m) - and the closure will come as a blow to the UK tech industry just as it comes to terms with the Brexit vote.
A Microsoft spokesperson said the tech giant has decided to "unify some engineering positions, potentially putting at risk a number of globally focused Skype and Yammer roles". Yammer is a Microsoft business that provides social networking services for organisations.
"We are deeply committed to doing everything we can to help those impacted through this process. Microsoft will be entering into a consultation process and offer new opportunities, where possible," the spokesperson said.
The UK is home to more tech unicorns than any other country in Europe, and has double the number of its next closest country, Sweden.
London is particularly proud of its strong collection of fintech firms, but the Brexit vote has put a question mark over the sector, as it is not yet clear whether Britain will secure the passporting rights required for financial firms based in London to have automatic access to the EU market.
Half of the UK's fintech firms could lose access to the European market if passporting rights are scrapped.