It is terribly distracting, especially when it comes to having technical discussions on a conference call. When the people adjacent to you are having their own discussions and are totally devoid of the fact you are trying to listen to what is being said on the call. I also get complaints from those on the call about the background noise around me.
Yeah I watched this unfold in the large Company I work for. Upper management gets sold on this shared workspace concept because they squeeze more people per square foot and supposedly save money ... and because they think this is the hip thing to do nowadays, e.g. Google is doing it.
I believe there is another reason and it is tied to political idealogy. Everyone having their own space is more conservative. Everyone using shared spaces is more communal and socialist. I saw where they would have these huge communal spaces that were hardly used.