Disney laid off hundreds of employees in its Beijing office ahead of a meeting with a US congressman who chairs a committee focused on US competition with China and data privacy, according to a report.
The Wall Street Journal reported Friday that the Mouse House canned more than 300 people in late March, days before CEO Bob Iger was scheduled to meet with Republican Rep. Mike Gallagher (R-Wisc.), who has been a tenacious critic about data security and China’s ability to access American consumer data.
The group of employees had access to some US customer data, according to people familiar with the matter, and Disney’s lawyers voiced concerns that the Beijing team had such access, noting that even though the data had been accessible by staff there for years, it “could be seen as a potential red flag by the committee.”
Disney told The Journal the layoffs were unrelated and were merely part of its ongoing cost-saving initiative.
“Disney’s decision to restructure and consolidate these operations was not motivated by data security vulnerability concerns,” a company rep said.
The company in February said it planned to eliminate 7,000 jobs as part of a cost-savings effort.
China is an important revenue driver for Disney, whose Marvel-owned movie studio, in 2019, sold more than $600 million worth of tickets in China with “Avengers: Endgame,” helping it become the second-highest grossing movie of all time.
In Iger’s memoir, published that same year, the CEO described opening mega theme park Shanghai Disneyland — which took nearly two decades and dozens of trips to mainland China to negotiate with government officials and oversee construction — as “the biggest accomplishment of my career.”
For Disney, China has emerged as pivotal to its ongoing consumer growth.
It has become an important hub of technological work for the its effort to grow its streaming business.
Sources said while Disney says it stores all US streaming customer data domestically, the Beijing staff worked on features such as “personalization and search” that require access to some subscriber information.
Republicans and Democrats have been critical in recent years about the Chinese government’s ability to access American user data.
China has adopted laws and rules under President Xi Jinping that could give the it access to data collected by companies operating in the country.
Gallagher and others in Congress have been vocal that China’s government could use its leverage, especially in the tech and media industries, to not only strengthen its military capabilities, but also use Americans’ user data to influence US pop culture by forcing entertainment companies to self-censor, which could help burnish China’s global image.
Earlier this year, the Wisconsin Republican said he wanted top executives from Silicon Valley, Hollywood and professional sports leagues, including Iger, to testify before the committee he oversees.
In April, Gallagher traveled to California to meet with tech and media tycoons, and he interviewed Iger in Los Angeles, which he described as more of a fact-finding mission than a grilling.
Chinese officials have said the claims aired in Congress reflect a “Cold War mentality” aimed at holding back an economic and military competitor.
Meanwhile, Disney has tried to tread a fine line with China and the US government.
China has banned some of its biggest movies — such as “Black Widow,” Spider-Man: No Way Home” and “Shang-Chi and the Legend of the Ten Rings,” which Disney says has contributed to disappointing box-office results for its Marvel Studios.
On the flip side, Disney has been criticized for filming parts of its 2020 live-action remake of “Mulan” in Xinjiang province where Beijing is carrying out its hideous campaign against the Uighurs, while offering “special thanks” to several Communist Party agencies in the credits.
Gallagher called out Disney, as well as Sony Pictures Entertainment, which also ran into trouble with Chinese censors in the 1990s with the movie “Seven Years in Tibet,” during a September congressional hearing on censorship.
“Today, companies like Disney bend over backwards to avoid portraying the CCP in a negative light,” he said.
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