TikTok, ByteDance spent $13 million on US lobbying campaign

TikTok and its parent company have collectively spent more than $13 million lobbying federal government officials since then 2019 — an effort that appears to have fallen flat as lawmakers push proposals that target the app’s ownership by a Chinese company or even seek to ban TikTok in the United States outright.

Weeks After Republican Rep. Ken Buck of Colorado and Sen. Josh Hawley of Missouri introduced legislation that would block TikTok downloads nationwide, Buck’s staff received a call in February from Michael Beckerman, the head of the social media company’s U.S. public policy shop, according to one person near Buck.

Beckerman pushed back on concerns from Bucks staff that TikTok was collecting customer data and championed the company’s new initiative known as Project Texas, this person explained. Project Texas is TikTok’s effort to place its US customer data in a secure hub managed by the tech giant Oraclewhich is supposed to alleviate the US government’s concern that the information can be accessed by Chinese parent company ByteDance or members of the ruling party in China.

The lobbying comes amid a sustained effort by TikTok to play down concerns from lawmakers who want to ban the app, which has 150 million monthly active users in the US. The company has tried to show it can address concerns about user data without an outright ban, but most lawmakers on a controversial hearing on TikTok this month didn’t seem convinced that Project Texas would do that enough.

TikTok CEO Shou Zi Chew looks on while testifying before a House Energy and Commerce Committee hearing titled “TikTok: How Congress can Safeguard American Data Privacy and Protect Children from Online Harms,” ​​as lawmakers scrutinize the Chinese-owned video-sharing app, on Capitol Hill in Washington on March 23, 2023.

Evelyn Hockstein | Reuters

TikTok CEO Shou Zi Chew told US lawmakers at the hearing that China-based employees at ByteDance may have access to certain US data from the app. But he assured them that employees would no longer have that information once Project Texas is complete.

The sustained lobbying pressure and Chew’s testimony so far have not stifled efforts on Capitol Hill to sever TikTok’s ties to its Chinese owner or limit access to the app.

Brooke Oberwetter, a TikTok spokeswoman, did not deny any part of this story. She defended the work of TikTok’s team in Washington, saying the company is trying to address lawmakers’ privacy and security concerns.

“Our team in Washington is — and always has been — focused on educating lawmakers and stakeholders about our company and our service,” Oberwetter said. “We will continue our work to educate lawmakers and the American public about our progress in implementing Project Texas to address national security concerns, and we will continue to work with lawmakers, stakeholders and our business peers on solutions that take address industry-wide issues of privacy. and security.”

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One of the leading proposals targeting TikTok is the RESTRICT Act, which was introduced by a bipartisan group of senators led by Sens. Mark Warner, D-Va., and John Thune, RS.D.. The bill, which does not yet have companion legislation in the House, would give the Commerce Secretary the authority to evaluate national security risks related to certain technology transactions with companies or individuals in a select group of foreign adversary countries, including China. The Commerce Secretary can recommend to the President to take action up to a ban.

Another proposal is the DATA Act, which was introduced by Rep. Mike McCaul, R-Texas. It would revoke protections that have typically shielded creative content from US sanctions. It would also authorize the president to impose sanctions on China-based companies that transfer sensitive personal data of Americans to individuals or companies in China. The proposal passed the GOP-led House Foreign Affairs Committee along party lines, with Democrats fearing it was rushed.

At the far end of the extreme is the Hawley and Buck legislation that simply seeks to ban TikTok outright by calling on the president to block transactions with ByteDance.

Since the conversation with Beckerman, Buck has not held back in calling the app a threat to national security. Buck’s staff told Beckerman they were still concerned about the company’s privacy, cybersecurity and national security policies, the person close to Buck said.

Another ally of the Colorado lawmaker said the lobbying money is being wasted trying to change Buck’s mind. “It’s like they’re setting their money on fire,” a Republican strategist allied with Buck told CNBC.

Another GOP strategist familiar with TikTok’s lobbying efforts told CNBC that the company’s “last-minute blitz” to lobby on Capitol Hill weeks before Chew’s testimony was “amateur hour.” The person said congressional offices sometimes declined meetings with company representatives and that TikTok officials did not reach out to key lawmakers like Hawley who have targeted the app.

Hawley hasn’t eased up on his campaign to ban TikTok. He tried Wednesday to win unanimous support from the Senate to speed up his bill. Late. Rand Paul, a Republican from Kentucky who is now among the small group of lawmakers from both parties who have opposed the effort to block access to the app, blocked Hawley’s legislation. While there are plenty of lawmakers who have yet to conclude that a ban is necessary, only a handful have openly ruled it out.

Those who declined to be named in this story did so to speak freely about private conversations and meetings. A Hawley spokeswoman did not return a request for comment.

The interaction with Buck’s team represents just one of many instances when lobbyists for TikTok, or its China-based parent company ByteDance, have seen their campaigns fall on deaf ears on Capitol Hill, according to advisers and aides to congressional lawmakers. The fact that some lawmakers have shown little interest in hearing from TikTok executives is the latest sign that the company may need more allies in Congress to prevent new restrictions on the app or a potential ban.

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Warner met earlier this year with TikTok lobbyists, according to a person at the gathering in the senator’s office. The Virginia legislature and Thune later presented theirs the bill which would give the Commerce Secretary the right to take action against TikTok. The White House has since endorsed the bill and urged Congress to pass it so President Joe Biden can sign it.

Warner’s office did not return a request for comment.

TikTok appears to have stepped up its lobbying just ahead of Chew’s testimony before the House Energy and Commerce Committee. The company flew TikTok influencers to Washington before the event.

The company also had allies in one handful of Democratic lawmakers like Rep. Jamaal Bowman, DN.Y. A day before the hearing, he and popular content creators on the app held a press conference to oppose a possible ban.

But in private meetings, some of those same influencers told Bowman there must be rules to protect their data on all social media platforms, including TikTok, while keeping the app intact, according to an aide familiar with the discussions.

Regardless of their impact on lawmakers, the creators’ pleas to keep access to TikTok in the U.S. have seemed to resonate with many American users who see the app as a source of entertainment, information and even income. During and after the hearing, TikTok users shared clips of lawmakers asking basic questions of the CEO, taunting Congress for what they saw as a lack of understanding of the technology.

But based on five hours of tense questioning by members of both parties at the hearing, the creators’ pleas did not seem to outweigh the deep concerns lawmakers shared about the app’s ties to China, along with the addictive and potentially harmful qualities of its design.

“I don’t think they won over any lawmakers,” Alex Moore, communications director for Rep. Jan Schakowsky, D-Ill., said of TikTok’s lobbying before the hearing. Bringing in TikTok creators to amplify the company’s message “hasn’t affected my boss,” Moore added.

Still, Moore said his office has heard a lot from constituents since the hearing. Before the testimony, talk about TikTok would “bleep in,” he said. But after, “our phones rang off the hook” with the majority of callers expressing opposition to a TikTok ban.

“We heard overwhelmingly that’s not what our voters are interested in,” he said.

Although a conversation like that often “starts hot”, Moore said constituents would tend to calm down when the staff explained that Schakowsky wants comprehensive privacy legislation so as not to “let other companies off the hook” for similar data practices.

Schakowsky told CNBC immediately after the hearing that there will likely still be “further discussion” about how to address the issues directly related to TikTok’s Chinese ownership. But Schakowsky, who co-sponsored bipartisan privacy legislation who walked out of committee last Congress, said she hopes the hearing gives renewed momentum to privacy protections that would apply to other big tech companies as well.

Connected lobbying efforts

TiKTok’s and ByteDance’s lobbying efforts are directly linked.

ByteDance’s quarterly lobbying reports show that all of their internal lobbyists work for TikTok. They include Beckerman, who once worked as policy director for former GOP Rep. Fred Upton of Michigan, along with Freddy Barnes, who had a stint in Republican House Speaker Kevin McCarthy’s office.

TikTok itself has hired its own legion of outside lobbyists. Its latest recruits include former Rep. Jeff Denham, R-Calif., and Ankit​ Desai, a former aide to Biden when he was a member of the U.S. Senate.

ByteDance and TikTok have collectively spent more than $13 million on federal lobbying since 2019, according to lobbying reports and data reviewed by OpenSecrets.

The majority of lobbying spending related to the social app has come from ByteDance. The TikTok parent company spent $5.3 million on federal lobbying in 2022, a new record for the company, according to nonpartisan OpenSecrets.

TikTok itself has spent just over $900,000 since 2020 on outside lobbying consultants.

ByteDance too donated more than $400,000 last year to nonprofit groups allied with members of Congress for “honorary expenses,” according to a filing.

The document shows ByteDance donated a combined $300,000 to the Congressional Hispanic Caucus Institute and the Congressional Black Caucus Foundation, groups linked to predominantly Democratic caucuses in the House. Each of these organizations lists Jesse Price, a director of public policy at TikTok, as a member of either its board or advisory council.

Beckerman, the leading TikTok lobbyist, signed the report showing the contributions from ByteDance.

TikTok and ByteDance have also targeted Biden’s White House executive office with lobbying since 2020, according to revealing reports.

The White House did not respond to a request for further details about the lobbying.