Disney (DIS) announced a surprising decision to lay off over 300 staff members from its Beijing office in March, citing financial reasons. However, internal sources suggest the company's move was, in part, a reaction to anticipated scrutiny over data security by U.S. lawmakers. Disney's Beijing team, adept at tailoring personalized recommendations for Prime Video (AMZN) users, had access to some U.S. customer data. With Disney CEO Bob Iger's impending meeting with Republican Rep. Mike Gallagher, a critic of U.S.-China tech collaboration, concerns over data vulnerabilities surfaced, prompting the staff reduction decision.
The company's relationship with China is multifaceted. China, a significant market for Disney, brings in substantial revenues from movie releases, theme parks, and TV shows. Despite this, Disney has faced challenges in the region, ranging from selective movie bans by Chinese censors to criticism over filming choices, like shooting parts of "Mulan" in Xinjiang. The latter has been under scrutiny for alleged human rights abuses against its Uyghur Muslim population. However, following Iger's return as Disney's CEO, several Disney movies, including notable titles like "Avatar: The Way of Water," have secured release approvals in China.
Disney's operational hiccups following the Beijing layoffs became evident when some streaming functions experienced glitches. Systems such as Hulu experienced disruptions in their search functions. These setbacks, attributed to the absence of the laid-off Beijing team, required Disney to temporarily reinstate some team members to resolve the issues.
Rep. Gallagher's criticisms extend beyond Disney. He has expressed concerns over the potential influence of the Chinese government on U.S. tech and media companies, emphasizing potential risks in areas such as data security, censorship, and revenue-sharing policies. Hollywood studios, including Disney and Sony Pictures (SONY), have been under the congressman's radar, emphasizing the ongoing challenges U.S. companies face when navigating their business relationships with China.
