TikTok, ByteDance spent millions on lobbying Congress

TikTok and its parent company combined to spend more than $13 million on lobbying federal government officials since 2019 — an effort that appears to have fallen flat as lawmakers push proposals targeting the app’s ownership by a Chinese company or even seek to ban TikTok in the U.S. outright.

Weeks after Republican Rep. Ken Buck of Colorado and Sen. Josh Hawley of Missouri introduced legislation that would bar 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 a person close to Buck.

Beckerman pushed back on concerns from Buck’s staff that TikTok is harvesting customer data, and advocated for the company’s new initiative known as Project Texas, this person explained. Project Texas is TikTok’s effort to place its U.S. customer data into a secure hub managed by the tech giant Oracle, which is meant to ease U.S. government concerns that the information could 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 fears raised by lawmakers who want to ban the app, which has 150 million monthly active users in the U.S. The company has tried to show it can address concerns about user information without an outright ban, but most lawmakers at a contentious hearing about TikTok this month seemed unconvinced Project Texas would adequately do so.

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

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

Brooke Oberwetter, a spokeswoman for TikTok, did not deny any element of this story. She defended the work of TikTok’s team in Washington and said the company is trying to address lawmakers’ privacy and safety 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 peer companies on solutions that address the industrywide issues of privacy and safety.”

One of the leading proposals targeting TikTok is the RESTRICT Act, introduced by a bipartisan group of senators led by Sens. Mark Warner, D-Va., and John Thune, R-S.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 firms or individuals in a select group of foreign adversary countries, including China. The Commerce secretary could recommend the president take action up to a ban.

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

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

Since the call with Beckerman, Buck has not held back in calling the app a threat to national security. Buck’s staff members responded to Beckerman that 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 wasted on trying to change Buck’s mind. “It’s like they’re lighting 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 Capitol Hill weeks before Chew’s testimony was “amateur hour.” The person said congressional offices at times declined meetings with company representatives, and that TikTok officials did not reach out to key lawmakers such as Hawley who have targeted the app.

Hawley has not eased his campaign to ban TikTok. He tried on Wednesday to win unanimous Senate support to fast-track his bill. Sen. Rand Paul, a Kentucky Republican who is now among the small group of lawmakers from both parties who have opposed the effort to bar access to the app, blocked Hawley’s legislation. While there are plenty of lawmakers who haven’t yet concluded 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 advisors and aides to congressional lawmakers. The fact that some lawmakers have showed little interest in hearing out TikTok executives is the latest sign the company may need more allies in Congress to prevent new restrictions on the app or a potential ban.

Warner met earlier this year with TikTok lobbyists, according to a person at the gathering at the senator’s office. The Virginia lawmaker and Thune later introduced their bill that would empower the Commerce secretary to take action against TikTok. The White House has since endorsed the bill and called for 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 ramped up its lobbying just ahead of Chew’s testimony in front of the House Committee on Energy and Commerce. The company flew TikTok influencers to Washington before the event.

The company also had allies in a handful of Democratic lawmakers such as Rep. Jamaal Bowman, D-N.Y. A day before the hearing, he and popular content creators on the app held a news conference to oppose a potential ban.

But in private meetings, some of those same influencers told Bowman that there need to be regulations passed to protect their data across 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, creators’ pleas to maintain 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, deriding Congress for what they saw as a lack of understanding of the technology.

But based on the five hours of tense questioning by members of both parties at the hearing, the creators’ appeals didn’t seem to offset the deep concerns lawmakers shared about the app’s connections 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 pre-hearing lobbying. Bringing in TikTok creators to amplify the company’s message “hasn’t swayed my boss,” Moore added.

Still, Moore said his office has been hearing a lot from constituents since the hearing. Before the testimony, calls about TikTok would “trickle in,” he said. But after, “our phones were ringing off the hook,” with the majority of callers voicing opposition to a TikTok ban.

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

While often a call like that “starts out hot,” Moore said constituents would tend to calm down once 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 still likely be “further discussion” about how to address the concerns directly related to TikTok’s Chinese ownership. But Schakowsky, who co-sponsored the bipartisan privacy legislation that passed out of the committee last Congress, said she hopes the hearing brings renewed momentum to privacy protections that would apply to other large tech companies as well.