New lobbying disclosures reveal that TikTok parent company ByteDance has ramped up its lobbying amid mounting efforts to crack down on the video-sharing app, pouring record sums of money into federal lobbying.
ByteDance spent more in the first three quarters of 2023 than any prior year, with another three months still to go. Each quarter of 2023, the China-headquartered company has outpaced prior years, spending about $7.4 million in federal lobbying and eclipsing the $4.9 million it spent on federal lobbying in 2022, an OpenSecrets analysis of new lobbying disclosures filed Oct. 20 found.
To date, since ByteDance first reported payments to federal lobbyists in 2019, it has poured more than $19.9 million into lobbying.
In the last three months alone, the company spent over $3.7 million on federal lobbying, setting a new company record for federal lobbying in a single quarter and surpassing what it spent annually in 2019 and 2020 combined.
“The higher expenditure this quarter reflects a unique settlement of Restricted Stock Units that are part of our employee compensation,” a TikTok spokesperson told OpenSecrets.
In July, ByteDane announced it was dropping a rule that stock grants can’t vest until a liquidity event such as the company going public or being sold, letting employees cash out. Payments to lobbyists employed by ByteDance were reported in the company’s most recent Lobbying Disclosure Act filings.
Around the same time as the rule change, ByteDance also announced plans to buy at least $300 million worth of stock from current and former U.S. employees in a deal that values the company at $223.5 billion, further discounting its valuation despite its profitability as TikTok faces increased pressure over its China ties.
ByteDance faces a nationwide push to ban TikTok and is under increased scrutiny from U.S. officials over national security concerns, the spread of misinformation and data privacy risks related to its connections to the Chinese government.
Concerns surrounding TikTok have heightened due to China’s expanding national intelligence and counterespionage laws, which could potentially require TikTok to provide user data to the Chinese government for national security purposes.
“We take national security concerns seriously and have launched an initiative – voluntarily and at TikTok’s expense – to build a secure environment for U.S. user data that will protect our platform from outside influence, and put additional safeguards on our content recommendation and moderation tools,” a TikTok spokesperson told OpenSecrets.
ByteDance is based in Beijing but registered in the Cayman Islands, a common practice for privately owned multinational firms. TikTok, a wholly-owned subsidiary, maintains dual headquarters in Singapore and Los Angeles but staff in ByteDance’s Beijing headquarters reportedly have substantial control over the popular video-sharing app, which has more than 150 million U.S. users.
“Nearly sixty percent of ByteDance is owned by global institutional investors, such as General Atlantic and Susquehanna International Group. Twenty percent is owned by our founders; and twenty percent is owned by employees. Of ByteDance’s five board members, three of them are Americans,” the spokesperson told OpenSecrets.
During the most recent quarter, ByteDance lobbyists focused on advocacy related to internet technology and machine-learning-enabled content platforms that use artificial intelligence to customize feeds based on users’ preferences.
The lobbyists also advocated around issues related to “privacy, data security, data localization, protecting children, intermediary liability and platform/content moderation, including federal privacy and protection legislation.”
ByteDance also paid for lobbying on “trade issues affecting internet companies including legislation related to cross-border data transfers and legal frameworks for foreign-based applications and services.”
During the third quarter of 2023, ByteDance ranked thirteenth among all federal lobbying clients spending. The TikTok parent company outspent over 10,000 other federal lobbying clients and made significant headway compared to its counterparts in the social media industry.
ByteDance’s $3.7 million investment in third-quarter federal lobbying eclipsed the $3.5 million spent by Google parent company Alphabet Inc. The contrast was even more striking when juxtaposed with the $1.8 million spent by Apple, the $160,000 spent by Twitter, which was recently renamed X, and the $140,000 spent by Snapchat owner Snap Inc. last quarter. But ByteDance’s federal lobbying spending was surpassed by Facebook parent Meta’s $5.1 million outlay in the same quarter.
The uptick in lobbying spending comes as lawmakers ramp up attempts to regulate social media companies.
The lobbyists pushed against the Protecting Kids on Social Media Act, which would bar anyone under the age of 13 from using social media and require platforms to verify the age of users. The bipartisan bill was introduced in April by Sens. Brian Schatz (D-Hawaii), Tom Cotton (R-Ark.), Chris Murphy (D-Conn.) and Katie Britt (R-Ala.).
TikTok requires users to be 13 years or older to have an account, according to TikTok community guidelines last updated in March 2023 and accessed by OpenSecrets in October 2023. “In the United States, there is a separate under 13 TikTok experience, which provides a more limited experience designed with additional safety protections,” the guidelines note.
In new disclosures, ByteDance’s lobbyists also reported lobbying efforts related to the annual National Defense Authorization Act for Fiscal Year 2024. Members of Congress considered various iterations of the annual defense appropriations bill, including one that proposed a provision to ban TikTok. However, the process was prolonged by the ouster of Rep. Kevin McCarthy (R-Calif.) from the House speakership.
ByteDance additionally invested in lobbying around the RESTRICT Act, ANTI-SOCIAL CCP Act, No TikTok on United States Devices Act and the DATA Act. The bills range from restricting children’s use of the internet to barring children from using social media to banning some social media platforms entirely.
In March, dozens of TikTok influencers descended on Capitol Hill to protest impending regulations, as members of Congress grilled TikTok CEO Shou Zi Chew. In addition to those influencers, ByteDance has enlisted a cadre of powerhouse lobbying firms and “revolving door” lobbyists.
Former members of Congress on ByteDance’s team of lobbyists include former Sens. Trent Lott (R-Miss.) and John Breaux (D-La.) as well as former Reps. Jeff Denham (R-Calif.), Bart Gordon (D-Tenn.) and Joe Crowley (D-N.Y.). Crowley, who lost his House seat to Rep. Alexandria Ocasio-Cortez (N.Y.) in 2018, registered to lobby for ByteDance in April.
As states across the country also consider laws to restrict what children can access online, TikTok has started ramping up state lobbying with hundreds of thousands of dollars in spending across multiple states.
At least 34 states have proposed or enacted bans on using TikTok on government-issued devices, according to an Associated Press analysis.
At the federal level, TikTok’s lobbyists have strategically targeted the Senate, House and the Executive Office of the President in their advocacy efforts.
In conjunction with Congress’ legislative proposals to restrict TikTok, President Joe Biden’s administration has explored the possibility of tightening control over the video-sharing app.
In June of 2021, after withdrawing former President Donald Trump’s executive orders banning new downloads of the app in the U.S., Biden ordered the Committee on Foreign Investment in the United States to review TikTok.
Since then, President Biden has intensified his push to limit children’s access to social media — an effort that could have a significant impact on TikTok.
Biden declared a “youth mental health crisis” in May, attributing part of the blame to the internet. Biden has claimed on several occasions that social media harms children and on May 23 issued an executive action with the goal to “protect youth mental health, safety, and privacy online.”
The proposals have sparked concerns about free speech, censorship and privacy issues with age verification mechanisms from a wide range of organizations, including the American Civil Liberties Union and Electronic Frontier Foundation.
A new U.S. Supreme Court case also stands to potentially affect the ability to regulate TikTok content.
On Friday, the Supreme Court announced it will review a lower court decision that barred government officials at the White House and other key federal agencies from contact with social media companies. In the meantime, the Supreme Court put a temporary hold on the Fifth Circuit Court of Appeals decision that blocked some government officials from having contact with TikTok and other social media companies.
10/27/2023: This article was updated to add additional comments from a TikTok spokesperson and information from TikTok community guidelines.
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Source: OpenSecrets.org
