Back in February, Bob Iger announced that the Walt Disney Company would undergo a restructuring, causing $5.5 billion in spending cuts.

As a part of this overhaul, 7,000 job cuts went into motion, and many lost their jobs in the following months. In March, the company laid off more than 300 employees in China who were working on its streaming services. Now, those layoffs are creating more questions as malfunctions affect the company’s streaming programs.

According to the Wall Street Journal, shortly after these layoffs, some streaming functions started to experience problems — like features that suggested what programs to watch next based on the viewer’s history and profile. On Hulu, the search function stopped working entirely.

After these issues arose, it took days for the company to work out these malfunctions, partially because the automated error messages were “being sent to Slack channels that were previously monitored by the Beijing team, which had lost access.”

While these issues could be a direct result of layoffs related to spending cuts, there might be more at play than simple cost-cutting. According to the Wall Street Journal article, around the same time that these job cuts took place, Bob Iger was scheduled to meet Republican Rep. Mike Gallagher, “who chairs a congressional committee focused on U.S. competition with China. Executives were braced for pointed questions about data security.”

Since the Bejing team that was laid off specialized in technology that allowed streaming services to make personalized recommendations, they had access to some U.S. consumer data that caused concerns. The company’s legal team thought that this access to data would look like a red flag to the committee.

Currently, Disney denies that the layoffs were related to these security worries. According to a company spokesperson, “Disney’s decision to restructure and consolidate these operations was not motivated by data security vulnerability concerns,” and rather that it was a result of the plan to eliminate 7,000 jobs communicated in February.

China is an important money maker for the company, being the “second-largest market for theatrical movie releases” and also home to Shanghai Disneyland, which Iger describes as “the biggest accomplishment of my career.” So this news has caused a lot of questions. We’ll keep an eye out for any updates, so stay tuned to DFB for more.

Disney CEO Bob Iger: Savior or Saboteur?

What do you think of this development within the Walt Disney World Company? Let us know in the comments below.

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