By guest author Maghan McDowell from Vogue Business
The new administration is expected to be tough on social media advertising, maintain the pressure on Amazon’s private-label business and could be a boon for fashion-tech innovation.
A Biden administration would be a mixed bag for fashion and technology, policy plans and past interviews suggest, with fashion-tech startups poised to get a potential boost, a possible increase in Facebook advertising costs on greater regulation and Amazon’s private-label business and Google’s dominance under scrutiny.
Expect a collaborative relationship and tougher regulations, says Sarah Cannon, partner at San Francisco’s Index Ventures and former policy advisor on the National Economic Council at the White House during the Obama administration, pointing to previous Democrat-led administrations. “There will be greater scrutiny to big tech in particular,” she says. According to the Center for Responsive Politics, five of the 10 top contributors to the Biden candidate committee were tech companies.
Scrutinising anti-competitive behaviour of firms like Google and Facebook and expectations for social media platforms to police content are the biggest issues for the fashion industry. That could mean Amazon’s private-label apparel business, which it operates on its own platform and poses a potential threat to fashion, could be more carefully watched. Greater regulation of platforms like Facebook will likely enact greater trust, analysts suggest. Facebook advertisers, for example, will be less likely to face the kind of dilemma that plagued marketing departments this summer when the #StopHateForProfit boycott encouraged luxury to avoid Facebook and Instagram if greater regulation is enacted.
The cost of advertising on social media platforms may increase for fashion, if, as indicated, there is greater responsibility added to social media platforms to police their content.
“If the government enforces the platforms to combat hate speech and fake news, one could argue big brands will further invest on the platforms, which will make ads more expensive for small businesses again,” says digital advertising expert Rachel Tipograph, founder and CEO of e-commerce software company MikMak, whose clients include L’Oréal, Unilever, P&G and Estée Lauder. It comes down to trust: more trustworthy platforms are, in fact, good for advertising spend, Tipograph argues.
Anti-competitive behaviour and innovation
The US government recently filed documents that allege that Google, Apple, Facebook and Amazon unfairly limit competition and thus hinder innovation; most recently, the Department of Justice filed a lawsuit against Google to this end. This is largely up to Congress, and members of both parties have supported these efforts.
Biden has said that enforcement of antitrust laws has been insufficient, and that federal agencies that oversee competition should further scrutinise tech firms. “The Biden administration is more focused on making the economy work for more people and be more fair, and antitrust will be a large part of that,” Cannon predicts. “I know some of the folks advising him have been vocal about anti-monopoly rules.”
This could manifest in two ways, Cannon adds: by preventing tech giants from buying other companies, and by re-examining whether companies can be both “platform” and “seller”. This is most obvious in Amazon’s private-label business; lawmakers like Senator Elizabeth Warren say that Amazon’s access to data, and its ability to promote its own products online, give it an unfair advantage. Cannon says that regulations need to be amended in the digital age. “We know people only look at the first page [of web results]; in a grocery store, you are more likely to walk through a whole store, so it’s not comparable [to physical retail],” she says. While the focus of this has been on Amazon, where 9 % of clothing sales are from its own labels, this could be relevant for other e-commerce companies who have private-label brands, such as Rent the Runway, Stitch Fix and Revolve.
Cannon is optimistic that limiting mergers and acquisitions might lead to more innovation and give rise to “the next important consumer platform”. If tech companies like Facebook can’t as easily absorb potential competitors as it did with Instagram, it will be easier for startups to get scale, Cannon says. “As an investor, I expect to be investing more as a result.” Another potential boon for innovation? Immigrants; the Biden administration is likely to be more welcoming of foreign workers.
TikTok, China and AI
While it’s unclear how Biden feels about the ban on downloading of Gen Z and new fashion favourite app TikTok and WeChat in the US, his administration is likely to maintain the pressure on Chinese companies. At a campaign stop in September, he said, “I think that it’s a matter of genuine concern that TikTok, a Chinese operation, has access to over 100 million young people, particularly in the United States of America.”
The new administration might further scrutinise facial recognition technology in retail, like the kind used in Amazon stores, and being tested by Target and Walmart, or the use of algorithms to target specific customers online. Ultimately, we could see new regulations that are focused on preventing bias, such as racial bias in data sets, Cannon says. “It’s an interesting new area of policy, and some of that will go to the courts.”