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Lawmakers Take New Aim at Tech — and Fashion Should Brace Itself

It’s hard to overestimate TikTok’s influence on fashion and beauty trends and social commerce, or AI’s impact on virtually every other part of retail. So when both faced momentous new mandates across two continents on Wednesday, brands began to brace for what could be a momentous impact.

The House of Representatives just advanced a bill forcing social media super-network TikTok to separate from its owner, China-based ByteDance, or see the app banished in the U.S. The vote was passed with overwhelming bipartisan support, at 352 to 65, primarily due to national security concerns — the same worries touted by the previous Trump administration and nearly forced the company to sell the platform four years ago. President Joe Biden vowed to sign it, if it clears the Senate. At that point, TikTok would have five months to find a new owner.

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Meanwhile, on the same day, the EU passed a major piece of legislation to govern the development and use of AI. First proposed in 2021, the Artificial Intelligence Act sets out guardrails based on levels of risk, from low, medium and high up to “unacceptable,” which would justify banning the tech.

Artificial intelligence is already very much part of our daily lives. Now, it will be part of our legislation too,” Roberta Metsola, president of the European Parliament, shared in a social media post.

The EU AI Act isn’t fully baked…yet

Fundamentally, the EU AI Act is similar to the EU’s GDPR (or General Data Protection Regulation) of 2016, in that it aims to protect consumers from bad tech policies, though for AI instead of personal data. According to its text, it seeks to guard and promote the “uptake of human-centric and trustworthy AI,” which is a noble goal and one that proved so popular, the regulation sailed through voting with a massive majority of 523 votes in favor and just 46 against. It even has fans from within the tech sector.

Of course it does. One could hardly argue with the need for guardrails for such a complex, powerful and fast-growing technology. But that also means implementation is no simple affair. In fact, it already looks complicated, perhaps even messy. The scope covers multiple facets of AI and extends beyond its makers and developers to partner companies that use their tools. This has companies that operate in Europe scrambling to understand what compliance means.

The law sets out a number of prohibitions, from using AI for biometric identification to social scoring and AI-based manipulative techniques. There are obvious violations, such as deep fakes used for disinformation or facial detection used to discriminate. But plenty of other scenarios could vex even well-meaning people and companies.

Fashion retailers may understand that they must disclose the use of AI-created models in a marketing campaign. But would a beauty brand be prohibited from targeting users based on data from a virtual makeup or face-scanning skin care app? Or ranking their value as clients for loyalty purposes? If AI is used to scan customer histories and categorize types of shoppers in order to offer product and size recommendations, would that violate the law? When it comes to the nitty gritty of these types of specific use cases, it’s not immediately clear.

The EU AI Act is poised to take effect in May, but it will resemble more of a rollout over time than a single launch, with different stages of the law fine-tuned and deployed over the next two years. Whatever that looks like for developers, platforms and the brands they partner with, the repercussions of getting any of it wrong are rather stiff.

Penalties range from 15 million euros, or 3 percent of annual global turnover, up to 35 million euros, or 7 percent of turnover. Companies won’t be able to sweep violations under the rug either: The act also establishes the consumers’ right to file complaints against businesses about inappropriate use of AI and demand transparency over any AI-based decision-making that affects their rights.

European Union lawmakers vote on the EU AI Act at the European Parliament on Wednesday, March 13, 2024 in Strasbourg, eastern France.
European Union lawmakers vote on the EU AI Act at the European Parliament on March 13 in Strasbourg, France.

TikTok’s countdown clock ticks once more

As tech-makers and brands grapple with the EU AI Act in Europe, companies and creators in the U.S. are staring down the potential of losing a tech platform that, for some, has become central to their businesses. Again.

Despite trying to force a similar hardline against TikTok four years ago, former President Donald Trump seemed to pivot recently, in remarks suggesting that banning the app would mainly benefit “enemy of the people” Meta. The House passed the bill anyway, putting a ban back in the realm of possibility.

Chief executive officer Shou Chew reacted to the rapidly escalating TikTok conundrum on X, the app formerly known as Twitter, stating that this action will “take billions of dollars out of the pockets of creators and small businesses.”

He’s not wrong.

That TikTok boasts more than 170 million U.S. users speaks to its tremendous sway — and if anyone missed that memo, perhaps they caught word about the deluge of concerned messages that have been flooding legislators’ offices, facilitated by the company itself. The Tiktok app directly urged users to contact their representatives and complain.

That wasn’t enough for some of its stars and fans, who rallied in Washington, D.C., this week in defense of the app. That was the setting for another TikTok gambit. The company reportedly paid some creators to attend and amplify the protest to their followers, cumulatively reaching some 60 million followers.

Creators defending TikTok marched from the U.S. Capitol to the White House, demanding President Biden #KeepTikTok.
Creators defending TikTok marched from the U.S. Capitol to the White House, demanding President Joe Biden to #KeepTikTok.

Whether the company’s tactics will work remains to be seen. What’s clear is that the stakes are high, and not just for TikTok. Brands also loom large on the app, whether through TikTok Shop, garden-variety accounts or creator partnerships.

The company had some 5 million business accounts as of last year, including familiar names such as Crocs, PrettyLittleThing, PacSun, Asos, Ugg, Vans, Converse, Calvin Klein, Boohoo, Ralph Lauren and many, many others. Although some pundits have been wondering aloud if the app’s out-sized influence on fashion retail has started to wane, in terms of trend-setting and inspiration, its star still appears to shine. Just ask Prada. At Milan Fashion Week, the fashion house apparently took a cue from TikTok’s coquette trend for its show.

But some of the businesses with the most to lose are smaller outfits. Like Juicy Body Goddess Boutique.

Its owner, Summer Lucille, told CNN in a broadcast segment that since she started promoting her Charlotte, N.C., store on TikTok two years ago, it has grown into a 15,000-square-foot warehouse and a physical mall location. The experience sounds similar to that of Jessie Whittington of Ramsey Springs, Miss., who turned her soap-making hobby into a business called Country Lather Soap Works on the platform. In a featured promo for the app, she enthused, “TikTok is a fantastic platform for DIY.” It’s the stuff of dreams and TV commercials.

For Lucille, the prospect of a TikTok ban looks like a nightmare. The app’s fate — and hers — rests in the hands of the Senate. Her message to lawmakers: “You are voting against my small business,” she said on the air. “You are voting against me getting a slice of my American pie.”

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