by It’s hard to overestimate TikTok’s impact on fashion and beauty trends and social commerce, or AI’s impact on almost every other part of retail. So when the two faced massive new mandates on both continents on Wednesday, brands began to anticipate what could be a major impact.
The House of Representatives has just advanced a bill that would have forced social media giant TikTok to separate from its owner, China-based ByteDance, or see the app banned in the U.S. The vote passed with overwhelming bipartisan support, at 352 to 65, mainly due. national security concerns — the same concerns the previous Trump administration had that forced the company to sell the platform nearly four years ago. President Joe Biden has promised 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 regulate the development and use of AI. First proposed in 2021, the Artificial Intelligence Act lays out guardrails based on levels of risk, from low, medium and high to “unacceptable,” which would justify banning the technology.
“Artificial intelligence is already a big part of our daily lives. Now, it will also be part of our legislation,” shared Roberta Metsola, president of the European Parliament, in a post on social media.
The EU AI Act is not fully baked… yet
In essence, the EU AI Act is similar to the EU GDPR (or General Data Protection Regulation) of 2016, in that it aims to protect consumers from bad technology policies, although AI aims rather than personal details. According to its text, it seeks to protect and promote the “adoption of human-centric and reliable AI”, a noble goal that was so popular, the regulation passed by voting with an overwhelming majority of 523 votes in favor and only 46 against. It even has fans from the tech sector.
Of course it does. It could hardly be argued that such a complex, powerful and rapidly growing technology needs guardrails. But that also means that implementing any business is not simple. In fact, it already looks complicated, maybe even messy. The scope covers multiple aspects of AI and extends beyond its makers and developers to partner companies that use their tools. Companies operating in Europe are trying to understand what compliance means.
The law sets out several prohibitions, from using AI for biometric identification to social scoring and AI-based manipulation techniques. There are obvious violations, such as deep fakes used for disinformation or facial detection used for discrimination. But many other situations can even annoy people and companies with meaning.
Fashion retailers may realize that they need to 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 skin care app or face scan? Or classify their value as clients for loyalty purposes? If AI is used to scan customer histories and categorize types of shoppers to offer product and size recommendations, would that break the law? When it comes to the nitty gritty of these specific types of use cases, it’s not immediately clear.
The EU’s AI Act comes into effect in May, but it will be more like a roll-out over a period of time than a single launch, with various stages of the law being fine-tuned and implemented over the next two years. Whatever that looks like for developers, platforms and the brands they partner with, the consequences for getting any part of it wrong are pretty severe.
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 make violations either: The Act also establishes the right of consumers to file complaints against businesses about improper use of AI and to demand transparency about any AI-based decision-making that affects their rights.
TikTok countdown clock comes in again
As technology manufacturers and brands grapple with the EU’s AI Act in Europe, companies and creators in the United States are expecting to lose a technology platform that, for some, has become central to their businesses. Again.
Despite trying to push a similar hard line against TikTok four years ago, former President Donald Trump appeared to be cracking down recently, saying a ban on the app would benefit “the 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 responded to the fast-growing TikTok app on X, the app formerly known as Twitter, saying the move will “take billions of dollars out of the pockets of creators and small businesses.”
It is not wrong.
That TikTok boasts more than 170 million US users speaks to its massive control — and if anyone missed that memo, they might have gotten word of the eradication of worrisome messages flooding lawmakers’ offices, facilitated by the own company. The Tiktok app encouraged users to directly contact their representatives and complain.
That wasn’t enough for some of its stars and fans, who gathered in Washington, DC, this week in defense of the app. That was the setup for another TikTok gambit. The company reportedly paid several creators to attend the protest and amplify it to their followers, cumulatively reaching around 60 million followers.
It remains to be seen whether the company’s tactics will work. What is clear is that the stakes are high, and not just for TikTok. There are also big brands on the app, whether through TikTok Shop, garden variety accounts or creator partnerships.
The company had about 5 million business accounts as of last year, including household names like Crocs, PrettyLittleThing, PacSun, Asos, Ugg, Vans, Converse, Calvin Klein, Boohoo, Ralph Lauren and more. While some commentators are wondering aloud whether the app’s profound influence on fashion retail is waning, in terms of trend setting and inspiration, it seems its star is still shining. Just ask Prada. At Milan Fashion Week, the fashion house seems to have taken a cue from the TikTok coquette trend for its show.
But some of the businesses that miss out the most 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 physical mall. This experience sounds similar to that of Jessie Whittington of Ramsey Springs, Miss., who turned her soap hobby into a business called Country Lather Soap Works on the scene. In a featured promo for the app, she enthused, “TikTok is a great platform for DIY.” It’s the stuff of dreams and TV commercials.
For Lucille, the prospect of a TikTok ban is a nightmare. The fate of the app — and the fate of the app — rests in the hands of the Senate. Her message to lawmakers: “You’re voting against my small business,” she said on air. “You’re voting against me getting a piece of my American pie.”
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