How Big Tech’s Legal Battles Could Impact Fashion

According to U.S. federal and state governments, Big Tech has been behaving badly — or, several cases, monopolistically.

Not that scrutiny from attorneys general, along with the Department of Justice and Federal Trade Commission, over matters like privacy, monopolistic practices or social harms is new. Over the years, tech titans have incurred costly fines in the millions, even billions at times.

But punitive measures hardly seem to have slowed their roll. Big fines were just the cost of doing business.

Today, the stakes are higher. Attempts to restrain large tech companies are taking aim at core parts of the business — which, according to a fresh round of earnings wins, are channeling gargantuan revenue hauls.

Just ask Google, which could be facing a breakup, or TikTok, which is fighting a potential U.S. ban in January unless it finds a new owner.

Tougher scrutiny and bolder efforts to hold companies accountable have made it crunch time for Big Tech — and perhaps others that rely on them, including e-commerce, fashion and practically everyone else.

But how that will work out now is anyone’s guess.

Timing may matter in a presidential election year, when Big Tech’s influence loomed particularly large in the race for viral moments, fundraising and more. Meanwhile, the fate of FTC Chair Lina Khan — a pick of President Joe Biden who has been particularly aggressive in reining in large tech companies and also Tapestry Inc.’s $8.5 billion deal to buy Capri Holdings — seems uncertain.

For now, the cases in the center of the tech storm could lead to material changes in the way fashion reaches consumers, does business and powers its e-commerce.

Here’s where the legal cases stand now.

In August, a federal court ruling cast Google as “a monopolist” that acted illegally to preserve its advantage in online search. Now, according to an October court filing, the DOJ is considering “structural remedies.”

This could include spinning off Chrome, Android and Google Play, or prohibit the company from striking paid deals to pre-install its web browser and search engine on mobile devices. Cue massive buzz, as a startled internet mulls over the prospect of a Google breakup.

The company called it an “overreach.” But the DOJ’s not done yet. A second case brought by the department and eight states is focusing on the company’s advertising tech, and the results are still pending.

The trial in the U.S. District Court for the Eastern District of Virginia began in September. It is weighing allegations that Google sought to control the online ad market by buying up rivals and bullying publishers and advertisers into using the company’s ad platform.

It’s unclear whether the proposed breakup of Google’s tech divisions could ultimately extend to its advertising infrastructure as well. But it’s a scenario that would materially and directly impact the brands and marketers feeding the company’s growing $66 billion ad business.

Meta

The basis of the FTC’s 2020 lawsuit against Meta was that company’s acquisitions of Instagram in 2012 and WhatsApp in 2014, back when it still went by Facebook, amounted to a monopoly that left consumers with few other options.

Tech acquisitions are a way of life in Silicon Valley, so the case has far-reaching implications. Yet four years later, the argument still hasn’t been tried, while the cycle of public attention frothed and fizzled, with various starts and stops.

The first suit was dismissed in June 2021 by the U.S. District Court of the District of Columbia. The FTC accused the social media company of controlling the market, but didn’t properly define the market. In a refiling, the commission contended that Meta held “a dominant share of the relevant market for U.S. personal social networking services” since 2011.

Momentum then seemed to stall, and Meta filed an unsuccessful motion to dismiss.

In February 2024, the FTC pushed for a trial by the end of the year. Two months later, as Meta filed to get the case dismissed again, its attorneys shared doubts that a “case of this size and complexity” could move to trial by then.

Whenever it happens, the trial won’t end with a slap on the wrist for Meta if the government prevails. And if regulators succeed, it would set a precedent for the tech sector, potentially destabilizing two key channels for brands, and remake the creator economy amid a booming social commerce market that, according to Technavio, is expected to grow by $8.9 trillion over the next four years.

After the administration of former President Donald Trump first targeted the platform, the Biden administration signed off on a bill in April demanding that TikTok separate from ByteDance, its Beijing-based owner. Now, the app’s fate couldn’t be less certain.

With two months to go, the deadline for the Chinese parent company to divest the business due to national security concerns is fast approaching.

Fueled by outcry from fans and creators bemoaning the prospect of a TikTok ban, the business sued the government in May, calling the legislative action unconstitutional, as it “subjects a single, named speech platform to a permanent, nationwide ban, and bars every American from participating in a unique online community with more than one billion people worldwide.”

Since then, both presidential campaigns took up the platform, hoping to reach young voters and infuse their candidacies with relevance and cachet. More than 8 million young Americans are eligible to vote for the first time in 2024, and that’s just a segment of roughly 41 million total Gen Z voters this year.

Trump reversed course, promising to “save” the app.

Whether it can be saved, only January knows. But, as arguably fashion’s top social platform and a budding e-commerce giant in its own right, TikTok, along with its partners and massive trove of 150 million U.S. users, hopes so.

The only certainty is that these ups and downs haven’t yet seemed to hammer ByteDance cofounder Zhang Yiming — whose $49.3 billion fortune positions him at the top of the 2024 Hurun China Rich List.

For Amazon, the most recent jab in the government’s anti-monopoly crusade landed in the U.S. District Court for the Western District of Washington in September. That’s when the FTC and 17 states sued the e-tailer, alleging unfair practices toward marketplace sellers, while it pushed its own services.

Those actions, which included blocking Amazon merchants from selling the same products through other sites, “artificially” ballooned prices and harmed consumers, the government argued.

Amazon denied the allegations, claiming that it offers low prices and doesn’t bully sellers. It also counterpunched, stating that the case illustrates a “fundamental misunderstanding of retail.”

Then the company issued what could be characterized as a thinly veiled threat: If the lawsuit doesn’t go Amazon’s way, it would force the company “to engage in practices that actually harm consumers and the many businesses that sell in our store” — in essence, manifesting the very reality that the FTC and states claim is already happening.

The case is scheduled to go to trial in October 2025.

Whatever the outcome, the decision will likely shape, not just the retail business of Amazon and its sellers, but the way large marketplaces operate overall.

Washington is all over Silicon Valley indeed.

This post was originally published on here