“Purchasing is very often more than just a simple transaction between buyer and supplier,” with consumption being a social experience in many cases, and the influence of others playing a role in what we buy. That same goes for the consumption and sale of counterfeit goods, according to a recent report from the United Kingdom Intellectual Property Office, which surveyed 1,000 female consumers (“as the social media endorsements of counterfeit products are dominated by female influencers and a female audience,” the research population was limited to female consumers), to gauge the state of the market for counterfeits and determine the extent to which social media influencers facilitate the purchasing of such goods. 

The United Kingdom Intellectual Property Office (“UKIPO”)’s top-line finding in connection with its survey was that 17 percent of participants (70 percent of whom were between ages 16 and 33) reported that they had knowingly purchased counterfeits in the prior year – and 13.3 percent revealed that their purchasing behavior relating to counterfeit products has, in fact, been influenced by social media endorsements. In other words, that 13.3 percent of respondents reported that they had “purchased counterfeits either deliberately or by mistake following social media influencers’ endorsements,” which the UKIPO contends “clearly demonstrates” that influencers are an noteworthy force in endorsing counterfeits and an “important channel to market for counterfeit suppliers on the other side of the world.” 

In line with previously-reported figures, the UKIPO found that fashion and related accessories are top drivers of counterfeit consumption, with this category of goods being “particularly attractive” for younger consumers (i.e., those in the 16-33 age group), with 1 in 5 (20 percent) of survey participants admitted to buying counterfeit clothing or accessories in the prior year compared to 4 percent of older consumers.” (The UKIPO notes that it defined counterfeits to participants as “items that look identical to a genuine product with or without the official branding/logo, but are not made by the brand and may be of lower quality, for example, a handbag of identical design to a “Chanel” with or without the Chanel logo.”)

Aside from fashion apparel and accessories, which was the most popular product category when it comes to counterfeit consumption, according to the UKIPO, fake jewelry and watches, and beauty products were also noted as frequently purchased. 

Another interesting takeaway about the mindset of consumers when it comes to counterfeit goods from the UKIPO’s findings is that 18 percent of survey respondents “believe counterfeits do not harm businesses and jobs,” 22 percent “believe counterfeits are not a health and safety threat,” and finally, a larger 33 percent (or one-third of survey participants) revealed that the trade in counterfeits is actually “the manufacturers’ fault for overpricing high brand products.” 

The Rise of “Dupes,” as Platforms Eye Luxury

The timing of the UKIPO’s survey seems appropriate given the overarching rise of “dupes” both in terms of Google searches and on social media sites, including Instagram and TikTok, and influencers who have built sizable followings thanks, in many cases, to their posts on this topic. As TFL reported this past summer, while recent Google Trends data indicates that searches for the word “replica,” for instance, are steadily declining overall, searches for “dupes” have been on the rise in recent years.

“A browse through YouTube reveals innumerable videos presented by young, mainly female content creators that promote counterfeit clothing, accessories and beauty products to followers,” the UK IP body stated, pointing to one British influencer with 4.4 million subscribers on her YouTube channel, who “posted a video promoting counterfeit goods in May 2021 entitled, ‘I Bought Fake Designer Bags on Wish.’” The video – which features counterfeit Louis Vuitton, Jacquemus, Dior, and Balenciaga bags – has since been viewed 221,326 times. 

At the same time, brands and marketplace sites are coming together to send public messages to influencers (and the public at large) in connection with their role endorsing counterfeit goods. Amazon, for instance, filed a counterfeit-centric lawsuit in November 2020, accusing influencers Kelly Fitzpatrick and Sabrina Kelly-Krejci of “engaging in a sophisticated campaign of false advertising” in connection with which they have “conspired” with sellers on Amazon’s marketplace to evade Amazon’s anti-counterfeiting protections by promoting counterfeit luxury goods – from Gucci belts to Dior handbags – on Instagram, Facebook, TikTok, and their own websites. That case settled in September, with the terms of the largely confidential agreement putting in place a prohibition against Fitzpatrick and Kelly-Krejci from “marketing, advertising, linking to, promoting or selling any products on Amazon,” and in terms of monetary damages being paid by the defendants, Amazon revealed that it would donate the sum to various non-profit organizations, including an anti-counterfeiting initiative of the International Trademark Association.

Not to be outdone, Facebook, Inc. (now Meta) partnered with Gucci in April 2021 to file suit against a single defendant – a woman named Natalia Kokhtenko –for operating “an international online business, trafficking in illegal counterfeit goods,” which has seen her use the “Facebook and Instagram [platforms] to promote the sale of [luxury brand] counterfeit goods,” such as Gucci handbags, shoes, clothing, and accessories, and running afoul of trademark law and “Facebook and Instagram’s terms and policies” in the process. That case is still underway in the U.S. District Court for the Northern District of California. 

Given the strikingly limited scope of both cases (there are far more than marketplace sellers and influencers hawking counterfeits on Instagram and Amazon), the cases are almost certainly part of a larger trust-building exercise aimed to luring consumers and brands onto these platforms, and enabling them to be viewed as a source of legitimate fashion. In much the same vein as Amazon, which has not been quiet about its ambitions in the fashion and luxury space, Reuters reported last year that “groups like Facebook, Inc. are keen to make a bigger push into the luxury market and ‘social commerce,’ but to do so they need to show that their platforms are not a conduit for counterfeiting and are safe for brands, some of which are reluctant to sell their products through third-party players.” Targeting counterfeit-peddling influencers is one part of that effort.

According to recent McKinsey research, 2021 was a year of transformation: people, corporations and society began to look ahead to influencing their futures rather than just surviving the present. It was the year that hopes for herd immunity, an end to pandemic lockdowns, and a return to normality were dashed – at least for now. And aside from the Great Social Media Resignation, which saw burnt-out Gen Z workers announce that they had quit their jobs via TikTok and Instagram, the rise of non-fungible tokens (“NFTs”), and the introduction of the metaverse, the world’s space-going billionaires were as wealthy and productive in business and technology as ever. 

It is difficult to make accurate predictions in the unpredictable environment we have been experiencing over the last two years; the year ahead will undoubtedly bring many surprises. However, here are six digital trends that will influence life in 2022 … 

1. Social Media: More Privacy, Quality and Algorithm Tweaks

Platforms will concentrate on privacy and content quality in feeds. Despite recent public criticism, Facebook is likely to grow in terms of its members, as well as its revenues. With an eye on privacy and content quality, all major social media platforms will likely have updated their privacy policies and tweaked their algorithms by the end of 2022. All the while and due to the demand for strong, engaging content, a new tribe of creative influencers will grow rapidly and make an impact on branding and engagement. 

Thanks to the growing popularity of short-form video content, Instagram and TikTok are likely to witness a rise in ad expenditure in 2022 and Instagram will continue to grow beyond its 50 percent ad revenue share. Underutilized social media marketing components like customer service and relationship management will soon thrive on these platforms.

2. Enter the Metaverse: From 2D to 3D Web

Mark Zuckerberg announced a corporate name change to “Meta” in October 2021, indicating the former Facebook, Inc.’s wish to shape the metaverse transformation. The term refers to the possibilities of virtual and augmented reality. Users may interact, socialize, explore and create content in the virtual environment, and monetize their virtual transactions using blockchain technology and cryptocurrency. The metaverse (or Web3) is intrinsically linked to NFTs and cryptocurrencies, which help to commercialize interactions by creating or selling digital artifacts. In 2022, Web3 is expected to be a big commercial issue and is backed by major brands including NikeAdidasGucci, Dolce & Gabbana, Burberry, Microsoft and others.

3. Acceleration of Crypto & NFT Growth

The adoption of non-fungible tokens (“NFTs”) increased significantly in 2021 and will continue to in 2022. A new value exchange mechanism in the global online economy (and one of the most notable digital trends of the past year), NFTs have the potential to change the value and function of digital assets and artworks, including by enabling artists to reap resale royalties. The Frankfurt School Blockchain Centre predicts a $1.5 trillion market for tokenized assets in Europe over the next three years – with real estate, debt, bonds, shares, virtual art and even tangible collectibles being among the types of assets that can be linked to NFTs. 

4. Growth of Artificial Intelligence

Artificial Intelligence could well change the way we conceptualize, create and enjoy food – or fashion – or look for a job. Michael Spranger, COO of Sony’s artificial intelligence team, explains that labor shortages have led many organizations to use AI to broaden the way they evaluate and assess job applicants. He also notes that some of the most exciting applications of AI in gastronomy will enhance the imagination and creativity of chefs and culinary experts beyond what is possible today. And robots like Flippy are already flipping burgers at McDonalds and other restaurants.

5. Increased Connectivity = More Digital Transformation

5G and the new Wi-Fi 6 standard will enable faster connection – crucial if the world is to embrace these new digital trends. Jerry Paradise, VP of product management for Chinese tech company Lenovo, has said 5G and Wi-Fi 6 are about more than just speed: “Future applications will include smart cities, the internet of things, and vehicle-to-vehicle communications – which would ideally improve traffic flow and safety.”

According to Lenovo, working from home will grow to become more “hybrid” as consumers and organizations continue to think beyond the office. A large majority of IT executives expect to work outside of the office in the future, with smaller and smarter devices, as well as wireless and noise-cancelling headphones. And in this vein, it is expected that hybrid employees will participate in video meetings and conduct phone calls not just from their home office – but from anywhere.

6. New Workplace, New Skills

With workplace set to change, skills will presumably be next. According to the World Economic Forum, in 2022, new occupations will account for 27 percent of big corporate employee bases, while technologically outmoded positions will decline from 31 percent to 21 percent. A shift in the division of labor between humans, computers and algorithms has the potential to remove 75 million current job openings while generating 133 million new ones. 

Data analysts, software and application developers, e-commerce specialists, and social media specialists will continue to be in high demand, including for retail companies. Meanwhile many “human” jobs, such as customer service, organizational development and innovation management, are expected to grow. So, far from “taking our jobs,” AI will create jobs and ensure employment across an array of different field, and further accelerate larger digital trends.

Theo Tzanidis is a Senior Lecturer in Digital Marketing at the University of the West of Scotland.

The approach by Facebook to users’ data has just been dealt a major blow from the Court of Justice for the European Union (“CJEU”). In an answer to a question from Germany’s highest court, the CJEU’s advocate general – whose opinion is not binding but is generally followed by the court – has made an essential clarification to Europe’s data protection law to confirm that consumer associations can bring actions on behalf of individuals. If followed by the CJEU, this will make it easier for people to defend their rights against tech giants in future. Coming on the back of a decision by the CJEU against Google several weeks ago for using its platform power to restrict competitors, this is the latest example of European regulators making the business climate increasingly chilly for the companies that control user data – in sharp contrast to the U.S.

Facebook and Consent

The current case is about the way that Facebook – whose parent has since rebranded to Meta – in its early years encouraged users to play quizzes and games such as FarmVille before sharing the results with all their friends. In an action brought by the Federation of Germany Consumer Organizations (“VZBV”), which was originally heard in 2014, the VZBU claimed that Facebook’s data protection notice did not clearly explain to users how their data could be shared. It wants the company to be forbidden from using similar consent forms in future. 

VZBV won the original case and its appeal – and the case was then heard by Germany’s highest court in May 2020. The judges agreed that Facebook had misled users with the notice, but sought an opinion from the CJEU on Facebook’s argument that only individuals and not consumer organizations can bring complaints under the EU’s General Data Protection Regulation (“GDPR”), which governs this area. The advocate general’s recommendation, ahead of a final CJEU decision in 2022, reflects the fact that individuals do not typically start legal proceedings against large companies for a small breach of a rather technical regulation. Suing big firms on behalf of society is what consumers’ organizations do, so it would limit people’s protection if this was disallowed. 

Facebook’s approach to games is not the only time that there have been questions about how it obtained users’ consent over data. It famously sent unsolicited emails to users’ contacts when they joined the social network. It also placed “like” buttons on third party websites and harvested the data without seeking users’ consent. One by one, national European regulators have ruled these practices illegal, but always long after the fact. When Facebook was ordered to pay €100,000 (£85,138) by German regulators in 2016 for sending unsolicited emails, for instance, it was clearly too late to affect the company’s behavior on that individual issue.

VZBV has been at the forefront of fighting to make tech giants accountable for customer data since the early 2010s, though not always successfully. It failed in an attempt to stop Facebook claiming its platform is “free and will always be,” while making users pay with their private data. It was also unable to require the company to allow users to adopt a pseudonym. Facebook had resisted citing safety concerns, but perhaps also because data on identifiable consumers is more valuable than anonymous ones.

The GDPR and Future Regulations

As Facebook and other social media companies have continued to develop new techniques to harvest consumer data, the GDPR was adopted by the EU in 2018 as a general framework to clarify the rules. It gives users more control and rights over their own data, requiring clear consent before it can be used. Pending a decision on consumer organizations, the CJEU has already recently decided that national privacy watchdogs can directly fine tech firms under the GDPR for breaches affecting their citizens. Facebook had claimed only the Irish authority was competent, since its EU headquarters are there. A forthcoming CJEU case will look at giving similar powers to antitrust authorities.

The EU rules around big tech are also set to be strengthened in 2022 with the Digital Services Act and Digital Markets Act. This package of extra restrictions is set to include curbing the uncontrolled spread of unverified and often hateful content, with the potential for penalties of 10 percent of a company’s annual revenue. And for all the talk of a bonfire of EU data protection rules after Brexit, the forthcoming UK Online Safety Bill goes arguably even further in the same direction, with not only similar fines but potential prison sentences for executives over breaches. The bill may even make Facebook responsible for scams by other companies advertising on the platform. 

Major EU countries, such as Germany, France and the Netherlands, also want the Digital Services Act to block what has become big tech’s major strategy to attract new users: identifying non-profitable but successful internet companies, and buying their technology and user base. The UK is now decisively on the same path, as the Competition and Market Authority just ordered Facebook/Meta to sell Giphy, the largest repository of GIFs on the internet, which it bought in 2020 for $400 million.

European regulators are, therefore, unravelling tech giants’ business models one decision after another. European data regulation is also becoming the de facto global standard because to be allowed to operate in Europe (which generates a quarter of Facebook’s annual profits), global tech often has to obey the stricter European rules across the board.

The European logic is that harvesting private data is often a rip-off. People care about privacy but give away their data in exchange for almost nothing, and the government should protect them. American regulators consider this patronizing, with the Supreme Court ruling almost 20 years ago that a dominant firm is free to exploit its consumers. Recent whistleblower Frances Haugen has provoked some soul searching in the U.S., but will probably ultimately struggle to secure meaningful changes to the rules around data and content. 

With the likes of the UK now strongly following the path of the EU, the U.S. is becoming increasingly isolated in this area. Meta is still free to make money out of their existing Facebook users in Europe. But as younger generations leave Facebook for the likes of TikTok and Snapchat, it faces increasing difficulties in reaching them and gathering the necessary information to sell their profiles to advertisers. It may, therefore, be time for companies like Facebook to find new sources of revenue … potentially in the metaverse

Renaud Foucart is a Senior Lecturer in Economics at Lancaster University School of Management School. (This article was initially published by The Conversation.)

L’Oréal has been going through a massive retail row in China after two leading social media influencers sold large quantities of the French cosmetics company’s beauty face masks to consumers while inaccurately claiming it was the cheapest deal available anywhere. Influencers Austin Li Jiaqi and Wei Ya regularly reach tens of millions of shoppers on their two e-commerce livestreams, and the November 11 “Singles Day” festival has become one of their most eagerly anticipated broadcasts. 

This year, among the many products that Jiaqi and Ya were each selling on Singles Day was the supposedly special offer of batches of 50 L’Oréal masks for ¥429 ($66.30). But it emerged shortly after that the same deal was available direct from L’Oréal for ¥258. Li, known as China’s “lipstick king” for his ability to sell masses of product online, and Wei, a former pop star who rose to fame as the winner of China’s equivalent of Pop Idol, started receiving large volumes of complaints from furious shoppers. Both influencers issued apologies. After L’Oréal did not immediately say it would compensate those who had bought the masks, the influencers said they would no longer showcase the company’s products. 

Now L’Oréal has apologized and confirmed it will provide compensation. In a statement, the company blamed its “overly complicated sales mechanism” and said it had “found a constructive and satisfactory solution to address the recent customers complaints in relation with singles day promotion.” The row has not been pleasant for anyone involved, but it shows how important influencers have become as endorsers of luxury goods in China. So how has the market changed, and what does it mean for customers?

Changing face of luxury retail

China is the most important market in the world for luxury goods, with Chanel, Dior, Cartier and Hermès among the leading brands in the country. The market has been doing strong business during COVID. For example, major Hong Kong-based luxuries retailer Chow Tai Fook has reported an annual revenue increase of nearly 24 percent in its 2021 financial year, mostly from mainland China. 

Luxury brands have traditionally relied on flagship stores in the best shopping districts to connect with their customers. The number and size of stores has continued increasing in leading malls like Plaza 66 in Shanghai and SKP Beijing, where all the top luxury brands have large external facades and dazzling logo displays. They also use historical buildings, such as the ones situated at the north of the Shanghai Bund waterfront district. 

But while physical stores are still important, most brands seek to extend their reach online. A major part of this is through using the internet as a way to communicate their relationships with celebrities. Cartier, for example, invites Chinese movie stars to attend its promotional events. These would include star actors like Tony Leung, and more recently actor Chang Chen and actor/singer Lu Han, who would be described as “good friends of Cartier” to highlight the brand’s prestige through these connections.

But when Cartier has tried to use social media to promote these celebrity attachments, consumers have reacted badly. I have read thousands of comments (in Chinese) from people ridiculing the watchmaker for referring to its endorsers as “friends”, claiming that this detracts from the importance of their favourite stars. Most Chinese people would say that “guest” is a more respectful choice of word than “friend.” 

Perhaps partly because of such experiences, luxury brands have turned to social media influencers to help communicate their messages. For example, Dior hired Angelababy, a famous actor and internet celebrity from Hong Kong, as a brand ambassador in 2017. The relationship has continued to the present day, with the actor appearing in virtual form at Shanghai Fashion Week in April. Yet, using Angelababy in this way was questioned by Dior’s customers online, as she is an agent of the brand rather than an independent influencer. This means she is seen as not being in a position to speak on behalf of Dior’s customers and fans in the way that she might otherwise have done. 

Unpredictable behavior

Just like celebrities, influencers come with the additional problem that brands have no direct control over their behavior. Whatever exactly happened in the case of L’Oréal and its influencers, for instance, they have not been speaking in unison since the debacle with the face masks. 

When it comes to the dangers of individual behavior, the only consolation is that it can sometimes work in the brand’s favor. This happened to Dior, for instance, when footage surfaced in which Angelababy was perceived as speaking up for an actress in an encounter with pop star Kris Wu, who was subsequently arrested on suspicion of rape in relation to a separate incident.

At any rate, L’Oréal’s recent problems show that while influencers are potentially more objective moderators than traditional celebrities (particularly if you don’t use them as brand ambassadors), online marketing still presents great risks. In an era where millennials engage mainly online, an incident like the one with Li and Wei can spread quickly and stick in consumers’ minds much more than the glitzy marketing narratives that are pushed by the luxury brands. A fan exposed to a debacle like L’Oréal’s can turn hostile overnight to the brand they loved.

Perhaps the ideal relationship between brands and influencers arises from Vogue China’s decision earlier this year to appoint famous 27-year-old blogger Margaret Zhang as editor-in-chief. Even though she never trained in journalism, she is well accepted by consumers of high fashion, and her endorsement is now arguably one of the most valuable to brands in the business.

Samuel Kwok is an Associate Professor of Transdisciplinary Studies at Xi’an Jiaotong Liverpool University. (This article was initially published by The conversation.)

China’s dominance in manufacturing has made it the factory of the world. The subsequent economic growth enriched an ever-expanding middle class, and the country’s retail industry has quickly adapted to supply a growing appetite for consumption. Some of these developments in the way people spend their money, powered by the latest technology, will soon be appearing on a device near you. Indeed, at the start of this year, The Economist suggested that retailers everywhere should look to China, and some are already doing so. So. what will China’s “retail revolution” bring to the rest of the world? Here are five concepts for global consumers to be on the lookout for…

1. Lifestyle commerce

Increases in disposable incomes have led to a rapid growth in the number of Chinese people eating out, seeking entertainment and travelling. Traditional e-commerce businesses sold general goods, but did not offer a new lifestyle. That is where digital “super-platforms” came in. Meituan, for example, which has over 600 million users and is valued at $100 billion, provides almost every type of lifestyle service and entertainment. It offers restaurant reviews, takeaway deliveries, travel bookings, movie tickets, bike rentals, and more. 

Consumers elsewhere can expect omnipresent “super apps” to penetrate every part of life, as the delivery and ride-hailing service Grab is doing in southeast Asia, by moving into financial services. 

2. Merging online and offline

The integration of online and offline consumption is already familiar to many shoppers. But in China digital platforms like Taobao, JD.com, and Meituan offer much more than the likes of Amazon. They sell everything from rice and luxury handbags (Alibaba’s Luxury Pavilion comes to mind, as does its $1 billion-plus deal with Farfetch and Richemont) to villas and space travel. The most challenging items for these firms to sell quickly online have been seafood and fresh produce, due to high logistics costs, low price points, and easily perishable products. But some are now using their own warehouses to provide delivery of fresh food in under an hour (an idea already becoming popular elsewhere). Online grocery shopping has become routine in many countries, but in the future, you should expect every kind of purchase to become faster and even more convenient. 

3. Social commerce

While the middle classes in China’s biggest cities enjoy the convenience of Meituan and others, there are still one billion Chinese people living in small towns and rural areas who remain poorer and more price sensitive. A social media platform called PinDuoDuo has now tapped into this population, harnessing the popularity of the social network WeChat (think: WhatsApp, Instagram, Facebook and Amazon all rolled into one). The idea was to make online shopping more of a social, interactive experience. It became very popular because it was enjoyable – a source of entertainment – and has since caught on with wealthier customers too. Consumers outside China can expect shopping in digital ways to become more fun, social, and accessible.

4. Celebrity livestream selling

Celebrities advertising products for sale is a tried-and-tested marketing tool for big brands. In China, the concept has moved on to include business executives and government officials, who participate in livestream broadcasting to sell their wares. For instance, Dong Mingzhu, chairwoman and president of Gree Electric, (the world’s largest residential air-conditioning manufacturer) sold $9.3 billion worth of products through 13 livestreams in 2020. Social media influencers, who customers identify with – and trust – are likely to play an ever-greater role in the way consumers spend their money. (Brands would be wise to keep an eye on the budding legal issues that are coming up this space.)

5. “Invisible” selling

This is where an ordinary person is featured in a video doing ordinary day to day things, but does not make any recommendations whatsoever about purchasing products. For example, Li Ziqi, also known as the “quarantine queen” has become an internet sensation in China, with 2.4 billion views of her YouTube channel, which showcases her skills making food and handicrafts. Even though there is no link or direct recommendation of products, consumers who watch these videos and admire the lifestyle want to buy the associated products. This requires a delicate balance between lifestyle and consumption, and Ziqi, who makes money through advertising and selling merchandise including homewares, fashion and food, is one of many in an emerging consumer trend.

All of these ideas have three things in common. First, they involve e-commerce platforms, third-party payment, express delivery and social media. Countries with similar shopping habits already in place, such as the UK and the US, are likely to see these new retail concepts flourish sooner than others. Second, these retail concepts are responses to emerging consumer needs, which can be better satisfied with digital technology. One way this is likely to affect markets such as the UK and Europe is through a digitally minded younger generation growing up with vastly different needs and desires to their parents. 

Finally, all of these developments rely heavily on sophisticated algorithms and data analysis. Consumers can expect to receive more personalized experiences – but potentially by paying a heavy price when it comes to data privacy.

Mark Greeven is a Professor of Innovation and Strategy at the International Institute for Management Development. (This article was initially published by The Conversation.)