L’Oréal Makes First Technology Acquisition With ModiFace Deal

L'Oréal has made its first technology acquisition.The beauty giant has acquired augmented reality and artificial intelligence business ModiFace as it launches into the next phase of its digital program. Phase one, according to chief digital officer Lubomira Rochet, was digitizing things like marketing and communications. Phase two is more about "creating the future of the beauty experience," she said."The acquisition of ModiFace really marks the second big phase of acceleration for our digital transformation," Rochet said. "We see technology bringing so much innovation in the consumer-decision journey for beauty. We really wanted to have, in-house, a research and development capability for digital innovation."ModiFace will remain headquartered in Toronto, but will be plugged into L'Oréal's digital network as an internal means of research and development in the space, Rochet said. Specifically, the business will be part of L'Oréal's Digital Services Factory, a network to create and develop new digital services for the company's brands. Terms of the ModiFace deal were not disclosed.[caption id="attachment_11124756" align="alignleft" width="164"] The Style My Hair app.[/caption]ModiFace was founded by chief executive officer Parham Aarabi eleven years ago and has created technologies like 3-D virtual makeup, color and skin diagnosis services that use proprietary know-how to track facial features and color. The technology is used by nearly all major beauty brands."As part of L'Oréal, pushing that technology forward is something we're absolutely planning to do," said Aarabi. "This is a great next step for the next iteration of our technology, improving our technology and bringing it to the consumer. Under L'Oréal, we can do that on a scale and in a way that will be quite groundbreaking.""They will keep their very strong and unique personality within L'Oréal," Rochet said. "This is the first tech company that we've acquired so the integration will be light, in a way."ModiFace and L'Oréal have worked together on numerous occasions. Recently, L'Oréal tapped ModiFace for its L'Oréal Professionnel Style My Hair app, which allows users to try on different hair colors and see projected results, down to the hair strand. ModiFace also provides AR and AI apps for other beauty companies and will honor those commitments, according to Rochet and Aarabi.The technology can be used across multiple platforms, including through apps, web sites and retail experiences. "It really creates this transversal journey for the consumers from online to offline, which we believe is absolutely the future," Rochet said."Augmented reality is a technology that makes perfect sense for the beauty industry — the ability to see products on your face before you buy them intrinsically is beneficial," Aarabi said. "AI, I feel, will impact all industries, not just the beauty industry. The ability to collect and understand the information and make sense of that information will have a significant impact — that impact in the years and decades to come will be more felt and more noticed." While L'Oréal has made investments in accelerators and incubators in the past (like Station F, Founders Factory and venture capital firm Partech), making a technology acquisition provides an advantage, according to Rochet. Augmented reality apps are going to be one of the ways consumers discover products in the future, she noted — which is why it's an area of focus for L'Oréal."Digital and technology are really changing and shaping the beauty industry in a completely different way, so we believe this is a competitive advantage for us moving forward," she said. "This is really the reason we acquired ModiFace." ModiFace's technology provides consumers with a good way to discover product "because it's very visual and it's very personalized," Rochet said. "More and more people will discover our brands and our products through these experiences — we absolutely need to be there."L'Oréal isn't the first beauty company to acquire outside of the brand space, which has hosted a flurry of deals over the past several years (many of them from L'Oréal). Shiseido has made several tech acquisitions, including MatchCo and Giaran. Coty Inc. also bought into digital with its deal for Beamly.Digital is only going to play a bigger role in beauty, according to Rochet."The way we discover, research and buy products is going to change tremendously," Rochet said. "Today it's really dominated by search engines and the YouTubes and Googles of the world, and by very powerful social platforms like Facebook and Instagram."She continued, "Tomorrow, I can see a future of voice being very strong. I see the whole conversational commerce picking up, and that people will discover more and more products through services — makeup try-on, skin-care diagnostics — and less through search engines or social platforms."