Trust & Safety for Investors: Revisiting the Trust & Safety Vendor Ecosystem

Last summer, I wrote an article for Tech Policy Press describing the growing ecosystem of vendors serving the trust and safety sector. Since then, journalists at WIRED and CNBC have also published explorations of the topic, recognizing its potential importance as some large platforms have significantly cut back their internal spending on trust and safety. Outside of these articles, some information about this group of companies and the market dynamics they hope to exploit can also be gleaned from a set of reports published in recent months.

The Safety Tech Reports

“Safety tech” is a broader umbrella than “trust and safety vendors,” including providers of somewhat related products and services aimed at government, law enforcement, and end-users such as network administrators, schools and parents, as well as individual users. The earliest of these reports, “Safer technology, safer users: The UK as a world leader in Safety Tech” (2020, and updated annually since then under the more sober title “The UK Safety Tech Sector: 202x Analysis”) was commissioned by the UK Department for Science, Innovation & Technology and is a sector analysis of the UK’s safety tech industry.

The British government has supported the emergence of this industry as part of its strategy for improving online safety. The UK has two industry associations, OSTIA and AVPA, for the sector, and the government formerly operated the internationally-oriented Safety Tech Innovation Network to encourage developments in the industry and ran the Safety Tech Challenge Fund to similar ends. Skeptics have suggested that a motivation behind the Online Safety Act, or at least some of its provisions, was to push business towards UK safety tech companies.

Recognizing the parallels between cybersecurity and safety tech, Paladin Capital Group, a leading venture capital firm in the former industry, commissioned a parallel report aimed at investors that is about the US safety tech sector from the consultants who authored the UK report. It was published in 2022, and then an international version was published in December of 2023.

These reports all lay out taxonomies for the field; identify areas of overlap with other industries; give estimates of the size of the industry in terms of numbers of companies and invested capital; and give predictions for growth based on quantitative and narrative trends (such as impending legislation). The Paladin-sponsored reports, in what has since become a reasonably common trope, give particular emphasis to the aforementioned parallels and crossovers between safety tech and cybersecurity.

From Philanthropy to VCs

Finally, last week, the expert network consultancy Duco, which has a focus on trust and safety, released its Trust & Safety Market Research Report. This report is focused specifically on the companies providing services for the trust and safety function at platforms. It presents the affirmative case for investing in these companies, fleshing out their value propositions at sector level for prospective investors. The case for engaging vendors is also built out for platform executives—though this may be in part to reassure investors that there will be an eager customer base for the vendor companies.

The previous analyses were either works of journalism or commissioned by parties interested in promoting the industry because of their positions as a government fostering local enterprise or a VC firm boosting a sector in which they are already heavily invested. This most recent report, in contrast, was paid for by the Future of Online Trust and Safety Fund, a philanthropic partnership supported by funders including, according to information provided by another of its projects, the William and Flora Hewlett Foundation, the Patrick J. McGovern Foundation, the Omidyar Network, Google, and Discord. (Omidyar issued a grant to Tech Policy Press in 2022.)

The report is a sequel to the Atlantic Council’s Scaling Trust on the Web (which was also funded in part by the Hewlett Foundation and to which Duco also contributed analysis). That work defined the societal importance of trust and safety for an audience of philanthropists and other stakeholders external to the tech industry. It advocated the development of shared expertise and tooling to advance the effectiveness of trust and safety on all platforms, independent of their resources. As I posited in my article last year, vendorization of trust and safety can be understood as the next stage of expertise-sharing in a maturing trust and safety sector. It is perhaps for this reason that the Duco report was commissioned: to advance the field by pointing investors toward vendors that are developing high-quality trust and safety solutions and making them broadly available.

Same Themes, New Numbers

Though the report includes a new analysis of the 222 companies identified as operating in the space (~62 of which seem to constitute software companies for whom trust and safety solutions is “their core offering”) and what roles they are filling in the trust and safety sector, many of the core insights of the report do not differ so widely from those mentioned in past works. For example: international growth with notable hubs; comparisons with the cybersecurity sector; regulation as a driver of business; trust and safety’s value as brand safety for both platforms and their advertisers; the availability of talent due to layoffs; the dangers and benefits of AI advancements; and segmentation of the sector into three main groupings (BPOs, full moderation platforms, discrete tools).

The report’s major contribution, aside from the framing of this specific sector for investors, is its analysis of the market for these vendors. Quantifying the various platforms and their trust and safety needs and adding public information and expert input about costs and spending enabled the calculation of the total addressable market (TAM) for trust and safety solutions, and the serviceable addressable market (SAM) reflecting the current spend on trust and safety vendors. Incorporating various trends, including changes due to increasing use of AI-powered moderation, allowed them to predict the TAM and SAM for the next few years.

These calculations require a certain amount of estimation, but the report’s contributor list includes investors, current and former trust and safety leaders, and vendors who, between them, have a thorough understanding of the market. One split in expert opinion is spelled out, regarding the degree to which increased spending on software will be in-house or vendor-led. The methodology is described in some detail, along with a statement of limitations. A Google sheet is also linked with the TAM / SAM dataset, calculations, and even the functionality to adjust the assumptions to produce alternate estimates and forecasts.

A Lacuna: Investment Risks

In keeping with the mission of making the case for investing in trust and safety vendors, not very much space is given to the risks of putting money into this space. Only three “considerations” are briefly discussed:

• the concentration of spending power at platforms controlled by tech giants, who tend to keep more of their operations in-house;
• the tendency of software products to get cheaper over time;
• the prospect of worker unionization (regarding BPOs).

Other risks that might have been mentioned include:

• Recent cutbacks in trust and safety at several of the largest platforms have not always damaged their standing, with short-term gains being prioritized over long-term benefits. This may lower the bar across the board, reducing total trust and safety spending.
• Conversely, if there is an upturn in interest in trust and safety from the deep-pocketed platforms, talent may be lured back away from vendors.
• With standardization pushed by regulators and advances in AI classification methods, solutions may not only become less expensive, but also less differentiated, making it a challenge for new startups to define their unique selling point.
• With regulation taking shape in a range of countries, there is a danger of governments selectively licensing favored vendors, making business difficult for those who are excluded.

A Narrative of Trust and Safety Value

One other group sure to find the Trust & Safety Market Research Report useful are newer startups in the sector—in fact, a couple of early-stage founders I have been in touch with have already expressed their appreciation for the report. It has significant value in guiding both their business strategy and their fundraising pitches, as well as naming a number of VC firms that have already invested in the sector. Moreover, they may now have a larger framework for the industry and its opportunities that is shared by the investment community, facilitating easier and more productive communication.

If this is successful, the report’s role as a companion to the Scaling Trust report becomes even clearer: these endeavors work together to craft an authoritative and coherent public narrative of the value of trust and safety for different parts of society. For those of us who believe in the importance of the field, and cannot quite believe it when those outside the tech world seem to be largely unaware of its existence (or believe that content moderation is merely a euphemism for censorship), this is a highly valuable project.