L’Oréal has made its first tech acquisition…ever. Last week, the beauty juggernaut announced its acquisition of ModiFace, the company behind the makeup filters in Sephora and Estée Lauder’s augmented reality apps. The move gives L’Oréal a massive edge over its competitors and hints at the aspects of digital that the company might pursue in the future.

Currently, L’Oréal Group maintains the highest enterprise score in L2’s Digital IQ Index: Beauty, owning two of this year’s Genius brands. The company’s digital growth is driven by investments in mobile technology: L’Oréal’s app gets the highest ratings among brand apps tracked by L2, and the brand recently made its first entry into the wearable tech market with UV Sense, a button-sized gadget that tells users if they’ve been spending too much time in the sun.

The ModiFace acquisition is well-timed, as augmented reality has become an increasingly important aspect of the beauty industry, with brands competing to tap into innovative new technologies. China’s Meitu gleaned 446 million users through its facial enhancing app; similarly, many US-based beauty companies have invested in AR to allow customers to try on makeup at home. Sephora, Maybelline, CoverGirl, Rimmel London, Cargo, Smashbox, and Estée Lauder have all launched apps with virtual try-on, often through ModiFace’s technology. With ModiFace creating digital experiences for L’Oréal’s 30-plus brands, the pressure will be on for other labels to innovate in the growing space.

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