Investors Placing Huge Bets On China’s Facial Recognition Startups

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Citizens say “No”. but big money says “Yes”. Money is flowing by the billions into China to fund facial recognition companies who operate freely there due to their warm embrace by the Technocracy-loving government. ⁃ TN Editor

China’s facial recognition startups are attracting big investments at a time when Silicon Valley’s giants are facing a backlash over their use of the technology.

In the past week, Chinese facial recognition companies, according to a pair of reports, were close to raising as much as $1.6 billion. Those investments would build on billions of dollars that investors have already put into the companies.

The investments reflect facial recognition’s embrace by Beijing, which has created a better environment for companies to test the technology than in the West. And that could help China deploy advanced systems faster and more broadly than the United States.

SoftBank’s $100 billion Vision Fund was seeking a $1 billion stake in SenseTime, an artificial intelligence company in Beijing, Bloomberg reported last week, citing anonymous sources. SenseTime makes facial recognition software used in applications like monitoring CCTV footage and checking a consumer’s likeness to validate digital payments.

Monday, Bloomberg reported that, according to anonymous sources, the Chinese AI company Megvii would close a $600 million funding round “within weeks.” Alibaba and Hong Kong-based Boyu Capital are expected to contribute. Megvii is the developer of Face++, the facial recognition system already used in China to grant or deny people access to buildings, or check if the driver of a Didi ride-hailing car is legitimate, among other things.

SenseTime has already raised over $1.6 billion in funding since it was founded in 2014, according to data from S&P Global Market Intelligence, and as recently as May was valued at about $4.5 billion. Investors included Alibaba and Bank of China as well as the American firms Qualcomm, Silver Lake, Tiger Global Management and Fidelity International.

Megvii’s previous funding round raised $460 million from Chinese companies like Foxconn and Ant Financial, as well as several domestic investment funds. It also received money from the Moscow-based Russian Direct Investment Fund and South Korea’s SK Group.

The facial recognition systems being built by SenseTime and Megvii use artificial intelligence to discern individuals from one another in images or video, by studying libraries of existing content. It is one of the more established machine learning techniques, which means that it has found some practical application in consumer products — such as Apple’s Face ID, which allows a user to unlock his or her iPhone by looking at it, or Facebook’s tools, which can recognize users in uploaded images.

Such software has proved controversial because of the privacy issues that it raises. Law enforcement’s use of it to identify criminals or track citizens, in particular, has drawn pushback.

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