Fa­cial recog­ni­tion firms ap­peal to funds

The Myanmar Times - - International Business -

BUOYED by China’s plans to build a ubiq­ui­tous CCTV sur­veil­lance net­work, Chi­nese and some for­eign in­vestors are pour­ing money into start-up tech­nol­ogy firms that spe­cialise in fa­cial recog­ni­tion soft­ware.

At stake for firms such as SenseTime Group, Face++ and Deep­Glint, is a multi-bil­lion dol­lar global pub­lic and pri­vate mar­ket for fa­cial recog­ni­tion tech­nol­ogy that can quickly iden­tify in­di­vid­u­als by mea­sur­ing ma­jor el­e­ments of their faces, such as the dis­tance be­tween the eyes and the curve of the cheek­bones.

With the use of ar­ti­fi­cial in­tel­li­gence (AI) the tech­nol­ogy can recog­nise and track those wanted by the au­thor­i­ties by seek­ing a match from a data­base of pho­to­graphs. In the com­mer­cial world it can be used for se­cu­rity at homes, work­places and ATM ma­chines, and as a part of pay­ments sys­tems at stores and restau­rants.

Ac­cord­ing to es­ti­mates from IHS Markit Ltd, video sur­veil­lance - in­clud­ing the equip­ment and video man­age­ment soft­ware - was a $6.4 bil­lion mar­ket in China in 2016, with 176 mil­lion sur­veil­lance cam­eras al­ready in­stalled by the au­thor­i­ties or pri­vate com­pa­nies.

That mar­ket, the largest in the world, is set for a com­pound an­nual growth rate of 12.4 per­cent through 2021, ac­cord­ing to IHS. By com­par­i­son, the US mar­ket was es­ti­mated to be worth only $2.9 bil­lion and grow­ing at just 0.7 per­cent a year.

In China, though, the su­per­charged growth has added to con­cerns about con­trols on dis­si­dents or ac­tivists by the gov­ern­ment of Pres­i­dent Xi Jin­ping, es­pe­cially when com­bined with the po­ten­tial for the Chi­nese au­thor­i­ties to track phones be­ing in­creas­ingly used for elec­tronic pay­ments and their stepped up mon­i­tor­ing of In­ter­net traf­fic.

That hasn’t ap­peared to de­ter in­vestors, who in­clude lead­ing U.S. ven­ture cap­i­tal firms such as the China arm of Se­quoia Cap­i­tal, which is one of the best-known Sil­i­con Val­ley ven­ture cap­i­tal firms.

Hong Kong-based SenseTime Group, which pro­duces deep-learn­ing based soft­ware for fa­cial recog­ni­tion, au­ton­o­mous driv­ing and video an­a­lyz­ing, said ear­lier this month it had “at­tracted lots of in­ter­est” in its lat­est fi­nanc­ing round with­out elab­o­rat­ing. Peo­ple fa­mil­iar with its plans said the firm in­tends to raise about $500 mil­lion.

At the same time, SenseTime, which lists var­i­ous po­lice de­part­ments across China as ma­jor clients, has joined forces with its backer China’s CDH In­vest­ments to raise about $450 mil­lion to in­vest in other firms work­ing on ar­ti­fi­cial in­tel­li­gence tech­nolo­gies, said two sources with knowl­edge of the mat­ter.

And China’s big­gest fa­cial recog­ni­tion firm Megvii, more com­monly known as Face ++, ear­lier this month an­nounced it has raised $460 mil­lion in its lat­est cap­i­tal rais­ing, in­clud­ing pulling in money from China’s na­tional ven­ture cap­i­tal fund.

With the fund­ing, Face++ plans to ex­pand its busi­ness from soft­ware to hard­ware by de­vel­op­ing more prod­ucts with built-in AI, such as smart sur­veil­lance cam­eras that can cap­ture faces bet­ter and faster, said Xie Yi­nan, Face++’s mar­ket­ing and pub­lic re­la­tions di­rec­tor.

“We want to en­hance these ‘eyes of the city’ and make them in­tel­li­gent,” Xie told Reuters. “So that ‘footage of the city’ be­come ‘data about the city’,” he said.

Xie said that Face++, whose tech­nol­ogy is be­hind Chi­nese com­pany Ali­pay’s “scan-your-face-to-pay” func­tion, has al­ready helped the po­lice catch more than 3,000 fugi­tives.

“It’s just like in the films. The po­lice no longer need to man­u­ally look for some­one from thou­sands in the cam­era. The video net­work au­to­mat­i­cally de­tects and alerts them to sit­u­a­tions so that greatly en­hances their ef­fi­ciency,” Xie said.

Sin­ga­pore pro­posal

Face++, which was founded in 2011, does not re­lease spe­cific rev­enue fig­ures but Xie said it has been grow­ing at about 400 per­cent an­nu­ally and the com­pany is ex­pected to break even this year. It’s also tar­get­ing an ini­tial pub­lic of­fer­ing, although it has no time frame, he said.

SenseTime said its video sur­veil­lance tech­nol­ogy is used by 40 lo­cal gov­ern­ment clients.

Its pho­tog­ra­phy en­hance­ment tech­nol­ogy is also used by al­most all of China’s ma­jor smart­phone man­u­fac­tur­ers in­clud­ing Huawei Tech­nolo­gies, Oppo, Vivo and Xiaomi.

SenseTime is seek­ing to ex­pand over­seas. It’s con­sid­er­ing set­ting up an ASEAN head­quar­ters in Sin­ga­pore, af­ter Sin­ga­pore’s Prime Min­is­ter Lee Hsien-loong re­cently vis­ited the com­pany in Bei­jing, Shang told Reuters.

“We are con­fi­dent of record­ing $100 mil­lion in rev­enue this year,” he said, adding that would make it No.1 in China. He said the com­pany ex­pects its over­seas rev­enue to grew to $150 to $200 mil­lion in three to five years.

SenseTime and Face++ are far from alone.

Smaller ri­val Yitu Tech­nol­ogy, which lists more than a dozen pro­vin­cial or mu­nic­i­pal po­lice de­part­ments across China as ma­jor clients, raised $380 mil­lion from in­vestors in May, in­clud­ing Se­quoia China.

Deep­Glint, an­other Se­quoia-backed AI com­pany that has de­vel­oped an in­tel­li­gent sur­veil­lance cam­era that can cap­ture faces as far away as 50 me­tres, told Reuters it de­rives al­most all of its rev­enue from gov­ern­ment con­tracts.

Se­quoia did not re­spond to Reuters’ re­quests for com­ment on whether it has any con­cern that tech­nol­ogy it is in­vest­ing in may in­fringe in­di­vid­ual pri­vacy.

Both Shang and Xie shrugged off crit­i­cism that their com­pa­nies’ tech­nol­ogy may be used to in­fringe on in­di­vid­u­als’ pri­vacy.

“We are only tech­nol­ogy providers, we are neu­tral,” Xie said. “If you go back to the time be­fore there is mo­bile, be­fore there is the In­ter­net, then of course you had bet­ter pri­vacy. But times have to ad­vance with tech­nol­ogy,” he said.

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