Megvii, the company behind the facial recognition technology being used to track Muslims in Xinjiang has announced a $750 million fundraise ahead of a potential IPO. The company, founded by three Tsinghua University graduates, is one of the major AI surveillance unicorns in China, alongside SenseTime, Yitu and CloudWalk.
News of this latest fundraise comes just a few days after Human Rights Watch (HRW) exposed details of a smartphone app used by the police in Xinjiang to track “the movement of people by monitoring the ‘trajectory’ and location data of their phones, ID cards, and vehicles,” and which HRW claimed used Megvii’s facial recognition technology. Megvii said it had not agreed for the use of its technology in the app and had no knowledge of how its technology had been integrated.
Last month, the New York Times reported that the Xinjiang authorities “are using a vast, secret system of advanced facial recognition technology to track and control the Uighurs… The Chinese A.I. companies behind the software include Yitu, Megvii, SenseTime, and CloudWalk, which are each valued at more than $1 billion.”
The newspaper added that “a SenseTime spokeswoman said she checked with ‘relevant teams’, who were not aware its technology was being used to profile. Megvii said in a statement it was focused on ‘commercial, not political solutions’, adding, ‘we are concerned about the well-being and safety of individual citizens, not about monitoring groups’.”
It’s starting to look like a pattern, isn’t it – at what point does ignorance cease to be a defense?
The latest funding round has brought Macquarie Group, ICBC Asset Management (Global) Co and a subsidiary of the Abu Dhabi Investment Authority into the company. The fact that a subsidiary of the Abu Dhabi sovereign wealth fund is investing in a technology that Human Rights Watch claims is being used to help suppress the Muslim population in Xinjiang is in itself notable.
According to Reuters, “the funding raises start-up Megvii’s valuation to slightly over $4 billion as it prepares for an initial public offering (IPO) in Hong Kong planned for later this year,” adding that the company has enlisted Citigroup, Goldman Sachs and JPMorgan for the proposed IPO.
Alibaba is a major financial backer of Megvii, and the company’s Face++ technology is also used on the Alipay platform for biometric authentication. Separately, Alibaba themselves came in for criticism this week, when TechCrunch published details of a Beijing “smart city database accessible from a web browser without a password… includ[ing] facial recognition scans on hundreds of people over several months.” The system was hosted by Alibaba.
Alibaba is also a major backer of SenseTime. Last month, SenseTime “sold out of a security joint venture in Xinjiang after an international outcry over the surveillance and mass detention of local Uighur people in the far-western Chinese region.” SenseTime also sold its major stake in SenseNets, before news of a data breach broke earlier this year. That breach exposed more than 2.5 million records relating to the near real-time movement of Xinjiang Muslims, including “2.565.724 records of people with personal information like ID card number (issue & expire date, sex, nation, address, birthday, pass photo, employer and which locations with trackers they have passed in the last 24 hours which is about 6.680.348 records.”
According to Reuters, “Chinese and foreign investors are pouring money into the sector given Beijing’s emphasis on the technology. Investments in the AI sector surged to $2.1 billion through 88 deals last year.”
Technologies developed by companies like Megvii are being relentlessly exported under a state-subsidized push towards a dominant position in the security sector. It is a national security strategy that networks together telecoms providers, AI software developers, surveillance equipment manufacturers and services providers. And the end result, formed domestically, is exported at prices that companies from other parts of the world cannot match. It is a program that has fueled the development of advanced surveillance technologies by existing players and new entrants, with no reins applied. “Under President Xi Jinping,” explained the New York Times, “the Chinese government has vastly expanded domestic surveillance, fueling a new generation of companies that make sophisticated technology at ever lower prices. A global infrastructure initiative is spreading that technology even further.”
Many of these technologies have been deployed in Xinjiang, which is also where AI can be effectively trained to track the region’s Muslim population. With facial recognition that means identifying individuals and also identifying races. It has become an unconstrained surveillance laboratory used to hone capabilities. And so the question remains as to whether the world will ever wean itself off cheap Chinese electronics because of this, or will carry on regardless. If no impediments are applied by non-Chinese technologists, customers, investors or regulators, then there is a collective responsibility for what takes place.
As I’ve written before, it will only be restrictions on the exports of such technologies and the investment in their makers that will affect any change on the ground. In the meantime, the money will keep pouring in. For investors, access to China’s huge closed procurements across its high-tech surveillance state underpins financial performance and makes for a very safe bet.
