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Despite controversy and ban, facial recognition startups are pouring in VC cash

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If efforts by states and cities to pass privacy regulations limiting the use of facial recognition are anything to go by, they may fear the worst for the companies that build the technology. But the recent influx of investor money indicates that the facial recognition startup sector is thriving, not struggling.

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Facial recognition is one of the most complex and controversial areas of politics. Technology can be used to keep track of where you go and what you do. It is used by public authorities and private companies such as department stores. But facial recognition has been shown to be flawed and inaccurate, often misrecognizing non-white faces, and disproportionately affecting communities of color. Its flawed algorithms have already been used to send innocent people to prison, and privacy advocates have raised countless concerns about how this type of vital data is stored and used.

With the threat of federal legislation looming, some of the biggest facial recognition companies like Amazon, IBM and Microsoft have announced that they will stop selling facial recognition technology to police departments to try to placate angry investors, customers and even their employees who have protested the deployment of such technologies by the state government. United States and immigration authorities.

The rollback of facial recognition didn’t stop there. Since the beginning of the year, Maine, Massachusetts, and the city of Minneapolis have all passed legislation restricting or banning the use of facial recognition in some form, following in the footsteps of many other cities and states that preceded them and paving the way for others, such as New York, that are looking to legislate their own.

In those six months or so, investors have funneled hundreds of millions into various facial recognition startups. A breakdown of Crunchbase data by FindBiometrics shows a sharp rise in project funding in facial recognition companies of more than $500 million in 2021 so far, compared to $622 million for the whole of 2020.

About half of that $500 million comes from just one startup. Israel startup AnyVision raised $235 million in Series C earlier this month from SoftBank’s Vision Fund 2 for facial recognition technology used in schools, stadiums, casinos and retail stores. Macy’s is a well-known customer, and uses face scanning technology to identify shoplifters. It’s a funding round steep compared to a year earlier when Microsoft publicly withdrew its investment in AnyVision’s Series A following an investigation by former US Attorney Eric Holder into reports that the Israeli government was using the startup’s technology to monitor populations in the West Bank. .

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Paravision, which has been marred by controversy after being accused of using facial recognition on its users without informing them, has raised $23 million in a funding round led by J2 Ventures.

Last week, Clearview AI, the controversial facial recognition company that has been the subject of multiple government investigations and multiple class actions for allegedly removing billions of profile photos from social media sites, confirmed to The New York Times that it had raised $30 million from investors. who asked to be “not identified”, only that they are “institutional investors and private family offices”. This means that while investors are happy to see their money going toward building facial recognition systems, they are all well aware of the risks and controversies associated with attaching their names to the technology.

Although facial recognition applications and clients vary widely, there is still a large market for this technology.

Many cities and towns that have banned facial recognition also have sculptures that allow it to be used in some circumstances, or broad exemptions for private companies that can freely purchase and use the technology. The exclusion of several China-based facial recognition companies, such as Hikvision and Dahua, that the government has linked to human rights abuses against the Muslim Uighur minority in Xinjiang, as well as dozens of other startups blacklisted by the US government, helped in Pay this ban. Some of the biggest competition from the most lucrative US markets, such as government customers

But as facial recognition scrutiny continues, investors are urging companies to do more to make sure their technology isn’t misused.

In June, a group of 50 investors with more than $4.5 trillion in assets invited dozens of facial recognition companies, including Amazon, Facebook, Alibaba and Huawei, to ethically build their technologies.

“In some cases, new technologies such as facial recognition technology may undermine our basic rights. However, this technology is designed and used in a largely unrestricted manner, posing risks to basic human rights,” the statement read.

It is not only about ethics, but also about trying to protect the industry in the future from further inevitable political headwinds. In April, the EU’s highest data protection watchdog called for an end to facial recognition in public spaces across the bloc.

“With the expansion of mass surveillance, technological innovations outpace the protection of human rights. There are increasing reports of bans, fines and blacklists for the use of facial recognition technology. There is an urgent need to consider these questions,” the statement added.


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