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Home Tech SoftBank Backs Facial-Recognition Startup Despite Privacy Concerns

SoftBank Backs Facial-Recognition Startup Despite Privacy Concerns


SoftBank Group Corp.


9984 -0.62%

is leading an investment in AnyVision Interactive Technologies Ltd. that values the facial-recognition company at over $1 billion, according to a person familiar with the matter, underscoring its commitment to the technology despite pushback over privacy concerns.

The Tel Aviv-based company, which uses artificial intelligence to recognize faces and objects, said Wednesday that it had raised $235 million from SoftBank’s Vision Fund and other investors that it planned to use to expand in the U.S.

The fundraising comes as facial-recognition technology faces growing scrutiny from regulators and activists who say it infringes on privacy. Last month the European Union proposed a new law that sought to limit police use of the technology, while several U.S. cities including San Francisco and Portland, Ore., have banned it.

Large technology companies including Google’s

Alphabet Inc.,

Microsoft Corp.

and

Amazon Inc.

have also stopped or dialed down their sales of facial-recognition technology in the past few years, citing privacy concerns.

That pullback impacted AnyVision last year when Microsoft sold its stake in the startup citing “the challenges of being a minority investor in a company that sells sensitive technology.”

Microsoft-appointed lawyers had previously conducted an audit of AnyVision activities after media reports in 2019 said the startup’s technology was used to power mass surveillance in the West Bank. The audit found it wasn’t. AnyVision said the reports were unfounded.

AnyVision Chief Executive

Avi Golan

said SoftBank had investigated the surveillance allegations before investing. Mr. Golan was a partner at SoftBank’s Vision Fund before joining AnyVision in November.

SoftBank Investment Advisers partner Anthony Doeh, who led the investment, said AnyVision was “uniquely placed to redefine physical environment analytics across numerous industries.” He declined to comment on the surveillance issue.

The AnyVision move is SoftBank’s second major investment in facial-recognition technology, after the Vision Fund put $1 billion into Chinese firm SenseTime Group Ltd. in 2018 at a $7.7 billion valuation. Several of the world’s biggest facial-recognition firms, including SenseTime, Face++ and YITU Technology are based in China.

AnyVision plans to use the new funds to buy competitors whose software can “go beyond facial” to detect suspicious behavior in individuals based on their body positioning, what they are holding in their hands or their surrounding environment, Mr. Golan said. “Someone is laying on the ground near gas tanks,” he said as an example. “Is it a safe situation?”

AnyVision says its software, when plugged into surveillance cameras, can scan crowds for suspected criminals or people on a private watch list, and ping a mobile device when it spots them. It also sells software it says can scan faces to decide if someone should be allowed entry at barriers and gates. The company has sold its crowd-scanning software to retailers and casinos, and its access-control software to offices and manufacturers, as well as a sports stadium in the U.S.

About a quarter of AnyVision’s revenue comes from governments and military buyers, Mr. Golan said.

The pandemic crimped the company’s income last year as offices and other large venues shut down, but Mr. Golan said AnyVision’s revenue in the past two quarters has risen 70% from where it was in 2019. That is partly because Covid-19 has prompted more interest in technology that reduces physical contact, lowering the risk of spreading germs.

The market for facial-recognition technology has been steadily growing, despite a slowdown during the pandemic, according to Nick Ingelbrecht, an analyst with Gartner, a research firm. Demand for access-control systems that match faces and also screen people for high temperatures has been particularly strong, he said.

Mr. Ingelbrecht said AnyVision was one of several large facial-recognition companies that had the advantage of being able to scan many faces at once, as well as one face at a time. Some companies are refocusing their businesses on access control, which faces fewer regulatory hurdles than technologies used for surveillance, he added.

AnyVision said its software blurred the faces of bystanders and that it limited the storing of individuals’ data as part of an effort to improve data privacy measures.

Write to Parmy Olson at parmy.olson@wsj.com

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