Inside the creepy and impressive startup funded by the Chinese government that is developing AI that can recognize anyone, anywhere

Inside the creepy and impressive startup funded by the Chinese government that is developing AI that can recognize anyone, anywhere

Harrison Jacobs and Pat Ralph  Jul. 8, 2018, 7:54 AM 

The technology is futuristic, impressive, and unsettling — all at once. Harrison Jacobs/Business Insider

     Two Chinese startups, SenseTime and Megvii, are becoming the world leaders in real-world deployment of facial recognition software, drawing eye-popping valuations in the billions of dollars.
     The companies primarily have gotten attention due to their use by Chinese police to find criminals, leading some critics to wonder at how the technology is being used to further the country's techno-authoritarian ambitions.
     I recently visited Megvii's offices in Beijing to get an inside look at the company. Its Face++ technology was able to recognize my face instantaneously once it was in their system. The demonstration was futuristic, cool, and unsettling.
     Xie Yinan, Megvii's vice president, told Business Insider that the company sees tons of applications beyond law enforcement, including in financial services, e-commerce, retail, and identity verification.

A computer system that can track and identify any face anywhere may sound like science fiction, but, in China, two such companies are barreling ahead at making such technology an everyday reality.
The two startups, SenseTime and Megvii, are developing competing facial recognition platforms powered by artificial intelligence.

SenseTime became the world's highest valued AI startup after raising $600 million in April at a valuation of $4.5 billion. The company raised another $620 million last month. Megvii isn't far behind. It raised $460 million last November. While the valuation hasn't been disclosed, it's likely that it is close to or tops $2 billion. Two smaller Chinese companies include Yitu Technology, which raised $380 million last year, and DeepGlint.

The eye-popping valuations shouldn't be surprising to anyone paying attention. Last year, the Chinese government unveiled a plan to make the country the world leader in AI and to develop an AI industry worth $150 billion by 2030.

And the Chinese government has big plans to have a ubiquitous surveillance network that can monitor its 1.4 billion citizens. That has lead to China becoming the biggest market in the world for video surveillance — $6.4 billion in 2016 — with expectations that it will grow at a compound annual growth rate of 12.4 percent, according to estimates from IHS Markit Ltd. The US market by comparison is only at $2.9 billion and growing at 0.7% a year.

The government, particularly police departments at the local level, have become major clients of all four of the companies.

But that's only half the story. For the vast majority of Chinese, privacy is just not as high a priority as it is in the US, so there isn't as much backlash to AI and facial recognition in general. That has lead companies like SenseTime and Megvii to be able to put their technology in any number of real-world applications.

While government surveillance makes up a significant percentage of all the companies' business, they also sell to tons of other industries. It is already being deployed in China in everything from financial services — where it is used for payments and to prevent fraud — to technology companies like selfie-editing software provider Meitu and ride-hailing company Didi Chuxing.

Unsurprisingly, Alibaba and its affiliate Ant Financial have been one of the primary investors and users of SenseTime and Megvii.

"China is really moving ahead, especially in video and image understanding, because we have the real world problems, we have the real world data, and we also have a stronger talent pool dedicated to those kinds of things," SenseTime CEO Xu Li told Quartz in April.

I recently visited Megvii's headquarters to get an inside look at one of the major companies driving one of the most interesting and unsettling technologies of the future.

Here's what it was like:

Founded in 2011 by three Tsinghua University graduates, Megvii has become one of the world's leaders in facial recognition and AI technology. The Economist described the office as "Big Brother’s engine room." While the office atmosphere was cheery and bright in the optimistic way that all tech startups seem to be, I certainly had that unsettling impression.

Its main product is Face++, a platform that can detect faces and confirm people's identities with a high degree of accuracy. Entry to all doors in the office is managed by Face++. In order to enter the office, you have to be scanned into their system. Once you're in, it can identify you nearly instantaneously.

The system can handle multiple faces at once. As employees returned from lunch, each of their faces popped up on the screen. Currently, Face++ is being used in a number of industries in China, according to Xie Yinan, Megvii's vice president. One of the biggest is for private and commercial real estate to manage who is and isn't supposed to be in a particular place.

When I arrived at Megvii's offices, I scanned my face into their system. While getting into an office without a badge is cool, Xie thinks that is only the beginning. Using Face++ for office entry creates a smart system where employers can compile data on their employees — how long they stay at work, what hours they tend to work, etc. Doing so, he said, could allow employers to accurately measure employees who prefer flexible working schedules.

After I was in the system, I decided to give it a try. As soon as I got close to the door, my face popped up on the screen and the door opened. Face++ analyzes 106 data points on the face to determine someone's identity.

While Face++ is the technology underlying most of Megvii's efforts, they have a number of applications tailored for different uses. Already, some train stations in Beijing match passengers' faces with their national IDs to verify their train tickets.

In a showroom in Megvii's headquarters, a highlight reel shows Face++'s many capabilities. Face++'s open platform, which allows anyone to develop apps using its algorithm, is already the largest facial recognition platform in the world, with 300,000 developers from 150 countries on it. Megvii is counting on that popularity to make its system the best in the world. The more data that goes into an AI, the better it becomes.

The buzziest and, for many, most terrifying use of Face++ has been by Chinese police. China already has 170 million security cameras in use for its so-called "SkyNet" system, with 400 million more on the way. Face++ is already being used as part of that system. One of Megvii's biggest investors is China's state venture capital fund.

A number of police departments in China are currently using Face++ to track down criminals. In December, China demonstrated its sophisticated "Skynet" system by having it track down a BBC reporter in just 7 minutes.

But, according to Xie, the police's facial recognition capabilities are not as far along as many believe. Police systems powered by Face++ can't run 24/7 and can't track down anyone — it would be too much data for a server to crunch. While it can pick a criminal out of a crowd with solid accuracy, a local server would have to be uploaded with that criminal's face scan prior so that it would know to scan for it. And no server can handle having more than, say, 1000 faces on it at time to look for.

If the government, or any client, tried to use Face++ pervasively or indiscriminately, Xie said that he is confident that that the system would fail. There simply isn’t enough computing power available to support a facial recognition system that isn’t targeted. Of course, that could change as the technology matures.

When I asked Xie about the potential for overreach by the government, he seemed unconcerned, saying its up to the government to write the legal framework for how police should use the system. "We don’t have access to the data. What we do is sell them a server [loaded with Face++]. That’s all,” he said.

That's likely of little comfort to human rights observers of China, who have warned repeatedly of an authoritarian China super-powered by unfettered technology. Already, Chinese state media has boasted of police successes from facial recognition systems.

For now, Xie is more interested in the possible business applications. Xie sees Face++-powered cameras being used to make retail stores more profitable by analyzing foot traffic to determine a store's busiest times, what parts of the store draw the most interest, what kinds of people visit the store, and who buys what. Brands, he said, could also use Face++ to help customer service recognize rewards members and provide extra attention.

It's likely Face++'s retail and payment applications that have led Alibaba and its subsidiary Ant Financial to invest in Megvii and other similar companies. Ant Financial is already using Face++ to power Alipay's "Smile to Pay" feature at KPro, a KFC concept store in Hangzhou. Alibaba also uses facial recognition payment at some of its high-end Hema Xiansheng supermarkets.

The broader vision for Megvii, according to Xie, is to be the artificial intelligence that powers China's smart cities. Face++ is integrated into Alibaba's City Brain platform, which is already deployed in six local governments in China. The platform analyzes a city's CCTV network to optimize traffic flows and identify incidents that require police or medical responses. Alibaba claims that the system has improved traffic speed by 15-20% in Hangzhou.

Another way that Face++ is being used is for real name authentication on the internet. Last year, China began requiring platforms to verify user's identities before allowing them to post on social media or blogs. Face++ is being deployed by many platforms to comply. As sharing services like bicycle-share app Mobike and others become increasingly popular in China, it's likely that authentication will be required for those apps as well.

While the Chinese government has yet to do so, it's possible Face++ could be used to link logins together to create one unified ID. Such an ID would be a boon to China's efforts to build its so-called "social credit system." Some, like author Murong Xuecun, have suggested that the goal of such a system would be bring all of Chinese society against those deemed "untrustworthy."

Xie suggested that the aims of real-name authentication are more benign. As more citizens use services like ride-hailing app Didi Chuxing and other sharing services, its important that users on both sides can be tracked down if there is a disagreement or a legal issue.

One of the biggest questions for Megvii is whether it will be able to draw the interest of non-Chinese corporations, given the company's affiliation with the Chinese government. Xie said that he believes it will be a non-issue if Face++ and Megvii's technology is top of the line.

On that point, Face++ may have some work to do if it intends to be used outside Asia. AIs are only as good as the data that goes in them. Due to its dataset, Face++ is far more accurate at recognizing Asian faces than those of Caucasians or darker-skinned people. The platform had a 35% error rate when asked to analyze darker female faces.

As the US debates the use of facial recognition platforms, one thing is clear in China: the technology is here and it's only getting more accurate. Megvii is far from the only Chinese AI startup putting its tech into the real world.

SEE ALSO: Alibaba's futuristic supermarket in China is way ahead of the US, with 30-minute deliveries and facial-recognition payment — and it shows where Amazon is likely to take Whole Foods


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