Facial recognition business puts SoftBank between China and US, Telecom News, ET Telecom

A SoftBank-owned company is prospering by offering facial recognition technology powered by a blacklisted Chinese company to the likes of Mastercard and Visa, an opportunity for the Japanese conglomerate, fraught with geopolitical and privacy risks.

Japan Computer Vision Corp (JCV), owned by the wireless unit of SoftBank Group Corp, has struck deals on payments in recent months, a potential breakthrough for SoftBank founder Masayoshi Son’s dream of fueling new business through a partnership between your technology investments.

If JCV keeps expanding, it could become a leading example of SoftBank creating synergies with portfolio companies, a key part of Son’s sales pitch to the tech industry.

But the surge faces risks as the facial scanning system it offers to US heavyweights Mastercard Inc and Visa Inc uses technology from SenseTime Group, a Chinese firm blacklisted by the US over human rights concerns.

The JCV-SenseTime partnership highlights SoftBank’s difficult balancing act as Son tries to position his conglomerate as a neutral player, even as tensions rise between two key markets, the United States and China.

The billionaire said last month that SoftBank is taking a cautious approach to China because of a regulatory crackdown there that has hit his portfolio.

JCV said it is keeping SenseTime and credit card companies at arm’s length: the Chinese firm is a technology partner with no access to Mastercard and Visa systems or data.

Mastercard said all of its biometric payment program partners must comply with European Union data protection standards. Visa said it is working to define the use of biometrics in payments and believes such technology can help ensure a secure system.

JCV’s rapid expansion also faces privacy concerns from regulators and consumers as facial recognition technology becomes more widespread. SenseTime shares plunged 50% last week with the end of a lock-up period after its initial public offering.

SenseTime told Reuters that it aims to strengthen the partnership with JCV, which it believes will benefit companies, and that the company has set up an ethics council to ensure standards.

JCV said its technology is audited by a third party, Israeli cybersecurity firm CYE, to check for risk of data leakage and the company asks users to opt in to pay-per-person systems and allows them to opt out.

“Offering the consumer those controls is really what’s required to make this a very mainstream technology,” said JCV CEO Andrew Schwabecher. SoftBank declined to comment.

A million faces daily
SenseTime, in which SoftBank is the largest investor, was placed on a blacklist in 2019, preventing US companies from exporting technology to the Chinese firm. A new blacklist in December prevents US investment in SenseTime.

Washington accuses the Hong Kong-listed company of developing facial recognition technology that can be used to identify ethnic Uyghurs.

While there is no indication that JCV is violating any restrictions, the use of SenseTime technology reflects the limits of the US blacklist to hinder the expansion of Chinese technology.

JCV also sells body temperature scanners that use the technology to retailers such as Fast Retailing Co’s fashion chain Uniqlo and mall operator Aeon Co. It has shipped more than 20,000 devices in Japan that scan more than a million faces daily.

“SenseTime’s algorithm is absolutely the best, we’ve tested almost all of them,” JCV’s Schwabecher told Reuters, citing its ability to identify customers even when the face is partially hidden by a mask or hand.

Fast Retailing said its temperature scanners don’t store or transmit the information they capture. Aeon declined to comment.

JCV has created a software platform to run the SenseTime algorithm, which it says ranks high in the US government’s own tests for its low error rate. JCV operates the system from Japan.

SenseTime’s algorithm analyzes more than 200 facial locations and the distance between them to create a digital key. JCV uploads the single signature to the cloud, allowing users to authenticate payments using their face.

Schwabecher said other companies are likely to catch on with SenseTime, and JCV plans to offer alternatives on its platform in the future. “In two or three years, which vendor’s algorithm you’re using probably won’t matter as much as it does today.”

The adoption of face-scanning technology would enable greater personalization of services, from targeted ads to offering customers their favorite burger at a food joint or suggesting a destination when hailing a taxi.

But consumer concerns about data privacy pose a threat to further adoption, even as advocates say such technology is more secure and convenient.

Regulators have cracked down on facial recognition companies, with New York-based startup Clearview AI fined in Britain and Italy for collecting images online to train its face-matching tool.

In Australia, a major consumer group referred three retail chains to regulators last month over their use of “intrusive” facial recognition technology.

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