In China few people carry a more authoritative voice when it comes to artificial intelligence (AI) than Lee Kai-fu. The former CEO of Google China is also one of the most dedicated investors in the field. His latest fund is half invested in AI. So a passing remark he made about the sector snowballed into a major controversy that dogged China’s leader in mobile payments Ant Group, food delivery app Meituan, and facial recognition (FR) unicorn Megvii.
“Megvii is a company we invested in eight years ago. Today it is a giant in the field of AI… At the early stage we helped them look for partners such as Meituan and Ant Financial, which could let them obtain a vast amount of data on human facial features,” Lee confided at a conference in Beijing earlier this month.
The comment immediately sparked widespread discussion online, as users of Alipay and Meituan – who number more than one billion in China – were piqued that their facial identifiers and personal information might have been shared with third-party service providers without their consent.
Megvii became the first FR firm to file for an IPO in Hong Kong last year (see WiC465). The plan was shelved after Megvii was blacklisted by the US government. And Lee’s latest comment has just mired his fund’s star portfolio firm in further trouble.
“Lee Kai-Fu is just telling an open secret of the industry,” smirked a netizen.
Ant, which is readying for what will potentially be the world’s largest ever initial public offering, rapidly went into firefighting mode after the conference wound up. In a weibo post, it emphasised that it had never supplied facial data to Megvii and that their partnership – which has already ended, it insisted – was nothing more than its adoption of Megvii’s algorithms for image recognition.
“Data security and privacy protection are Ant’s codes of conduct,” said the Hangzhou-based company, adding that its collection, storage and usage of customer information is based on the principles of “due authorisation and data minimisation”.
Megvii, likewise, made plain that it had dedicated policies to ensure customers’ data security. “We don’t hold nor take the initiative to collect any data from end users,” stressed the Beijing-based company.
To help defuse the public relations crisis, Lee tried to clarify his earlier remarks. “From what I understand, the data in question has always been stored at the servers of Megvii’s partners. There isn’t any sharing or transfer of data,” he wrote on his widely followed weibo account. “I deeply regret that my slip of the tongue has spelt troubles for the three companies.”
Public concern over the issue relates to the rising use of FR applications across the country. Aside from processing payments at ‘smart’ grocery stores, the technology is also used in areas as varied as buying train tickets and entering zoos.
A district in west Beijing even uses it in waste management (communal trash cans automatically open for users who have their faces registered). The scheme is meant to help facilitate a points-based incentive programme that gives out credits to users based on the weight of their rubbish, Southern Weekend, a magazine, reported.
Such convenience undoubtedly comes with risks. Last October, some primary school students managed to collect parcels sent to their parents at the smart delivery lockers operated by SF Express service Hive Box (generally used for picking up goods bought from e-commerce vendors) simply by presenting their parents’ photos for FR scanning.
Flaws like this are a concern – but tech upgrades can fix them. A graver worry is that individuals’ facial data seems to be brazenly traded on e-commerce platforms. CCTV, the state broadcaster, reported last July that some 5,000 images, complemented with their owners’ names, IDs and bank card numbers, were sold for Rmb4 each on a mobile app.
China’s advances in facial recognition technology has been fuelled by 80 investments between 2012 and 2019 totalling Rmb33.7 billion ($4.97 billion). That has set the foundation for sales in the FR market to expand at a compound annual growth rate of 23% over the next five years to more than Rmb10 billion, Qianzhan, a research firm, estimated.
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