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Money Pours Into Controversial Facial Recognition Startups

Revenue & Finances Technology

Isadora Teich wrote this article


Even in years to come, as the pandemic ends, you may want to keep a mask on in public. Despite states, cities, and others working to ban facial recognition technology out of safety fears, investment in this sector is not slowing down.

If anything, facial recognition startups are receiving an unprecedented influx of funding.

Let’s take a look at the controversies, existing applications, and potential trajectory of this polemic and fascinating market. How are we really using this technology and is the widespread alarm warranted?

Let’s go.

What Is Facial Recognition And How Does It Work?

Facial recognition systems use algorithms to identify people in photos, videos, or in real life.

They essentially look at a person’s face and discover their identity. This is only one category of biometric security, which also includes tools like voice and fingerprint recognition. This technology is mostly used in security and for law enforcement, though there is strong interest in other varied applications.

There are a number of ways that these systems can work. However, this is the general way that facial recognition systems operate.

First, they detect a face either from visual media or in real time. Facial recognition systems can even pick out single faces in crowds. Then, the detected image is captured and analyzed using facial geometry. This computes distinct features, such as the distance between your eyes and shape of your lips.

Your individual distinct features are then converted into a mathematical formula. This numerical code is your unique faceprint. This faceprint is then compared against a database of faces until you are recognized.

Many different organizations have such databases, including Facebook and the FBI. In fact, it is already so common that it is estimated that half of the world has already interacted with facial recognition technology, whether they know it or not.

How Is This Technology Already Used?

Considering what a controversial hot topic facial recognition software has become, and the many trying to ban it, it gives this technology a certain reputation. It might seem like we are on the brink of some big dangerous thing.

However, as half the world is already involved with facial recognition technology in some way, the argument could be made that a lot of this alarm is a day late and a dollar short.

Here are some of the big and small ways it’s already used.

Unlocking Phones

A lot of people out there yell about the state’s conspiracies to control them while casually handing out their information to companies every day.

If you have ever unlocked your iPhone with your face, you have personally made use of facial recognition technology. However, something interesting to think about is what Apple can and cannot do with the information you provide.

Sure, you get a new way to secure your phone info, but does that come at the price of un-securing your face info?

Retail, Private, National, and International Security

Police around the world keep databases of mugshots from arrestees to compare and use in criminal searches and investigations.

They also use mobile facial recognition to take photos of drivers and pedestrians and compare them in databases. This technology is used for security globally almost everywhere from Airports to Rite Aids to schools too.

Depending on your perspective, this could be either good or bad.

For example, if you are a true crime fan, you know that in the past many people got away with entire strings of murders, simply because there was no way for police departments to really keep track of people across distances. This really solves that issue.

We Are Biased, So We Create Biased and Ineffective Systems

However, other systemic issues within law enforcement and with the technology itself makes it far from a utopian cure-all to crime.

Often, the technology created by one group of people can reflect their unconscious and conscious biases. These blindspots can derail projects and even be deadly.

For example, remember when Microsoft created a chatbot meant to learn natural interaction from conversation? This was cool, until Microsoft forgot that the internet is crawling with bad faith actors.

As a result, Twitter users taught the chatbot to recite neonazi rhetotic in 5 minutes flat. Weirdly, Microsoft had no fail safes in place for this, had never considered it, and was surprised.

By refusing to confront the biases baked into our culture, big tech continues to fail us.

Issues With Facial Recognition Software

It is one thing to make this mistake when you are making an experimental chat bot. It is another thing when you are playing with technology that can ruin lives. Lawmakers have already come down on Amazon’s facial recognition software. It was found that it has a higher rate of failure for identifying non-white faces.

This begs the question, how useful is facial recognition software that struggles to distinguish between the majority of people accurately? In most situations, something that fails most of the time is not considered a viable product. In these high stakes situations especially, that should be unacceptable.

Facial recognition has already misidentified people and sent innocent people to jail too. Privacy advocates not only have concerns about how this biometric data will be stored and used by companies, but how it will impact vulnerable communities.

Facial recognition software in the wrong hands could be horrifically dangerous. It could essentially empower abusers, sex traffickers, pedophiles, and other violent criminals to collect information about potential victims with the click of a smart phone camera.

A Strange Juxtaposition

While cities and states across the US work to try and ban this technology, money continues to pour into the startups creating it. More than $500 million of venture capital has flooded into these companies in 2021 alone. Whether governments and individuals like this technology or not, monied interests love it.

It is important to keep in mind that over half of this money went to only one facial recognition startup, Israel-based startup AnyVision. Softbank, of WeWork infamy, supplied them with funding for their technology, which is currently used in places like schools, retail stores, and casinos.

However, Microsoft pulled funding from AnyVision last year. This occurred after an investigation by former U.S. attorney general Eric Holder into reports that the Israeli government was using AnyVision’s technology on residents in the West Bank.

It seems that many facial recognition tech startups keep acquiring capital despite controversy after controversy. Paravision, a startup that came under fire for using facial recognition technology on its own users without their consent, just raised over $20 million.

Clearview AI also just raised $30 million after multiple class-action lawsuits for stealing people’s photos off social media to use in their databases.

A Plea From Powerful Investors

This market is not going anywhere. In fact, this technology is already everywhere. If you have ever walked into a retail store without a mask, uploaded a selfie on social media, or used your face to unlock your phone, companies have your face in a database.

Many are wondering if it is too late for governments to regulate this space.

Companies, law enforcement agencies, and many monied interests want this information and the power to use it. However, some have their concerns. This summer, a group of 50 investors with over $4 trillion in combined assets petitioned the major players in this arena to operate more ethically.

They spoke directly to companies like Amazon, Huawei, and Facebook in a statement which read:

“In some instances, new technologies such as facial recognition technology may also undermine our fundamental rights. Yet this technology is being designed and used in a largely unconstrained way, presenting risks to basic human rights.”

Final Thoughts

This is likely a tactical move. If world governments consider this technology a threat and ban it, these businesses cannot operate openly. Being forced to close down or operate illegally will lessen their profits.

The EU, for example, already wants to ban it in the entire European Union. US city and state governments are mobilizing against them. If facial recognition companies want to continue to grow unimpeded, they will likely have to learn to play nice with the governments who currently want to shut them down entirely.

No one can say what exactly will happen here. However, it will be fascinating to see what happens in this developing sector.

About Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.


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