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Tech States Sensemaker

Surveillance for sale

Wednesday 14 July 2021

Facial recognition technology is becoming a point of contention between tech states in China, and those in the US

Here’s what you need to know this week: 

  • State affairs: The facial recognition fault line between China and the West appears to be widening

State by state:

  • Apple threatened to leave the UK market behind
  • Microsoft made another cyber security acquisition
  • Amazon has a rivalry with Alibaba on its hands
  • Facebook faced a new executive order on competition
  • Google’s YouTube promoted content that users ‘regret’ watching
  • Tencent suffered a loss to the Chinese state over a massive merger

State affairs: Surveillance for sale

Facial recognition, and the sale of surveillance tech to governments is a major point of controversy, and a key difference maker between the tech states of the US, and their Chinese counterparts.

The controversial technology is wholeheartedly embraced in Beijing. Home-grown tech companies are helping knit a surveillance blanket across the country. Chinese police have eyeglass-mounted cameras, for instance, and surveillance is omnipresent in Xinjiang, home to 12 million ethnic minority Uyghurs.  

Tencent already provides facial recognition tech to Chinese police departments to trace long-missing children. The world’s biggest game company will now monitor its youngest users. In 2019, China banned anyone under 18 from playing games between 10pm and 8am. Tencent will now scan the faces of anyone playing its games every evening to enforce this prohibition. Named “Midnight Patrol”; the facial recognition function launches in July and will affect millions of players. 

In contrast to this gung-ho approach, US and European tech companies have drawn back from selling facial recognition technology to police forces (and would never be bold enough to monitor the faces of children). In May Amazon extended its moratorium on police use of Rekognition software. Microsoft has also said it will wait for regulation before selling its tech to law enforcement. 

But how real is the divide between East and West in this area? If you dig a bit deeper, there’s evidence that US tech states still support police surveillance in less obvious ways: 

  • Microsoft’s Domain Awareness System helps New York police scan CCTV cameras, number plates and bring thousands of other data points together in a way that critics say “treats every resident of the city as a potential suspect”. The tech state is also a key provider of cloud-based computing that allows for the use of facial recognition in policing by other third party providers. 
  • Amazon’s subsidiary Ring, has struck up deals with hundreds of police departments to use home security footage in criminal investigations. The company – which uses facial recognition – has given officers free devices or discounts to encourage them to promote the product (that cosy relationship is now under investigation by the LAPD).

Despite these important caveats, the gulf between how China, the EU and the US treat facial recognition appears to be widening. The EU has demanded external audits on general purpose facial recognition, and banned real-time facial recognition in policing. In the US, state lawmakers have tried to tackle the issue through enforced moratoriums, but the actual legislation is still forthcoming. In China, despite increasing disquiet among its civilians, facial recognition is becoming ever more ubiquitous. 

Apple: Terms of trade

Could Apple leave the UK market over a row about patent fees? Highly unlikely but apparently not impossible. The tech state lost a case last month against Optis Cellular Technology, which claimed that Apple refused to pay licence fees worth up to $7 billion on 4G technology. When Apple’s lawyer, Marie Demetriou, heard the judge remark that there was “no evidence… that Apple will leave the UK market”, she corrected him. “There may be terms that are set by the court which are just commercially unacceptable.” Apple faces a trial in 2022 over exactly how much it should pay. 

Microsoft: Security

In the latest cyber deals concluded by the tech state, Microsoft has confirmed that it will acquire cybersecurity startup RiskIQ for more than $500 million. RiskIQ specialises in detecting complex attacks on corporate networks. At a recent ThinkIn, Ciaran Martin, CEO of the National Cyber Security Centre, told us that cyber threats have migrated towards corporate ransomware, and away from personal data. The trend has prompted corporations into massive investments in digital security. Microsoft has already bought multiple cybersecurity startups in recent months (ReFirm Labs in June, and CyberX last year).

Amazon: Rivalry

72 hours. That’s how long Alibaba (one of Amazon’s chief rivals in ecommerce) thinks it should take to deliver goods from China to anywhere on the planet. With the ecommerce market set to grow by $1.4tn before 2025, Alibaba is becoming a growing threat to Amazon. The Chinese company posted $75bn of packages during its equivalent of Prime Day (10x what Amazon sold). Both companies are investing heavily in building infrastructure, distribution centres and fleets of delivery vehicles. Alibaba is also connecting customers directly to Chinese manufacturers, leading to lower-than-Amazon prices on a huge number of goods. Watch the WSJ’s report here.

Facebook: Legislation

“Capitalism without competition isn’t capitalism. It’s exploitation”. President Biden’s words, as he signed an executive order this week aimed at boosting competition throughout the American economy. The order will affect Facebook and the other US-based tech states: any mergers (both past and future) will be more heavily scrutinized, and big tech’s “killer acquisitions” of smaller companies will be scrutinised more carefully. Biden’s agenda is now clear: “No more tolerance for abusive actions by monopolies, no more bad mergers that lead to mass layoffs, higher prices and fewer options…” However, he has yet to appoint a key Department of Justice position on antitrust matters. Watch this space.

Google: Misinformation

A study this week revealed that, more often than not, YouTube users regret watching videos recommended to them by the platform. Almost three-quarters of the videos that users said they regretted watching had been actively promoted by the site, the study found. The correlation suggests that YouTube algorithm drives attention to offensive or misleading content that viewers wish they’d never seen. It adds support to the view of Brandi Geurkink, Mozilla’s Senior Manager of Advocacy: “YouTube needs to admit their algorithm is designed in a way that harms and misinforms people…” You can read more about the project here.

Tencent: Competition

In China, market regulators are moving to block a merger that would have seen Tencent secure complete dominance in the country’s online gaming industry. Huya and DouYu (China’s two largest video game streaming services) were the target of a planned deal that would have given Tencent a +70 per cent share of the market. Anti-monopoly regulators have stepped in to stop the deal, which was worth $5.3bn. It’s the latest episode in China’s growing scrutiny of the big tech companies.

Luke Gbedemah

Alexi Mostrous