Who are Sensetime?
Last year, the founder of the most valuable AI startup in China was simply kidding by asking attendees of an MIT gathering to name the company that came immediately into mind upon mentioning “AI.” “Yes, it’s SenseTime,” joked Tang Xiao’ou, despite the obvious response being Google.
However, one day in the near future, such an answer might not be perceived as a joke.
“Tang told me his dream was to make SenseTime as great as Google,” the President of the startup’s Asia-Pacific business Jeff Shi explained in the Nikkei Asian Review.
To accomplish this objective, the company renowned for its innovative surveillance technology is increasing its operations outside China and into rapidly growing industries like self-driving cars.
“We want to be an international player, so we have to go international,” Mr. Shi said.
The global ambitions come at a time with increased scrutiny of Chinese technology firms such as Huawei and ZTE in the United States citing espionage fears.
According to experts, SenseTime is expected to share the same fate, as it’s a part of Beijing’s artificial intelligence (AI) “national team” – elite entities that are responsible for making China the AI global leader by 2030.
The contentious issue is whether the face recognition startup can avoid the kind of situation that happened to Huawei in a bid to realize Mr Tang’s vision.
A considerable amount of investment is dependent on this answer.
Since SenseTime sprung out of the Chinese University of Hong Kong’s multimedia lab in 2014, the startup’s valuation has increased to $4.5 billion.
The company’s latest financing round garnered $620 million in May last year, propelling its total inflow to $1.6 billion.
Some of SenseTime’s leading investors include UK-based Fidelity International, Singapore-based Temasek, China-based Alibaba Group Holding, and Qualcomm’s VC arm.
The company’s journey began when Tang and some of his students at the Chinese University of Hong Kong, where he’s still a professor, came up with an algorithm that recognizes faces with an accuracy rate of 98.52%.
Aside from outperforming other existing algorithms, it exceeded the power of human eyes.
“We beat Facebook to the punch,” claimed Mr Tang while making a speech at MIT, where he graduated with a computer vision doctorate back in 1996.
The groundbreaking innovation triggered IDG Capital, a US-based venture fund, to invest “tens of millions of dollars” in the first financing round held in August 2014.
China Mobile, a state-operated wireless carrier, was among SenseTime’s initial customers.
At the time, the wireless carrier wanted to verify millions of users, specifically against each of their national identification, as per the security law in China.
SenseTime’s world-class facial technology
Five years later, there’s been stiff competition in the industry as more cash is injected into artificial intelligence projects.
China-based competitor YiTu outperformed SenseTime’s algorithms, primarily in accuracy evaluations conducted in late 2018 by the National Institute of Standards and Technology in the US.
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Also, Jeffrey Ding, who works as a researcher at the University of Oxford-based Centre for the Governance of AI, emphasized that China’s YiTu was the only company that beat SenseTime.
“SenseTime’s facial recognition technology is world-class,” claimed Mr Ding.
According to him, the company intends to expand its technology.
In July 2019, SenseTime revealed its plans to create a research and development center in Abu Dhabi.
The move follows its recently increased international initiatives, for instance, SenseTime launched a “smart health” laboratory in the United States in efforts to boost research that targets AI-powered cancer diagnosis.
SenseTime’s Self-driving cars ambitions
SenseTime also established a self-driving test facility in Japan, which it runs in conjunction with Honda Motor.
The company is also known for agreeing to assist Malaysia in developing a $1 billion “AI park,” creating supercomputing resources and developing human expertise.
SenseTime has over 700 clients.
“While SenseTime’s technology is mostly used in Chinese companies, [it] does have clients outside China,” said Mr Ding, citing Honda.
Lao Shihong, the CEO of the startup’s Japan facility, said that SenseTime intends to create autonomous vehicles through its partnership with Honda and begin selling them worldwide.
According to Lao, the company’s vision was not the same as those of other leading technology companies like Uber Technologies and Google.
While their objective “is to create robot taxis. We want to create something more affordable for ordinary car owners.”
Mr Shi claimed that SenseTime’s target was initially to commercialize its vehicles in 5-10 years.
Meanwhile, the face recognition startup is improving its technology to build safer regular vehicles.
During an automobile tech trade exhibition held in Nagoya, Japan in July, SenseTime showcased a vehicle simulator that featured a tiny camera fitted behind the car’s steering wheel.
The camera not only helps in determining the driver’s gender and age but also monitoring his/her movements and face for any indications of distraction or even fatigue.
In case the driver appears drowsy, lights a cigarette, or is on a phone call, a display shows an alert.
Mr Shi added that the facial recognition startup is currently holding talks with nearly 20 global automakers.
“They are big names in Germany, Japan, the US and of course China that together accounts for 90 per cent of global production,” he said.
Meanwhile, facial recognition technology is still the company’s leading money-spinner.
According to Mr Shi, smartphone systems are among the “most profitable product lines.”
“We provide deep-learning algorithms to all the major Android smartphone makers globally,” he said.
Although the privately owned and operated company is yet to start disclosing its revenue, Mr Shi claimed that it received profits for both 2017 and 2018, with a triple-digit compound yearly growth over the last three years.
Sensetime and Smart Cities
SenseTime failed to comment on its intentions to go public and its ownership structure.
The market is growing: IDC forecasts that artificial intelligence (AI) expenditure in the Asia-Pacific area, Japan excluded, would triple to 15 billion dollars in 2022 from this year’s 5.5 billion dollars.
The startup’s technology is not only appealing to businesses but also Beijing.
SenseTime provides a selection of groundbreaking “smart city” monitoring tools with the potential to assist in catching criminals and monitoring citizens.
Surveillance stands as “one of the major business lines in China,” Mr Shi claimed, adding that “outside the country, we don’t do much.”
According to Mr Ding, it was “very hard to say” how much the startup depended on federal contracts.
He also acknowledged that the SenseTime’s CEO and Co-founder Xu Li, Mr Tang’s former student, placed the ratio of “government-related” customers at 30% in a Quartz report published in 2018.
Back in September 2018, Beijing selected SenseTime to be part of it’s Artificial Intelligence (AI) national team, joining the likes of voice recognition expert iFlytek, and online leading companies such as Tencent Holdings, Alibaba, and Baidu.
According to Mr Ding, although joining that list did not cement SenseTime’s dominance in the industry, it may provide the company with “a long-term advantage” when it comes to setting standards.
Sensetime part of Beijing’s AI Team
Being part of Beijing’s artificial intelligence (AI) national team has been an undeniable blessing.
“The Chinese government has signalled its confidence in SenseTime as a major player in the AI race by providing access to vast troves of big data,” claimed Timothy Heath, a leading international defence research expert at Rand Corp.
“For AI, more data increases the possibility of better algorithms, and the Chinese government has more access to data than anyone.”
Nonetheless, partnering with the state also has a downside.
Whereas Mr Shi stressed that SenseTime has a strict policy governing its security and privacy, Mr Heath warned that “SenseTime is vulnerable to the same type of charges that the US brought against Huawei”.
Back in May, media reports emerged that President Trump’s government was contemplating to ban five Chinese surveillance-based entities, even though SenseTime was not on the list.
“I think there is some risk,” cited Amy Lehr from the Washington-based Center for Strategic and International Studies. SenseTime’s ties with the Chinese government “will raise concerns about national security.”
She also claimed that the disclosure of the government’s increased surveillance on the minority groups living in Xinjiang would “have reputational implications for them.”
The startup appears to be fully aware of the reputation issue.
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Sensetime and Chinese government contracts
In April 2019, the Financial Times reported that China’s SenseTime had let go of its 51% shareholding in a Xinjiang-related “smart policing” joint operation, whereby increased incarceration of Uighur Muslims has elicited criticism.
SenseTime was quoted to have said that the endeavor was for “SenseTime’s own development”. Moving from the Xinjiang region marked a “step in the right direction,”Ms Lehr claimed.
“But they don’t have a choice about working closely with the Chinese government.” Similarly, Rand Corp’s Timothy Heath claimed that the withdrawal does not mark SenseTime’s completion of its work in “enabling” the state’s practices.
A spokesperson from SenseTime asserted that the startup had been “keeping a close watch on relevant news and announcements” concerning the tensions between China and the United States and had “always been committed to the responsible usage of AI technology.”
“We abide by all relevant laws and regulations of the jurisdictions in which we operate,” said the representative.
Other parties are convinced that government operations shouldn’t water down the startup’s achievements.
A source working with a US-based company, who knows all about SenseTime said: “SenseTime is not secretive or anything. It’s a normal AI company, and I’d say it’s a team full of really intelligent talents . . . Maybe because I’m Chinese, I’m used to every company having government ties.”
SenseTime claimed that it had over 1,500 artificial intelligence (AI) patents and recruited over 3,000 interns and employees, with more than 150 of them holding artificial intelligence-related doctorates.
The founder is a great figure, who still inspires artificial intelligence engineers to join his laboratory at the Chinese University of Hong Kong (CUHK), according to information from one of the students at the institution who described Mr Tang as “nice” and “strict”.
The SenseTime founder is “more like the spiritual leader of SenseTime,” asserted Hua Zhong, senior VC of engineering at WeRide, a Chinese self-driving company, which fundraised $20 million from various backers including SenseTime back in January, according to reports from Crunchbase.
“Under him are several of his [former] students, who really run the business. We work with them.”
Whereas the source working at the United States entity was concerned about SenseTime’s lack of adequate experience in the self-driving car space, citing that they would “prefer [to work with] someone who has a better knowledge of the auto industry”, WeRide shares its high hopes for its newest partner.
Even though Mr Hua acknowledged that the industry featured a “huge technology barrier,” he added that SenseTime “really understands AI.”
As far as the backlash threat from the US is concerned, he claimed that “a lot of people” are concerned about that situation and he hopes that “with time and more communication, these frictions will go away”. “People who work in technology,” Mr Hua said, “understand that you need participants from everywhere to bring new ideas.”
SenseTime’s Growth Timeline
The Tang Xiao’ou’s co-developed facial recognition algorithm at the Chinese University of Hong Kong attains 98.52 per cent accuracy, surpassing a human eye’s capability
IDG Capital invests “tens of millions of dollars” in initial financing
The establishment of SenseTime
SenseTime/CUHK team scoops top recognition at ImageNet, a leading computer vision contest.
SenseTime showcases artificial technology to the State Council of China
Enters into a self-driving collaboration with Honda
A $620 million financing round propels SenseTime’s valuation to $4.5 billion
Establishes a US-based health lab
Selected for Beijing’s AI “national team,” joining companies like iFlytek, Tencent, Baidu, and Alibaba
Mr Tang joins President Xi Jinping in an entrepreneurs meeting
Launches an autonomous-driving test center in northern Tokyo
Forms a strategic collaboration with Malaysia
Reveals plans to create an R&D center in Abu Dhabi
SenseTime’s Lineup of Products cuts across the following industries:
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