Second test for SenseTime: after an aborted attempt, the Chinese leader in artificial intelligence (AI) yesterday relaunched the process leading to an IPO on the Hong Kong Stock Exchange on December 30. Two weeks ago, the facial recognition champion canceled the operation after being placed on a new blacklist by the US Treasury, alongside other Chinese such as the world leader in drones DJI. The United States accuses him of having developed technology to specifically identify members of the Uighur ethnic group and other Muslim minorities in China. SenseTime, while lambasting “Unfounded accusations”, then postponed its IPO, scheduled for December 17.
The company, which hopes to raise 767 million dollars (678 million euros), will have to do without American investors, banned by the Treasury from taking stakes in companies placed on this blacklist. “Being deprived of American investors will make things more difficult for SenseTime, says Pan Yuyu, specialist in digital companies for the consultancy firm Analysys. Even if they managed to compensate, their investors are mainly state funds. Without access to American institutions, the future will be more difficult. ”
Ethnic recognition options
In 2019, an investigation by New York Times revealed that China’s major facial recognition startups – Yitu, Megvii, SenseTime and CloudWalk – all offer ethnic recognition options to police forces they collaborate with locally. In response, SenseTime sold its stake in a joint venture formed to serve the authorities in Xinjiang. In 2019, the US Department of Commerce had already placed SenseTime on another blacklist depriving the company of US components and software.
For its part, Beijing has also strengthened data legislation, an additional risk for SenseTime. “Companies considering listing on the Hong Kong Stock Exchange or other foreign markets should probably first get in touch with the Chinese cyberspace administration, to ask if they need to go through a cybersecurity investigation,” says Paul Triolo, digital policy expert at Eurasia Group.
According to its IPO prospectus, SenseTime generates 47.6% of its turnover on smart city services, which include software to streamline traffic, identify risks such as fire starts. , but also to monitor the population, thanks to powerful facial recognition algorithms. The other part of its income (39.2%) comes from its services smart business businesses, and the rest of applications for connected objects and autonomous vehicles.
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