Facial recognition technology (the ability to identify a person using their face) is here -- it's likely you already use it to unlock your smartphone -- and it's being used in some retail stores, mainly to help prevent theft.
Besides the huge benefit to stores, customers can benefit too by having a more tailored retail experience, along the lines of what's already happening with data collection. Just today, for example, I received a targeted ad about a sale for the type of running shoes I like, and I bought a pair.
Some people find this sort of thing convenient, and others think data storage is an invasion of privacy and that combining it with facial recognition technology without consent is downright totalitarian. Facial recognition technology, after all, can do more than just let you know about what's on sale -- it can track your every move and know how long you stayed in a store, what you bought, what you considered, and so forth. Let's explore the ramifications of facial recognition in retail and how investors might react.
On the retail front
Retail stores that currently use facial recognition technology, like Macy's, Albertsons, and the Apple Store, scan and store the faces of customers and employees. They're doing this, they say, to improve the shopping experience for customers and to reduce theft. Whether these scanned and stored images of people's faces are also linked to their personal data is unknown -- it depends on who's doing the collecting.
For now, retail stores primarily use facial recognition technology to reduce crime, both from shoplifters and from organized retail crime syndicates. Once a person enters the store, their face can be checked against a database of criminals, and security can be immediately notified if there's a match.
Another use of facial recognition for retail stores is to improve the customer experience by making product suggestions based on what that person purchased in the past. It kind of locks one in if a bad purchase was made -- that neon green shirt haunts you -- but that's a kink that can perhaps be worked out.
How facial recognition is being used in China
If you have a low social-credit score in China, facial recognition technology is used to project your face on a billboard, making sure you're denied access to basic amenities, such as buying a train ticket home, according to a Time Magazine expose.
Here's how it seemingly works: China has a system similar to our credit scoring system. The difference is that ours is strictly based on finances -- how much debt we have, whether we pay our bills and on time, if we've filed bankruptcy, etc., to help lenders decide whether to lend money. But China adds social behavior to the score, in effect, shaping the way its citizens behave, and this is tracked using facial recognition technology: Did you give blood? Get vaccinated? Your score will rise if you do. If not, your score either lowers or stays the same, depending on the model, which can change depending on whoever makes those decisions. You get the point.
Another difference between the credit-scoring systems is the philosophy behind them. Time Magazine reports that when China implemented its first credit-scoring system in 2015, it did so with this goal: To "allow the trustworthy to roam everywhere under heaven, while making it hard for the discredited to take a single step."
A high social-credit score in China, for example, allows one to not only get better financial perks, it allows a high-scoring person to skip hospital waiting lines. Low scoring people aren't allowed to ride the high-speed trains or buy plane tickets. And if you have a high score but try to call a person with a low score (a blacklisted person), you hear a siren and a recorded message that warns you about socializing with them, according to the Time article.
What should investors do?
Facial recognition is a new and exciting technology, and that always piques the interest of investors. In fact, facial recognition startups are getting lots of money from investors -- $500 million for the first half of 2021. But investors, be warned. This industry is one of the most controversial out there. This one's for risk takers and for those who are OK with using facial recognition technology in retail stores. It's telling, however, that millions of investment dollars come from investors who ask to remain anonymous.
The Millionacres bottom line
Investors can shape the way companies are headed. If people won't invest unless companies can show a strong business model and some proven success, those companies are incentivized to do business wisely. The same goes for ensuring that technological advances don't trample human rights. Investors can demand companies act ethically.