Biometrics stocks this week: Amazon vs SRI fund managers, promising startups
Over the past couple of weeks stock indexes have gained ground, lost it, and then gained it back. Markets are trading sideways. The summer is settling in. Time to ignore market news until rich people, bankers, traders and investment fund managers come back from vacation in September.
Declines in markets this week were led by the richly-valued tech stocks. Amazon lead those down, falling a percent one day earlier this week.
Is the controversy around the company’s sale of its facial recognition software having an effect on Amazon’s share price? Some would not be surprised.
The company’s product, Rekognition, is a simple and easy to use API that can quickly analyze any image or video file stored in its cloud service. Amazon Web Services (AWS), a division that contributes mightily to the good results at Amazon, announced this week that it will create 1,000 new jobs in a new Web Services office in Ireland. The company is encouraging kids to get certified as an Amazon Web Services expert.
Rekognition is contributing to the success of AWS. The AI processing is done in the cloud. It’s no surprise Google and Microsoft are offering similar products. The potential is massive. Everybody wants in. Including police departments. This is where the current controversy picks up.
A while back the ACLU launched a freedom of information request. That organization recently revealed that AWS was working with the city of Orlando, Florida and the Washington County Sheriff’s Office to deploy the real-time face recognition system. Activist groups joined the ACLU in an organized campaign to get Amazon to suspend sales of the technology to police departments.
Joining the activists on the hustings last week was a group 19 investment company fund managers, all with holdings in Amazon. Shareholder advocacy organizations like the Social Equity Group, and the Northwest Coalition for Responsible Investment, took part in the shareholder advocacy action.
The investors collectively manage about $10 billion in common stock, representing five to ten percent of the outstanding shares of Amazon, so they have the right to speak out on this. But it’s heartening to see the socially responsible investing market warriors in action, helping to sway opinion on a key, suddenly pressing issue.
But then the SRI guys have been doing this for decades. They’ve been ready for this for a long time.
Socially responsible investing took off in the mid-1970s in the wake of the Vietnam War. It’s still going today, and is a specialized sector in the investment fund industry. SRI investment fund managers screen their investment portfolios for exposures to various issues. A fund will screen out companies that are not responsible in their use of palm oil. Or maybe the fund will screen for arms makers or tobacco. You can go as wide as you want, or as focused as you want in terms of issues covered. There’s a fund that takes every social consciousness into account.
It’s a good way to utilize typically passive assets. As the promotional material for one of the funds signed to the letter put it this way, “… we base this approach on the reality that investment decisions determine how our society is structured. Socially injurious business practices are bad business. We believe that bad businesses ultimately lead to bad returns.”
The two lead funds behind the letter are California-based Harrington Investments and Boston-based Walden Asset Management. Harrington took up shareholder advocacy in the 1980s. Walden created the first U.S. mutual fund with South African anti-apartheid screens.
Now in 2018 the funds are taking action against the imminent deployment of constant real-time surveillance by police.
The investment managers are asking Amazon to review the marketing, sales, and policies to ensure the company is meeting its fiduciary duty to stakeholders and to protect the public.
The letter requests Amazon to stop “… expanding, developing and marketing it until it could demonstrate there was adequate fiduciary oversight.” The fund managers also want Amazon to put appropriate guidelines and policies in place to, “… protect citizens, customers and stakeholders,” according to a media report. John Harrington, president and CEO of the the similarly named firm, said there are perfectly practical concerns here. The deployment could lead to legal action that could be costly. “We’re concerned about some serious privacy right issues and also we’re concerned this may be litigious,” he was quoted as saying in a press release. It seems odd to have to point out that the shareholders are concerned Amazon’s stock price could dip if the tech is used “to unfairly and disproportionately target and surveil people of color, immigrants, and civil society organizations,” or is used by “authoritarian regimes,” to unlawfully assert power and control.
“We don’t know of any restrictions or parameters or policy decisions that Amazon made in going ahead and marketing this,” said one of the investors. This week Amazon did announce the Orlando Police department’s pilot project had ended.
Biometrics sector start-ups
Technavio published a list of up-and-coming start-ups in the biometrics sector this week. A good chunk of the names had been mentioned in this column before. Some of those that weren’t are listed below. Apparently these are the up-and-coming biometric stars of the future.
BehavioSec from Sweden is s company working on preventing fraud through “non-invasive biometric authentication methods that analyze user behavior.” They just raised $17.5 million in Series B financing. The company has worked with Crossmatch, which is doing keyboard-capture authentication. So that’s neat.
Another European name, SensiPass, is from Ireland. The company is described as a “thought leader in interactive identity assurance systems.” The company offers, “… a 3-factor mobile biometric authentication process to protect digital, physical, and human assets.”
From the South American country of Columbia comes B-Secur, which claims that while, “… fingerprint and iris scanners [are] becoming passé,” B-Secur is developing the next generation ECG-based biometric authentication systems. ECG systems measure the dimensions of a heart for biometric purposes.
Neuroboard is a platform that lets users, “… discover what emotional responses they are having in front of any input, and brings tools to analyze, curate, and extract conclusions to take immediate action.” Automated psychiatry, basically.
A company called Socure (USA) is doing authentication of account origination. Their “social biometrics solution” reduces customer friction by reducing overhead costs and fraud losses. This seems neat, and could facilitate transactions on social media.