Goldman Sachs reconsiders support of Megvii IPO, MIT reevaluates SenseTime link
Megvii IPO sponsor Goldman Sachs Group has decided to reconsider its role in the biometrics unicorn’s initial public offering, after the Trump administration released this week its Entity List of 28 organizations accused of being involved in human rights violations and abuse, reports Reuters. These companies are no longer allowed to purchase technology from American companies without explicit approval from the U.S. government.
Government officials claim these 28 entities were “implicated in human rights violations and abuses” in China.
Blacklisted companies include Megvii, SenseTime, Dahua, Hikvision, iFlytek, as well as a number of government agencies from the Xinjiang Uighur Autonomous (XUA) Region. The U.S. has also restricted entry to the country for individuals associated with the Chinese government and Communist party and with the abuse measures in the XUA region.
Goldman Sachs is “evaluating in light of the recent developments” what position to take, according to an emailed statement reported by WKZO.
Megvii did not comment on Goldman Sachs Group’s statement, but said it “strongly objects” and that a previously report released by Human Rights Watch (HRW) accusing it of similar actions was deemed incorrect and the company’s name was cleared.
According to Reuters, the IPO was rumored to raise $1 billion and was planned for the end of the year.
Citigroup and JPMorgan Chase are also sponsoring the Megvii IPO, however they have not commented on the situation.
The Chinese artificial intelligence company develops facial recognition platform Face++, and provides its services to a number of governments and companies such as Huawei and Lenovo.
Although the UN claims some 1 million people were mistreated in the region and detained in camps, Beijing denies all allegations.
SenseTime, another facial recognition unicorn which was co-founded by a former Massachusetts Institute of Technology (MIT) student and is participating in an MIT initiative, is now under review by the university, after it was blacklisted alongside Megvii, writes Bloomberg. SenseTime was the first company to be announced by MIT last year as part of its Intelligence Quest initiative.
“MIT will review all existing relationships with organizations added to the U.S. Department of Commerce’s Entity List, and modify any interactions, as necessary,” a spokeswoman told Bloomberg.
“We are deeply disappointed with this decision by the U.S. Department of Commerce,” a SenseTime spokesperson said in a statement. “We will work closely with all relevant authorities to fully understand and resolve the situation.”
A few months ago, although Megvii announced it was moving forward with the IPO, U.S. lawmakers started voicing concerns about U.S. investment in Chinese facial recognition companies Megvii and SenseTime.
Earlier this year, MIT had a similar situation with Huawei and ZTE, which led to new project guidelines for projects related to China, Russia and Saudi Arabia. MIT has also invested in Megvii through Qiming Venture Partners.