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A Chinese e-commerce giant is becoming a major investor in facial-recognition technology

In China, there are three startups valued at over a billion dollars each specializing exclusively in facial recognition. Alibaba is now an investor in two of them.

The e-commerce giant announced today it recently led a $600 million funding round in SenseTime, a Hong Kong-based company that provides facial recognition software to businesses and governments across China.

SenseTime is little-known among consumers both outside and inside of China, but it has become a major player in the country’s artificial intelligence industry. The company develops image-recognition algorithms and packages them in services it sells to a wide range of customers. Many of these are private consumer-facing companies. Electronics retailer Suning, for example, deploys its software in its stores to track the flow of customers in its stores. SNOW, a Snapchat-esque messaging app popular in China, uses the company’s software to power its AR visuals.

But SenseTime’s most important client is arguably the Chinese government. Across the country, various government bureaus have deployed software from SenseTime in subways, intersections, and other public places. Police in Shenzhen, Guangzhou, and many other cities have relied on SenseTime’s tools to help catch criminals, checking a “live” face against a separate database containing the faces of wanted individuals. This follows a broader pattern in China of local governments upgrading their surveillance technologies, which at times has raised concern among civil liberties advocates. In Xinjiang province, where roughly half the population is Muslim, authorities have installed cameras with facial-recognition software at gas stations, bus stops, and mosques, enabling the government to closely track an individuals’ everyday travels.

Alibaba’s investment in SenseTime follows one it made last year in Megvii, a Chinese facial recognition very similar to SenseTime, via its financial affiliate Ant Financial. Slightly before that deal was disclosed, Alibaba and KFC launched a trial service allowing customers to pay for meals using their faces. Ant Financial also acquired EyeVerify, a Kansas-based facial recognition and biometrics software company, and rebranded it as Zoloz. And it’s plowing $15 billion into R&D centers around the world specializing in AI and Quantum computing.

SenseTime is not from the only Chinese company specializing in facial recognition—in addition to Megvii, which is valued at $1 billion, there’s Yitu, which is valued at $2.4 billion, and several other companies. Of those three major ones, SenseTime has the widest international reach, even though most of its customers are in China. Chip makers Qualcomm is an investor, and the company has offices in Singapore and Japan—where it recently formed a partnership with Honda to develop technology for self-driving cars.

There are many ways that Alibaba can use facial-recognition technology in its core business. In addition to payment verification, the company can deploy software from SenseTime in its growing number of offline retail outlets to track customer movement and provide promotions. But SenseTime’s area of focus spans much wider than shopping, and comes as the Chinese government urges investment in public security, artificial intelligence, and “social credit” schemes. By deepening its stakes in facial-recognition companies like SenseTime, Alibaba is becoming one of the private companies in China most aligned with the government’s public goals.

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