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Microsoft (MSFT) Bans Police Use of Facial Recognition Tech

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Microsoft (MSFT - Free Report) recently announced its decision to stop selling facial recognition technology to police authorities to curb racial discrimination. The decision comes amid nationwide protests in the United States over the death of George Floyd in police custody.

Per a Reuters report, Microsoft president Brad Smith stated that the company will be taking a stand against the use of facial recognition technology by law enforcement agencies, at least until there is more federal regulation of the tech.

Moreover, the company noted that it has worked on enacting principles and legislation for ethical use of the software.

The decision to halt sale of this technology highlights the company’s strong position against racial inequity. It is also expected to boost the company’s brand reputation and instill investors’ optimism in the stock.

Notably, shares of the company have returned 18.1% in the year-to-date period against the industry’s rally of 18.3%.

Microsoft Corporation Price and Consensus

Focus on Responsible Use of Facial Recognition

Microsoft’s latest decision is in line with the company’s focus on ensuring transparent and ethical usage of facial recognition technology.

In March, Microsoft (MSFT - Free Report) divested its stake in Israel-based startup AnyVision and stopped making minority investments in other companies that offer facial recognition technology. This was due to concerns over breach of privacy and biased outcomes.

In 2018, Smith had voiced his concern over the ongoing misuse of facial recognition technology, via a blog post. Smith had necessitated the need to go slow on the use of facial recognition technology in a bid to be socially responsible.

Notably, the technology has been accused of being biased, which leads to disproportionate targeting of people along the lines of race or ethnicity. Per a study published by the National Institute of Standards and Technology (NIST), facial recognition systems have a higher rate of false positives for Asian and African-American faces as compared to Caucasian faces.

As a result, tech companies like Facebook (FB - Free Report) have come under scrutiny over their use of the technology. In January, the company paid $550 million to settle a class-action lawsuit regarding the use of facial recognition to identify people’s faces without consent.

Consequently, Microsoft’s strategy is likely to pay off over the long haul as the technology is not fool-proof and requires significant modifications, at the moment.

Microsoft Joins Others in Facial Recognition Prohibition

Apart from Microsoft, tech stalwarts like International Business Machines (IBM - Free Report) and Amazon (AMZN - Free Report) have also put a hold on facial recognition to contribute in the fight against racial discrimination.

Recently, Amazon put a complete halt on the police utilization of its controversial facial recognition software — Rekognition — for a year. Like Microsoft, Amazon has also asked for stronger regulations to be put in place by the government.

Meanwhile, IBM has reportedly dropped out from selling or developing facial recognition software  to curb the racial divide. Moreover, the company will oppose the use of such technology for mass surveillance and racial profiling.

Markedly, the companies’ decisions to prohibit the use of this controversial tech, amid increasing scrutiny, indicates that much work needs to be done on regulation and ethical development and utilization of the tech.

Zacks Rank

Microsoft currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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