The Los Angeles County assessor’s office has given favorable treatment to connected taxpayers, allowing them to pay lower property taxes for years and costing the county millions of dollars in lost revenue, according to a whistleblower lawsuit filed by three employees.

Stephen Adamus, Yvonne Austin and Scott Woods say County Assessor Jeff Prang, his top managers and county lawyers have violated tax codes to benefit property owners with ties to elected officials by giving them favorable decisions on reassessments. The trio alleges the county has intentionally lost legal cases, reversed property tax decisions and reimbursed millions of dollars to individuals and corporations in back taxes.

In a lawsuit filed Friday in Los Angeles County Superior Court, the three say they were “pressured to unlawfully change unfavorable tax decisions they made during a taxpayer’s reassessment.” When they did not go along with their bosses, they were punished and effectively turned into clerks, the suit states.

“This is the county’s dirty little secret when it comes to property taxes. It is one rule for the connected and another for the public,” said Greg Smith, a veteran labor lawyer representing the employees. “They threaten them, ostracized them, told them not to discuss the scheme on emails, and when they would not go along with the conspiracy, literally put one of them — a top manager — to work in a windowless room.”

Prang’s office said the lawsuit is without merit, calling the assessor a reformer who took over in 2014 in the wake of a scandal.

“Simply put: This lawsuit is groundless,” spokesman Steve Whitmore said. “It’s been filed by three disgruntled assessor employees alleging members of the assessor executive team and county counsel conspired to provide preferential treatment to connected taxpayers that resulted in millions of dollars in illegal tax refunds.

“We are certain that the claims will be found meritless once the facts of the case are presented. We want to emphasize that we do not retaliate against our employees, and we have taken great measures to prevent what happened in 2012 from ever reoccurring in the office.”

Allegations of corruption have long plagued the county assessor’s office. Criminal charges are still pending against former Assessor John Noguez, who in 2012 was accused of taking $185,000 in bribes from a tax consultant in exchange for a reduction in property values for clients.

Prang took over two years later. He previously was a special assistant in the office and a West Hollywood councilman.

According to the lawsuit, the assessor’s office has repeatedly reversed property tax decisions of connected owners, even when those residents have lost challenges with an assessment appeals board, a decision meant to be binding.

Court documents show several groups and individuals have received special treatment, including the Rand Corp., various apartment complex owners and property developers, and a San Marino property swap involving John Barger, the brother of County Supervisor Kathryn Barger.

The suit states the assessor’s office used executive referrals from county supervisors or others that circumvented the usual system of determining a property’s value and its appropriate taxes. Upon receiving an executive referral, the three employees were told to drop all of their work and complete an “exclusion, exception and/or exemption with 10 days.”

Whitmore disputed that Tuesday.

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“Executive referrals stopped in 2012 and [were] not replaced. We don’t do that anymore. It was scrubbed immediately after Noguez,” he said.

The suit alleges that special tax treatment was a “quid pro quo” for campaign contributions, although it doesn’t give specific examples of contributions. The trio says they were “urged to find in favor of individual or entity if it was an executive referral notwithstanding the law and regulations.” And it was common for the assessor’s top brass to order a review of an assessment or turn it over to another staffer who was “more amenable” to changes in taxation findings.

The employees also say the county routinely violated the law by “intentionally losing cases” when a property owner challenged a decision in court.

In one instance the county is accused of returning $1.5 million to Rand Corp. after the company, arguing that it was a charitable organization, requested a welfare exemption on property taxes. According to the suit, the plaintiffs determined that Rand did not meet the standard of a community benefit organization because it typically does research for private entities and the U.S. government rather than local work.

Rand, however, wanted no further assessments on a parcel of land as well as a refund of approximately $1.5 million in back taxes. In 2015, the company sued, and while the county had noted the statute of limitations had expired for the firm’s claim, it settled the case, giving an unending exemption on Rand property and returning $1.5 million to the company, according to the lawsuit.

“As a result of the decision to settle, Adamus complained by email to Chief Deputy Santos Kreimann and Assessor Jeffrey Prang that the county had intentionally lost the case and that the public had been harmed by the loss,” the suit states.

After Adamus complained, he was told by his manager: “If you care about your career and employment, you’ll stay away from the case.”

In a statement Tuesday, Rand said that as nonprofit “whose contracts and grants fund policy research that serves the public interest,” it is entitled to the exemption. The statement said that interpretation of the law was confirmed by the California Board of Equalization in 2013 and a judge in 2016.

Smith said that despite the denials of Prang’s office, there has been clear retaliation against his clients.

Adamus, who once worked at the assessor’s headquarters in the ownership operation, has been relegated to the work of a clerk in a branch office since March. Woods, a 23-year veteran who worked in the legal services department until March, also was reassigned to clerk duties. And Austin, once a manager in the assessor’s legal services department, was relieved of her positions on the real estate fraud task force and investigations team and is now assigned to special projects.

“Austin sits alone in a former computer service room with no windows, no staff, no colleagues, and she has been completely isolated,” the suit states.

A slice of social media lost its collective mind over the weekend after a photo of Ellen DeGeneres at Sunday’s NFL game between the Packers and the Cowboys surfaced online.

The problem? The self-proclaimed “gay Hollywood liberal” was sitting next to former President George W. Bush.

Some Twitter users vehemently criticized her for sharing the Republican’s company, calling him a “war criminal.” But DeGeneres was not having it.

“Here’s the thing: I’m friends with George Bush,” she told her studio audience Monday at a taping for Tuesday’s “The Ellen DeGeneres Show.” “In fact, I’m friends with a lot of people who don’t share the same beliefs that I have.

“We’re all different, and I think we’ve forgotten that that’s OK that we’re all different,” she continued.

DeGeneres also provided some context as to how the seating arrangement came to be, explaining that she and wife Portia de Rossi arrived at the stadium in Arlington, Texas, as guests of Cowboys owner Jerry Jones. She went on to share a video she took of Bush reclining in his chair between her and Laura Bush in the Cowboys private suite.

The Packers fan then joked about interacting with people who have “very different views and beliefs,” such as Cowboys fans, before acknowledging the red elephant in the room.

“Just because I don’t agree with someone on everything doesn’t mean that I’m not going to be friends with them,” she said before invoking her own catchphrase. “When I say, ‘Be kind to one another,’ I don’t mean only the people that think the same way that you do. I mean, be kind to everyone. It doesn’t matter.”

While some doubled down on scolding the entertainer for standing by Bush, others came to her defense, including “Bless This Mess” actor and repeat “Ellen DeGeneres Show” guest Dax Shepard, who simply replied “PREACH!” in the comments under the clip.

This is not the first time DeGeneres’ support for a controversial figure has stirred the internet. Earlier this year, the host came under fire for welcoming fellow comic Kevin Hart to her show after old homophobic tweets resurfaced and dashed his opportunity to host the 2019 Oscars.

Amid that “cancel” crusade, DeGeneres pushed a similar narrative of tolerance and forgiveness.

“There are so many haters out there,” she told Hart. “Whatever is going on on the internet, don’t pay attention to them. That’s a small group of people being very, very loud.”

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Genndy Tartakovsky didn’t plan on challenging how people watch TV when he developed his new cartoon. But “Primal” demands your complete attention.

The Adult Swim show, which premiered Monday, follows the adventures of — and the evolving relationship between — a caveman, Spear, and a dinosaur, Fang, who have experienced parallel tragedies. One episode of the 10-episode series is set to air each day through Friday, with the remaining five episodes coming at a later, to-be-announced date.

For the record:

2:27 PM, Oct. 08, 2019
An earlier version of this story incorrectly stated that all 10 episodes of “Primal” will air this week. Five of the episodes will air at a future, to-be-announced date.

“Primal’s” prehistoric world is vicious and violent, with inescapable reminders that every creature is predator and/or prey. Their bloody, brutal, beautifully animated story is told without a single line of dialogue.

It wasn’t until working on “Primal” that Tartakovsky really noticed how much people watch television without actually watching the television.

“I never realized how much we don’t watch and we just listen,” Tartakovsky told The Times in a recent interview. With “Primal,” “You kind of just get drawn in and you forget. And if you turn away, you’re going to miss a whole bunch.

“With everybody used to multitasking on their phones and everything, it’ll be interesting to see the effect,” he added.

Though the lack of dialogue doesn’t hinder the storytelling — and the series is far from silent, anyway — the absence of any spoken language means almost everything is conveyed through the animation. Every expression, every pause, every sound, every movement: All of the components work together to deliver the nuances of each episode. So viewers really can’t afford to look away.

It would be a formidable ask from a lesser show. But “Primal” is captivating enough, Tartakovsky recalled, that his Adult Swim boss Mike Lazzo even forgot he was holding a slice of pizza during a screening of the second episode.

While Tartakovsky said he didn’t specifically set out to create a show that would discourage distracted viewing, the “Dexter’s Laboratory” and “Samurai Jack” creator is aware that audience habits have changed since he started working in animation.

The internet was in its infancy when “Samurai Jack” debuted in 2001. But by the time the fifth and final season of the series premiered in 2017, the internet and social media were inescapable.

Tartakovsky said that it took him time just to accept the new normal established in the intervening years, with people habitually providing commentary on social media as they’re watching.

“It would drive me insane, because animation is so labor intensive. We produce every frame and all these drawings, everybody’s great work,” Tartakovsky said. “It’s something that took me a while to kind of just accept. It’s the way people watch TV now. We’re always doing other things at the same time.”

The inspiration for “Primal” was sparked long before Tartakovsky experienced these frustrations. Years ago, he started doodling versions of a caveman boy and his T. rex buddy that would eventually become Spear and Fang, envisioning a show for kids. He set the idea aside, then was reinspired by the final season of “Samurai Jack.”

For its fifth season, “Samurai Jack” jumped from Cartoon Network to Adult Swim — and a more adult audience. This allowed Tartakovsky to explore darker story lines and more sophisticated approaches to the narrative than he could in a program for kids.

Additionally, “When people were watching ‘Samurai Jack’ and would pinpoint their favorite sequences, they were always the ones that had no dialogue. The very visual ones,” Tartakovsky said. “And I thought, ‘Well, can I actually make a whole series of just these types of sequences?’”

He was confident that he could make it work. It wasn’t until he started watching some nearly complete, soundless sequences from the first episode that he worried viewers might miss having dialogue. But his doubts dissipated once sound effects and music were layered in.

“The show became emotional,” Tartakovsky said. “People started to read their own feelings into it without being told how to feel, which was a big deal.

“The subtlety of everything became heightened,” he said, including “the extra subtle acting that we weren’t really used to seeing in television before — or never had the opportunity to do — that helped it all breathe.”

Despite drawing inspiration from “Samurai Jack,” Tartakovsky wanted to make sure “Primal” remained distinct. He and his crew aimed for a darker tone than “Samurai Jack” and were also careful not to lean instinctively on humor.

“One of the big challenges was to not make it funny,” Tartakovsky said. “We really wanted to try to be true to the tone. We wanted it to be pulpy and fantastical.”

“Primal” is the first of Tartakovsky’s shows to heavily feature creatures — from dinosaurs and snakes to boars and woolly mammoths. But while the series lacks other major human characters besides Spear, it is still heartfelt and full of action.

More than that, “Primal” is the expression of what Tartakovsky loves most about animation: the art of moving drawings.

“There’s nothing like somebody’s moving drawings,” Tartakovsky said. “Because you’re creating this illusion. You’re creating life through these moving drawings, and it’s fantastic.”

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Like many viewers during the height of “American Idol” fever over a decade ago, Cardi B was glued to the TV, imagining what kind of judge she would be if tasked with critiquing aspiring performers.

“Everybody always wanted to be a judge on one of those judgey shows. You see Simon Cowell and you think, ‘I can do that,’” she says in her thick Bronx accent before letting out a sinister cackle and clinking together nude-painted fingernails far sharper than Cowell’s infamous shade.

Now, ahead of her anticipated sophomore record, Cardi, 26, is trying her hand at reality television judging alongside Chance the Rapper and Tip “T.I.” Harris on Netflix’s first foray into music-based competition shows, “Rhythm + Flow.”

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“A lot of people wonder how was I going to judge a competition, because I’m so new,” Cardi says, “but I know a hit record when I hear one.” Her debut album, “Invasion of Privacy,” won in the rap category at the 2019 Grammy Awards and is still No. 51 on the Billboard 200 after 78 weeks on the chart. “There’s so many good rappers right now on Instagram, but they just don’t have star quality. I’m looking for that.”

The 10-episode series, which premieres Wednesday, follows the three judges as they search for rap talent in L.A., New York, Chicago and Atlanta.

“Rhythm + Flow” doesn’t come with the lofty promise of finding America’s next big superstar or a million-dollar prize for its contestants (the winner scores a six-figure cash award and a slot on Spotify’s Rap Caviar Live tour). As guest judge Snoop Dogg says on the premiere, albeit more profanely: “This ain’t ‘The Voice.’”

“I’d seen a million voice competition or talent competition shows that were broadcast in a certain kind of way. And that wasn’t something I was into,” admits Chance the Rapper, 26. “This was my chance to put my mark on [a talent competition] and see it through the way I would want to see one of these shows go.”

While the heyday of music-based competitions peaked in the pre-streaming, “You’re a little pitchy, dawg” aughts, network television still boasts weekly talent shows like the relaunched “American Idol” and “The Voice,” now in its 15th season, while regularly springing new variations and gimmicks, some successful (“The Masked Singer”), most less so (“Songland”).

For the producers of “Rhythm + Flow,” the desire to authentically document the often harsh realities of life that’s rooted in hip-hop and reflected in the music led them away from traditional television and to Netflix.

“Originally, we were going to take it to one of the big networks, and we actually did find a home for it there. But the big networks, no offense, could never capture that environment,” said Mike Jackson, a producer on the show through John Legend’s Get Lifted Film Co., which oversaw the show alongside Gaspin Media and Jesse Collins Entertainment. (The trio of judges also share producing credit on the series.)

“Netflix immediately got what we were trying to do. They saw the importance of a show like this and knew the impact it could have,” he continued. “But the idea of doing a music competition series on Netflix instantly means you have to change your game a little bit.”

The producers needed to rethink how to roll out an ambitious competition show on the streaming giant that single-handedly created binge-viewing culture. How do you create a Netflix show without allowing viewers to simply click on the final episode’s coronation, thus spoiling the reality-TV buildup and revealing the winner?

The solution was to package the 10 episodes into three chunks, to be released weekly. The first four episodes, available Wednesday, follow the judges as they audition talent in L.A. and in their respective home cities (Cardi in New York, Chance in Chicago and T.I. in Atlanta), with the help of guest judges. The following week, in episodes 5-7, the top 30 contestants are pared down through rap cyphers and battles, and judged off original music videos. And during the final three episodes, the rappers sample records and collaborate with artists to make original songs, and a winner is crowned.

“We aren’t trying to teach the contestants how to become famous,” explained Chance. “We wanted to show them how to deal with being an artist: How to have the right stage presence, or how to make a dope music video, or how to collaborate with people from other genres.”

Adding to the show’s cachet is a rich roster of hip-hop and R&B stars who were tapped to guide contestants. The late Nipsey Hussle is featured in the premiere, and there are appearances from Killer Mike, Fat Joe, Quavo, Anderson .Paak, Lupe Fiasco, Jadakiss, Ebro Darden, Big Boi, Miguel, Jhene Aiko, Tory Lanez, Ty Dolla Sign and DJ Khaled, among others.

“Music competition series have been one of the most popular and beloved types of unscripted TV, but there has never been a competition show of this scale that has been focused on hip-hop before ‘Rhythm + Flow,’” said Brandon Riegg, Netflix’s vice president of nonfiction series. “We saw an opportunity to show fans an authentic look at the level of talent it takes to become Cardi B, Chance the Rapper and T.I.”

In the nearly two decades since a bubbly cocktail waitress from Texas named Kelly Clarkson helped “American Idol” innovate the modern music competition show, viewers have tuned into countless series looking for pop stars, country artists, guitar gods, a cappella vocalists, gospel singers, songwriters, producers and virtually every aspect of contemporary music-making.

And yet rap has continued to be largely shunned from competition shows.

Netflix’s new series isn’t the first of its kind by any means. MTV buffs remember Puff Daddy famously making the rap group he assembled on 2002’s “Making the Band” hike across the Manhattan Bridge to get him a slice of cheesecake, and everyone from Jermaine Dupri to Missy Elliott to Rick Ross have toplined shows scouring the streets for rap talent.

Where “Rhythm + Flow” differs is in its ability to cater to today’s music ecosystem, which is why contestants aren’t locked into any restrictive record deals on this show. Producers wanted the show to serve as a platform for artists to gain exposure, which attracted both the artists who signed on to the series as well as the judges and the contestants.

“The music industry has changed so much,” said New York-based rapper Cakes Da Killa, who competed on the series. “When I started making music, Instagram wasn’t even a thing. I’d been approached to do other reality shows, but this show had a bigger heart. It was centralized on the art form and the craft of making music.”

We are like the Soundcloud of competition TV series,” added Jackson, “because we’re an independent platform for the artist. Obviously a label deal is a very significant thing for an artist, but Chance is a perfect example of there being a different path to success outside of the label system.”

Cardi and Chance, who made history as the first artist to win a Grammy from a streaming-only album, have found massive success in rap’s new era. However, the show’s elder statesman, T.I., now 39, came to hip-hop fame in the early aughts before building his own reality TV franchise with a series of shows, including VH1’s hit docuseries “T.I. & Tiny: The Family Hustle.”

“I only wanted to do the show if it maintained a significant level of authenticity,” T.I. said. “I didn’t want to do a show that was contrived and orchestrated. For me, this was about taking my experiences and using them to benefit the next generation. Once you’ve sold records, won Grammys, done tours and made money, you have to think about what you’re able to do for others.”

And there couldn’t be a better time for a show like “Rhythm + Flow.” No genre of music is as prevalent as hip-hop at the moment. In the U.S., 18 of the top 20 songs being streamed on Spotify right now are hip-hop. There isn’t a commitment beyond the first season, but everyone involved hopes this is the beginning of a new franchise.

“I didn’t do this for the money,” Cardi said. “I obviously got a bag for doing the show, but I just wanted to keep filming every single day. I was so excited to see what these contestants were going to come up with. I got so emotionally invested. I would do a record with a lot of them — especially the winner.”

The popular Palm Springs Aerial Tramway that takes visitors from the desert floor up to a high point on Mt. San Jacinto reopened Monday morning. It had been shut for maintenance since Sept. 9.

The tram runs every day year-round but closes annually to test its mechanical and electrical systems, according to a press release. This year a car carriage was replaced during the month-long closure.

It takes about 10 minutes to travel two and a half miles to a station at 8,516 feet in Mt. San Jacinto State Park. Each year tram officials hold a contest for anyone who guesses when the first inch of snow will fall at the top spot. Typically snow starts falling in November.

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Guesses are accepted by snail mail only at Snow Guessing Contest, 1 Tram Way, Palm Springs, CA 92262. The first 10 entries with the correct date will win four tram tickets, which cost $26.95 each for adults.

At the tram’s high point called the Mountain Station, visitors dine at restaurants, take in views of the desert from observation decks, or head out on a system of hiking trails. In winter, you can also snowshoe and cross-country ski.

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The popular Kilauea Iki Trail in Hawaii Volcanoes National Park recently fully reopened, a year and a half after Kilauea erupted and more than 60,000 quakes rattled the volcano’s summit. The shaking last year damaged much of the park, including the popular four-mile loop from the rim of a crater to its floor. Now visitors will see something new along the way: large boulders that tumbled down during the seismic shaking, a park release says.

The trail starts out in lush forest and gives way to the sparse floor of the crater, which in 1959 was a “seething lava lake, with lava fountains up to 1,900 feet high,” according to the park’s website. Hikers now walk on hardened lava where decades later there’s still a hot rock that steams on the surface.

Part of the trail reopened in April; the full trail reopened Sept. 21 after final repairs were completed. Work crews from the nonprofit Friends of Hawaii Volcanoes National Park and other national park workers helped make repairs.

It’s all part of the park’s slow recovery from the eruption that forced the park to close for an unprecedented 134 days in 2018.

Some of the park’s features were forever changed. The bubbling lava lake within Halemaumau Crater near the summit disappeared after lava was sucked underground, and the crater doubled in size. The park’s Jaggar Museum, which contained geologic and cultural artifacts, sits precariously close to the newly formed rim.

The building was so severely damaged it may never reopen. Museum exhibits may be relocated to Pahoa, a town near the park.

Outside the park, more than 700 homes in a neighborhood called the Puna District were destroyed by the wall of lava from the volcano.

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Ready for a long train ride on your next vacation? Buy a roomette or bedroom ticket on selected Amtrak trains, and a companion goes free. It’s cool savings for those who want to see America by riding the rails on long-distance routes.

Sample destinations on sale include:

▶ Los Angeles to Seattle aboard the Coast Starlight, a 35-hour ride along the West Coast, with views from the ocean to Mt. Shasta. With the sale, tickets for two cost $383 for roomettes and $712 for bedrooms.

▶ Los Angeles to New Orleans aboard the Sunset Limited takes 48 hours to chug through Arizona, New Mexico and Texas on the way to the Louisiana city. Tickets cost $441 for roomettes and $820 for bedrooms.

The sale also is good on the California Zephyr, Empire Builder, Southwest Chief and other routes, and some itineraries include meals too.

The 2-for-1 sale ends Oct. 14. Tickets purchased by that date are good for travel from Nov. 11 through April 8 (except for blackout dates).

By the way, the more inexpensive roomettes come with recliner seats that become beds in a space that’s 3.5 by 6.5 feet. There’s also a large viewing window, electrical outlets and a fold-down table.

Bedrooms are roomier, have a larger window, and add a sofa bed (which could sleep a third person) plus toilet and shower. The space is 6.5 by 7.5 feet.

Info: Amtrak

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Sick of your selfie self yet? Likely not. The Museum (and I use the term loosely) of Selfies opened last year in Hollywood as a place for anyone to Insta indulge. Now a second site will open in the Miracle Mile Shops on the Las Vegas Strip on Oct. 25.

In Las Vegas, some of the photo ops will be similar to those in L.A. Expect to dive into the sea of yellow balls in the Emoji Pool; pose with the Selfie Throne made of selfie sticks; and share the Bathroom Selfie, where someone else is reflected in the mirror.

Tickets cost $23 for adults and $17 for children. It will be open 10 a.m. to 11 p.m. Sundays through Thursdays, and until midnight on Fridays and Saturdays.

Prefer more authentic places to snap a shot? The city of Las Vegas has compiled its own list of cool selfie sites that are outdoors — and free.

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▶ “Radial Symmetry” by Luis Varela-Rico features two richly textured “stainless steel radial shapes inspired by Southern Paiute basket weaving,” the city’s website says. You can get as close as you like, and play with light at different times of day as it reflects off the metal. It’s at Main and Commerce streets near the Arts District.

▶ The Fremont Street Crosswalk at Las Vegas Boulevard and Fremont Street provides a glimpse of vintage Vegas, with the neon martini glass and the Fremont East sign. It’s a diagonal crosswalk, so you can snap your selfie in the middle of the street under the sign’s arch.

▶ Wear stripes to snap “Pipe Dream,” a sculpture of metal pipes in all colors at Symphony Park. Tim Bavington created the piece as a physical representation of Aaron Copland’s 1942 musical composition “Fanfare for the Common Man,” the city’s website says.

Check out the list of other Insta sites recommended by the city.

Twitter Inc. said it used phone numbers and email addresses that some users uploaded for security reasons to target them with ads.

The company said this was “an error” and that the information should not have been used for ad targeting. “We’re very sorry this happened,” Twitter wrote Tuesday in a blog post. It didn’t say how many users may have seen ads because of this activity.

Twitter offers an ad product called “tailored audiences,” which lets advertisers upload a contact list of customers that the company then matches to existing users on its social network through phone numbers or emails. Twitter said it accidentally matched some of these customer lists with similar information that users shared with the company for security reasons, such as two-factor account authentication.

Last year, Facebook Inc. was also found to be using personal information uploaded for security purposes to target people with ads. The Federal Trade Commission ordered the social media giant to stop the practice in July as part of a $5 billion privacy settlement.

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A U.S. move to blacklist four of China’s leading artificial intelligence start-ups has thrown a blockbuster Hong Kong listing into doubt and left billions of dollars of foreign investment caught in the cross fire.

On Monday, the U.S. Commerce Department put eight companies on its “entity list,” accusing three of China’s leading facial recognition companies, SenseTime, Megvii and Yitu, as well as the voice recognition company iFlytek, of aiding the “repression, mass arbitrary detention and high-technology surveillance” in the western Chinese region of Xinjiang.

Companies on the entity list, which include the Chinese telecom supplier Huawei, are not allowed to buy products from U.S. companies.

The move shocked Megvii, which has already filed its IPO prospectus, and SenseTime, which is considering a public listing. “We are all taken aback,” said one of Megvii’s bankers. “No change to plans now but we will have to see what happens over coming days.”

In June, Human Rights Watch withdrew an allegation that a smartphone app used to track ethnic Uighurs in Xinjiang used technology from Megvii, which gave the company confidence that it had resolved questions over its alleged activities in the region. Megvii said the U.S. decision was made “without any factual basis” and that it made no revenues at all from projects in Xinjiang in the first half of 2019, and that the region accounted for only 1% of its sales in 2018.

Meanwhile, a person close to SenseTime said the company had been surprised at the blacklisting after a “positive” meeting with two U.S. senators in Beijing last month. SenseTime said it was “deeply disappointed” and that it was “actively developing AI code of ethics.”

The company had recently sold its majority stake in a police surveillance company in Xinjiang following an international outcry.

Both companies have foreign investors, with Macquarie and the Abu Dhabi Investment Authority taking part in Megvii’s last fund-raise and SoftBank, Fidelity, Qualcommm, Silver Lake and Temasek all backing SenseTime. Macquarie, Abu Dhabi Investment Authority, Softbank, Silver Lake and Fidelity all declined to comment.

IFlytek, the voice AI company, said the decision would have little impact on its business. “We have planned for this situation,” said a spokesperson. The company’s fund manager, who was seeking to raise about $300 million for iFlytek to invest in start-ups, said earlier this year that the U.S. was imposing “an iron curtain on technology from China.”

Yitu declined to comment on the decision.

In 2016, iFlytek won a bid to supply police in southern Xinjiang’s Kashgar city with 25 sets of voice pattern collecting equipment, as part of a government initiative to gather biometric data including DNA, fingerprints and “three-dimensional portraits” from residents, according to government procurement documents.

Collectively the four companies are the brightest prospects in China’s burgeoning AI sector, and they have all won a swath of contracts from Chinese companies and cities.

Megvii and SenseTime are among the world’s most valuable AI start-ups, and are unusual in each claiming to have developed a “full stack” of AI software themselves — right down to the deep learning frameworks underpinning their applications. That means they do not rely on other companies’ popular frameworks, such as Google’s Tensorflow or Facebook’s PyTorch.

Security camera companies Hikvision and Dahua were also put on the list, and Dahua said it expressed its “strong protest to such a decision, which lacks factual basis.”

Both Dahua and Hikvision suspended the trading of their stocks on the Shenzhen exchange, saying trading would resume Thursday at the latest. IFlytek’s shares fell 2.67% from the previous day’s close in Shenzhen.

All of the sanctioned companies run and train their AI algorithms on computers which are likely to use chips made by Intel as well as Nvidia, which makes AI-specialized graphics processing unit (GPU) chips.

But they can continue to use existing computers to run their algorithms, eventually moving away from U.S. suppliers, according to investment bank Jefferies.

The impact to Hikvision would probably be “modest” said Ruiyi Xu, a research associate for Bernstein, adding that Hikvision was among the best prepared of the eight companies to be added to the entity list.

Bernstein estimated that even after Hikvision’s key components inventory runs up, the revenue impact would only be about 10%, and the profit impact even less.

“We think this is manageable although short term there will be some weighing on investor sentiment,” Xu said. “Hikvision won’t have cross-selling problems because it can rely on partners such as Lenovo and other server makers in China.”

Wu said judging from the stock reaction of U.S. chipmakers Nvidia and Intel, investors were not expecting a significant hit. Shares in U.S. chipmaker Ambarella, a key Hikvision supplier, plunged as much as 12% after news of the blacklisting.

Additional reporting by Christian Shepherd and Nian Liu in Beijing

© The Financial Times Ltd. 2019. All Rights Reserved. FT and Financial Times are trademarks of the Financial Times Ltd. Not to be redistributed, copied or modified in any way.

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