An entity that is not specifically controlled by a state does not have legal grounds to validate identities.
States have the resources available to make identification more safe and secure. Private companies can sell identification information to the highest bidder.
Private entities are about profit and can not be relied on to hold such valuable information.
In totalitarian states, state entities can hold private information with regulations and laws enforced by external entities to provide more citizen safety. Full privatization could bring about more corruption and could affect totalitarian regimes and laws. For example, private corporations could begin to buy off those in power to force laws and changes that would benefit their company assets instead of the good of society and the state. Privatization of such valuable information could negatively impact human rights.