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Palantir – the “black sheep” of Silicon Valley

byMatthew Stafford
August 30, 2020
in WORLD
Reading Time: 6 minute read
Palantir – the “black sheep” of Silicon Valley

Source: Peter Klaunzer/EPA/Shutterstock

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The secretive data analytics company Palantir Technologies announced this week that it would begin preparations for its Initial Public Offering (IPO), with shares of the private company to be sold publicly for the first time. 

Palantir’s IPO comes as other tech companies are taking advantage of positive market conditions to publicly put their shares up for sale, including data analysis platform Snowflake, business software provider Asana and video game technology supplier Unity.

Palantir, however, is different. The company has attracted significant controversy since its founding 17 years ago as a result of its numerous contracts with agencies in the United States government.

Palantir’s IPO shows that the company is doubling down on its reputation, in the hope of deepening its ties to the government and the secretive work it performs out of the public eye. 

Palantir’s secret history

Palantir was founded in the US in 2003, in the aftermath of the 9/11 terrorist attacks. The software company was touted as being able to prevent future terrorist attacks by using intelligence and big data to better visualize and stop potential threats from arising. 

Co-founded by Trump-supporting billionaire Peter Thiel and chief executive officer Alex Karp, some of the earliest investors in Palantir included the Central Intelligence Agency (CIA). This investment served to set the model for Palantir, which over the years has primarily provided its services to government agencies. 

According to The Intercept’s Sam Biddle, Palantir sees itself not as a traditional Silicon Valley startup, “but alongside Raytheon, Lockheed Martin, and Booz Allen … Palantir wants to be a defense contractor, not a Silicon Valley unicorn.”

A look over some of the contracts Palantir has been awarded by the US government over the years suggests that it has had some success achieving these aspirations.

The Department of Defense (DOD) and Department of Homeland Security (DHS) are the two most prominent government agencies to have awarded Palantir million-dollar contracts. Last year, Palantir also won a US$800 million contract to produce a completely overhauled combat intelligence hardware and software suite for the US Army, beating out traditional defense contractor Raytheon. 

Government work stands at the core of Palantir’s operations. Despite a shift in recent years to include more corporate customers, Palantir’s government business still accounts for the majority of its operations – approximately 54% for the first half of 2020.

Its share of government work has only increased as a result of COVID-19, with Palantir being awarded a contract with the US Department of Health and Human Services (HHS) to build a tool to track the spread of the coronavirus. 

Despite its significant government contracts, Palantir has never once turned a profit. Documents for its IPO filing show that the company faced another US$567 million loss in 2019. 

Controversy

Palantir is not without its critics.

Palantir’s software was used to pioneer “predictive policing” programs in numerous police departments across the US, most notably in Los Angeles and New Orleans. 

Programs such as the Los Angeles Police Department’s (LAPD) now-discontinued Operation LASER attempted to prevent potential criminals from committing crimes by gathering large amounts of data on projected suspects. 

These programs received widespread criticism not just over large scale data gathering on those who had never committed a crime, but over the very idea of “predictive policing” that Palantir helped pioneer.

Michael Posner, a Professor of Ethics and Finance at New York University (NYU) and a senior contributor to Forbes, has also criticized Palantir for not taking the human rights and ethical concerns of its work seriously. Posner points to Palantir’s “Privacy and Civil Liberties” team, which is staffed by only 10 engineers out of a total workforce of more than 2,000 as proof that Palantir has “failed to assume this essential responsibility.”

What is arguably most controversial, however, is Palantir’s work with the Immigration and Customs Enforcement Agency, known more commonly as ICE. 

Palantir has been charged with using its big data analytics software to assist ICE in tracking down and deporting individuals. Thanks to its software, huge profiles of immigrant families can be made, along with their ties and connections, which can then be used to track their movements in order to capture and deport them.

The resulting uproar led Palantir to dismiss claims that its software was used in deportations, but the company’s dismissal was shown to be false following the release of documents proving that Palantir’s software had indeed been used for deportations. 

Doubling down 

Palantir’s executives are not unaware of the controversy surrounding the company’s operations. 

In a letter to investors prior to its IPO, CEO Alex Karp recognized that its government work could be a risk factor for investors, but charged that claims about its operations online mainly consisted of “unfounded speculation” and claims that are “otherwise misleading.”

Although Palantir executives have acknowledged the contentious nature of their work, they haven’t taken any steps to change course. On the contrary, Palantir has extended its contract with ICE. In a letter to executives, CEO Alex Karp allegedly embraced the company’s reputation as the “black sheep” of Silicon Valley tech companies. 

In his letter, Karp writes that the company’s biggest controversy – its ties to government operations and the national security apparatus – is instead its biggest asset. Karp also charges critics of not understanding or appreciating the company’s work.

Silicon Valley engineers “do not know more about how society should be organized or what justice requires,” writes Karp, adding that Palantir seems to “share fewer and fewer of the technology’s sector’s values and commitments.”

Palantir may stand to benefit from doubling down on its controversial operations. Its revenue is already up this year, with some US$480 million brought in over the first half of 2020.

Despite the company’s critics, its controversies and the fact that it hasn’t achieved a profit at any point in its 17 years of existence, Palantir sees its future tied to a deeper embrace of government and national security interests.

In CEO Alex Karp’s words, Palantir aims to “become the default operating system for data across the US government.”

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