Founded by venture capitalists Peter Thiel and Alex Karp, “big data” firm Palantir Technologies is the current headline-grabbing IPO. It created a different sort of headline with its initial filing, however, adding a rant against “business as usual” in Silicon Valley. The firm criticized the valley’s various tech giants as being out of touch with both the needs of American people and the country’s foundational principles.
Aimed primarily at potential investors, the invective appears to call for a greater diversity of perspectives in software engineering and a decreased geographical hegemony over the industry. However, it also pulls the spotlight off of some of the company’s own issues: primarily that it was forced to disclose that it has never made money in its 17-year history, but also that it has been investigated for sharing data with Cambridge Analytica.
Palantir takes on Silicon Valley
Understanding Palantir’s decision to go on the offensive against Silicon Valley in what was otherwise a routine financial paperwork filing requires understanding a little about its leadership, particularly libertarian firebrand Peter Thiel. The mogul got his start with the tech giants he is now criticizing, beginning with the founding of PayPal and making an early investment in Facebook in 2004 that would ultimately yield nearly $1 billion in profit. While he has worked in big data nearly since its inception, his outspoken right-wing politics put him in opposition to more left-leaning views that tend to be prominent in Silicon Valley.
There would appear to be a contradiction between Thiel’s criticism of the data handling practices of tech giants and his career-long involvement with exactly those sorts of companies, but his letter draws a distinction between data collected for the purposes of national security (as Palantir has ostensibly done while contracting with Immigration & Customs Enforcement) and personal data collected and put on the open market for sale for advertising purposes.
The letter appears to defend Palantir’s involvement with ICE, a politically contentious issue that has seen most of the criticism come from left-wing sources, by characterizing it as something in the interest of American citizens. The letter specifically references the hunting of terrorists and defending of United States soldiers, contrasting this sort of activity with the privacy invasions of Silicon Valley tech giants.
It also seemed to be a means of addressing the company’s continual inability to generate a profit. Palantir racked up a $579.6 million loss in 2019, comparable to its loss in 2018. The company is currently on pace to have a slightly smaller loss of about $328 million in 2020.
Founded in 2003, Palantir got off the ground by doing analytics work for federal government intelligence agencies and the Department of Defense. It gradually expanded operations to serve private industry, with a focus on health care and financial services. It also provides services to local governments and police departments, though 53% of its business still comes from federal government agencies. The company recently made a physical break from Silicon Valley, quietly moving its headquarters to Denver in August.
Moral superiority to tech giants?
Though it does not name any specific Silicon Valley tech giants, the letter’s themes echo common criticisms of major social media and targeted advertising companies such as Facebook and Google. However, Palantir offers essentially the same services to its clients. The Palantir platform scans a variety of internet and cellular phone sources to collect and assemble relevant data in a way that is visually and cognitively convenient for the end user. Given that the company contracts for agencies like the CIA, it is a fair assumption that it sometimes has access to personal information that is far beyond the scope of social media platforms doing targeted advertising.
Palantir’s reach (and also its market valuation) is thus unusually difficult to judge for a tech company. Not only is it sworn to secrecy by defense and intelligence agencies due to the nature of the work, the company sells itself on deploying teams of engineers to customize the platform for the individual needs of each customer. One concrete example of its use appears to be in tracking down Osama bin Laden prior to the raid in which he was killed, something that remains an unconfirmed rumor but that Palantir has made reference to in the past.
The moral line that Palantir appears to be attempting to draw between it and other tech giants is at how the data it collects is used. #privacy #respectdata
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The moral line that Palantir appears to be attempting to draw between it and other tech giants is at how the data it collects is used. Palantir’s argument is that the social media platforms of Silicon Valley that are built on advertising dollars make the personal information they have access to broadly available for sale, in some cases to foreign governments that are considered rivals or even enemies of the US. By contrast, Palantir argues that it limits its collected data to client-specific purposes that are in the interest of the US population. In the IPO letter the company declares that it will not work with the Chinese government or companies based there, shutting itself out of the world’s second-largest economy.
But some would argue, even some among the software company’s own employees, that Palantir’s activities are not necessarily moral or even in the best interests of the US public. A number of immigrant and refugee activist groups have protested its work with ICE on facilitating deportations, something that certain company employees took a stand on in an internal letter drafted last year. Activist groups have called for investors to stay away from the company; it is unclear what level of impact this may have on its filing to go public.