In a regulatory filing setting the stage for its initial public offering of stock, the Palo Alto-based data analytics company Palantir offered a glimpse at its finances — and a manifesto against Silicon Valley tech companies.
Much of the filing covered expected ground. Palantir, which counts the Los Angeles Police Department and U.S. Immigration and Customs Enforcement among its clients, disclosed that it has been losing roughly $580 million a year for the last two years, and used the filing to make the case for why investors should ignore the red ink and buy its stock once the company goes public.
But in the section where many companies would put a few paragraphs of sunny verbiage about how their products are changing lives and (eventually) making money, Palantir drew a line in the sand.
“Our company was founded in Silicon Valley,” Chief Executive Alex Karp wrote. “But we seem to share fewer and fewer of the technology sector’s values and commitments.”
Karp outlined the company’s self-image as a lone, steely-eyed pragmatist among its ineffectual peers in Silicon Valley, echoing past public statements from company co-founder and largest shareholder Peter Thiel, who served on the Trump administration’s transition team and has called Google’s work with China “potentially treasonous.”
The letter begins by discussing the company’s business culture and two core products.
The first software platform, Gotham, is used by defense, intelligence, and law enforcement agencies to model and manage reams of data. The LAPD has used the platform to track people through the city using surveillance footage and generate lists of “chronic offenders” as part of its predictive policing program, which was discontinued following concerns that it unfairly targeted Black and Latino communities. Palantir, which was founded with money from the Central Intelligence Agency, counts a number of Department of Defense and federal intelligence agencies among its clients as well, and Karp said in January that ICE has used Palantir’s Gotham software for years to track down undocumented immigrants.
The company’s second product, Foundry, is pitched at businesses as a way to manage their own internal data. In both cases, Karp argues that Palantir products are superior to other data management software on the market.
But Karp then moves beyond the standard pitch to investors. Making software to supercharge state surveillance and assist soldiers on military missions raises serious ethical issues, Karp writes, and engineers at other Silicon Valley firms are not equipped to confront them.
The statement draws a distinction between the major advertising-based companies in the industry — Google and Facebook — and Palantir, making the case that those companies have built their business on selling, collecting, and mining user data, while Palantir has turned down those enticements to instead build more efficient surveillance tools for the military, law enforcement and intelligence apparatus.
“The world’s largest consumer internet companies have never had greater access to the most intimate aspects of our lives,” Karp writes. “And the advance of their technologies has outpaced the development of the forms of political control that are capable of governing their use.”
The idea that Palantir has been unfairly targeted for criticism repeats throughout the filing. In the section outlining the risk factors that investors should be aware of before buying Palantir stock, the company runs through a list of potential hazards to the company’s future. Most are boilerplate for tech companies going public: warnings that the company may never turn a profit, that sales are unpredictable, technology can change, the world may end, and the stock market is volatile.
Other companies that have come under media scrutiny have included negative news coverage as a risk factor — Uber, in its pre-IPO filing in 2019, acknowledged that the flurry of stories around the company’s data breaches, culture of sexual harassment and treatment of drivers had a negative impact on the business, and could repeat if the company did not rehabilitate its brand.
Palantir warns not only of stories that are negative but also those it perceives as untrue. If negative news coverage “presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information regarding Palantir, such coverage could damage our reputation in the industry and with current and potential customers,” according to the filing.
It also foresees its deep unpopularity with anti-surveillance activists, who have protested at its offices and pushed its recruiters off college campuses, as a potential risk. But that’s not just because the critics could hurt Palantir’s reputation — but also because listening to the critics could hurt the company’s reputation.
“Being perceived as yielding to activism targeted at certain customers could damage our relationships with certain customers, including governments and government agencies with which we do business, whose views may or may not be aligned with those of political and social activists,” according to the filing.
