Palantir: The controversial data firm now worth £17bn

US tech firm Palantir, known for supplying controversial data-sifting software to government agencies, has fetched a market value of nearly $22bn (£17bn) in its debut on the New York Stock Exchange.

It’s a lofty figure for a firm that has never turned a profit, been hit by privacy concerns and relies on public agencies for nearly half of its business.

But the company, which takes its name from the “seeing stones” known for their power and potential to corrupt in Lord of the Rings, says the need for the kind of software it sells “has never been greater”.

The firm, which launched in 2003 with backing from right-wing libertarian tech investor Peter Thiel and America’s Central Intelligence Agency (CIA), builds programs that integrate massive data sets and spit out connections and patterns in user-friendly formats.

Palantir expansion

The firm – sometimes described as the “scariest” of America’s tech giants – got its start working with US soldiers in Iraq and Afghanistan, but now supplies software to police departments, other public agencies and corporate clients.

It is active in more than 150 countries, including the UK, where it was one of the tech firms the government enlisted this spring to help respond to coronavirus.

In the first half of 2020, Palantir revenue rose 49% year-on-year, topping $480m (£373m). And at its direct listing on Wednesday, in which investors sold some of their existing shares to the public, shares opened at $10 each – above the $7.25 reference price – giving it a value of roughly $22bn.

Mark Cash, equity research analyst at Morningstar, who has estimated the firm’s value at $28bn – even higher than the valuation reached on Wednesday – said the firm is well-positioned in a growing industry.

“Data integration at this scale for the government is very complex and I think if you tried to stop spending on that and it just goes away, you’re going to have some big problems,” he said. “We think it’s very hard to switch away from once you’re in as a customer.”

ICE and privacy protests

But Palantir’s rise has been shadowed by concerns from privacy experts, who say the firm’s tools enable surveillance and analysis of data – everything from drivers licenses and social media posts to DNA swabs – that skirts people’s right to privacy and is ripe for abuse.

In the US, the use of its technology by immigration authorities to help round-up undocumented immigrants has drawn heated protests and in the UK, the health data handled by the firm has also raised alarms.

Ahead of the firm’s listing, Amnesty International issued a report saying the firm was failing its responsibility as a company to protect human rights with inadequate due diligence into who it is working for.  

“We have to move away from the idea that data analytics and data collection is objective or clean or immune from all the pathologies that we’re seeing play out right now,” said Paromita Shah, executive director at Just Futures Law, which focuses on immigration law.

“Our governments are the problem because they don’t want to set up oversight, but Palantir takes advantage of it.”

‘We have chosen sides’

Palantir told Amnesty that it had deliberately declined some work with border authorities in the US due to the concerns.

But the company has also vigorously defended its government work, maintaining that its clients own and control the data. It says it has a team focused on civil liberties issues, but it is government’s job to craft policy, not Silicon Valley’s.

It has contrasted its commitment to some other tech firms, such as Google, which stopped work on an artificial intelligence project with the Pentagon after a backlash from employees.

“Our company was founded in Silicon Valley. But we seem to share fewer and fewer of the technology sector’s values and commitments,” chief executive Alex Karp wrote in the filing announcing its plans to sell shares to the public. “We have chosen sides, and we know that our partners value our commitment”.

The outspoken defence is perhaps little surprise, coming from a firm co-founded by Mr Thiel, who famously abandoned Silicon Valley in 2018, decrying its liberal politics.