Peter Thiel founded the data analytics company Palantir in 2003, five years after Larry Page and Sergey Brin launched Google and nine years after Jeff Bezos incorporated Amazon. While the search engine and the online marketplace both quickly became household names, Palantir remained largely out of the spotlight. Its list of clients, and the work it carried out on their behalf, have long been closely guarded. But the company’s 17-year reign as one of the world’s most secretive tech firms is now coming to an end.
Palantir has just gone public, with a direct listing on the New York Stock Exchange. Shares began trading at $7.25, creating a valuation of $16bn for a company that lost $580m last year and has never made a profit. It will soon be subject to a level of financial scrutiny it has largely evaded as a private firm.
But Palantir’s CEO, Alex Karp, has already provided a rare glimpse into his values and world-view, and justifications for his company’s controversial federal work, which includes building battlefield software, migrant surveillance systems and “predictive policing” tools to identify potential perpetrators and victims of crime.
In a note to prospective investors issued before the listing, Karp sought to distinguish Palantir from other US tech firms. “We seem to share fewer and fewer of the technology sector’s values and commitments,” he wrote. “Software projects with our nation’s defence and intelligence agencies, whose missions are to keep us safe, have become controversial, while companies built on advertising dollars are commonplace.”
Although Karp did not name Google, close followers of the industry took this as a reference to the search giant’s withdrawal, in 2018, from a US military project that involved the analysis of drone footage using AI. The project had provoked a backlash among Google’s employees in Silicon Valley, but the company’s decision to pull out proved equally controversial. US lawmakers accused the company of being unpatriotic, particularly given it had opened an AI research company in China just months before.
Amazon, too, has a complicated relationship with the US government. Bezos and Donald Trump are engaged in one of the world’s most high-profile feuds, and the company has accused the president of interfering in its bid for a $10bn cloud computing contract with the Department of Defense.
Apple has also been accused of putting its users before the wishes of law enforcement agencies, particularly in the case of one of the terrorists who killed 14 people in San Bernardino, California in 2015, whose iPhone Apple refused to unlock, despite appeals by the FBI.
America remains the most important market for these firms. But as they have grown, the giants of Silicon Valley have become more global in their outlook and less deferential to their domestic political leaders. It is a cliche to say that Apple, Amazon, Google, Microsoft and Facebook wield similar power to nation states, but one that is increasingly accurate. It’s not uncommon to see prime ministers and presidents converse with the CEOs of US firms as if they were meeting a fellow political leader.
It’s for this reason that Donald Trump’s attempts to take on Chinese tech companies are simplistic and probably doomed. By issuing sanctions against Huawei, TikTok and WeChat, the US president has caused huge short-term disruption to their business models. But in the long term, he is encouraging these businesses, which are already at home in the world’s largest consumer market, to be less dependent on American technical advances. Huawei, which sells one in five of the world’s smartphones, has announced its own operating system in light of last year’s US trade restrictions. In time, this will bolster the Chinese tech market and strengthen the ties between China’s tech giants and Beijing.
Nor has Trump’s aggressive stance on China prompted an equal and opposite reaction in Silicon Valley. Instead, Google and Amazon are becoming less engaged with the US government. A form of asymmetric warfare has developed; Trump’s attacks on the Chinese tech industry only serve to reduce its dependence on Silicon Valley, further diminishing American influence.
Officials in Washington are acutely aware of this trend, and what it may ultimately mean for the immense soft power that technological hegemony has given America in the past. Into this moment of uncertainty have stepped Alex Karp and Peter Thiel, who apparently see an opportunity to capitalise on the US political establishment’s frustrations with domestic tech giants.
But this is also a gamble: a good relationship with the Trump administration could be no bad thing for a company that relies on government contracts. But cosying up to an unpopular incumbent shortly before an election is not without risk. The question is whether this is a calculated risk, based on what Palantir expects to happen on 3 November, or simply an indication of Peter Thiel’s political allegiance.
What is certain is that the culture war divide that runs through American society is now creating a rift among its technological elite. For those in Washington who care about America’s influence on the global stage, that is bad news indeed.