Palantir’s debut on the public market earlier today drew different responses from different people. Some veterans in Silicon Valley claimed that its statements to investors are riddled with exaggerations and hype meant to hide the company’s less-than-stellar tech. Critics in the tech privacy sphere, meanwhile, sounded alarms over the idea of the company’s public filing, considering how Palantir’s own CEO has publicly stated its products have been used to “kill people.”
Now, that pushback is being echoed on Capitol Hill. A letter addressed to SEC Chairman Jay Clayton by Democratic representatives Alexandria Ocasio-Cortez and Jesús G. “Chuy” García issues several pages worth of warning that detail what Palantir might be omitting — and what Clayton might be overlooking — in the company’s mission to go public.
“Palantir reports several pieces of information about its company — and omits others — that we believe require further disclosure and examination,” they write in the letter, which was originally sent to SEC earlier this month before being made public today. The letter goes on to note that the S-1 document that Palantir initially filed last month as part of its public offering seems to gloss over “material risks” and “national security concerns” that should probably be flagged for potential investors, employees, and the public.
(Disclosure: Peter Thiel, who co-founded Palantir, secretly funded a lawsuit that resulted in the bankruptcy of Gizmodo’s former parent company, Gawker Media.)
To sum it up: The pair is largely asking for more information about the company’s corporate structure, as well as raising concerns about work the company has been tapped to do in regions where human rights abuses are common.
First, as the letter points out, there’s no mention of CIA-backed venture capital firm In-Q-Tel anywhere in Palantir’s S-1, despite the firm ostensibly being a major player that helped Palantir raise the funds needed to go public in the first place. An archived version of the In-Q-Tel site shows that way back in the bygone era of 2005, the firm reported pouring an undisclosed sum into Palantir’s pockets. Three years later, documents that Palantir filed with the SEC named In-Q-Tel and its affiliates as “beneficial owners” for Palantir because they controlled at least 10% of the company’s securities. In the years since, data from In-Q-Tel’s page on Crunchbase lists Palantir as getting $US550 ($767) million from the firm. Considering how that’s akin to hundreds of millions of dollars from the CIA, Ocasio-Cortez and García rightfully point out that this is a relationship that “can and should” be fully reported out as part of the filing.
The pair also calls out Palantir’s omission of its work with foreign federal officials, particularly in regions with a spotty track record on the human rights front. Considering how gung-ho the company has proven itself to be when it comes to abetting the widespread surveillance of immigrants at the U.S.-Mexico border, it’s not hard to imagine what that tech could be capable of when put in the hands of a more authoritarian regime. In particular, the letter mentions Palantir’s ongoing relationship with officials in Qatar, despite the region being under scrutiny by the likes of Amnesty International for its inhumane treatment of migrant workers, refugees, and LGBTQ people.
Aside from asking for more clarification on Palantir’s federal ties here and abroad, the letter also notes concerns about one of the company’s latest additions to its board, Alex Moore. Moore, whom Palantir presents as an “independent” board mamber, was literally the first employee that Palantir ever hired, eventually rising the ranks and becoming director of operations. This, along with the Palantir’s note on its S-1 filing that Moore has some sway with how certain members of his posse put down their shares — “including with respect to the election of directors” — should be enough to raise a few eyebrows, according to the letter. And that’s before you start looking at the other five members Palantir currently has on its board:
Palantir’s current board of directors is not comprised of a majority of independent directors, which is a requirement for listing on the NYSE that must be met within one year of listing. Of the six board members, three are co-founders who between them will exercise near-complete control of the company by virtue of a multi-class share structure, while a fourth, Alexander Moore, was Palantir’s first employee and Director of Operations from 2005 to 2010.
There are other concerns that Ocasio-Cortez and García raise here aside from the apparent human rights issues and a not-so-independent board. Notably, the Department of Health and Human Services signed off on a deal with Palantir back in May as a way to expedite the country’s recovery from the covid-19 crisis. The HHS deal, which was worth roughly $US25 ($35) million, drew criticism from lawmakers at the time who noted that “the public does not know what safeguards HHS has put in place to protect their data” and that “the HHS has failed to share, among other items, what data goes into the system, how it can be used, or with whom it can be shared.”
In short: There’s a lot of cause for concern about this particular company going public. Ocasio-Cortez and García don’t seem to have convinced the SEC to stop Palantir from entering the public market, but there’s a chance it could still investigate the company on any one of these numerous concerning fronts. Read the full memo below: