Palantir Goes Public 📢
Palantir’s been busy. The 2003-founded data company that serves enterprise and a growing number of government contracts filed their S-1 late August, a definitive move towards a public listing.
After Palantir’s seen everyone else’s data, it was only right for the public to see theirs. The business performance was less stellar than expected: revenue was lower (Bloomberg reported $1.7B in booked deals for Palantir in 2015, but that wasn’t the case. The company has yet to hit a billion dollars in revenue in a year.), customers are concentrated (3 customers make up 28% of their business), they have never been profitable and the majority of voting rights will almost certainly be captured by the founders. In addition, the company has an odd fascination with The Lord of the Rings.
The founders begin with 49.999999% of voting power in Palantir — regardless of whether they sell or keep their shares. If they buy more stock with voting power (easy enough, being that close by default), they have the majority of votes to control the company.
Dual class stock structures have become more common, especially for tech stocks. Google, Facebook, and even Nike use the system. Back in the 1980s, companies were not allowed to sell dual share stocks; but when hostile takeovers became everyday occurrences, regulations were relaxed. Typically, class B shares give 10–1 voting power. For Palantir, they’ll use a three-class voting structure. The founders (Alexander Karp, Stephen Cohen, and Peter Thiel) will be granted Class F, ensuring 49.999999% of ownership no matter how many shares they actually hold. In addition, Palantir may not have independent board governance for up to a year after it goes public, per SEC rules.
The lack of accountability may concern shareholders due to the company’s already controversial business dealings. For example, in 2013, Palantir used “predictive policing” technology in New Orleans (bypassing public scrutiny and some government officials’ sign-offs by doing it under the auspices of non-profit, pro-bono work).
Since that time, predictive policing has been denounced for perpetuating racist practices. Police who look at suspects of certain racial backgrounds and neighborhoods would then be more likely to look to those groups for suspects again using the Palantir algorithm. Palantir maps networks and relationships between individuals, even if they aren’t suspected of a crime, and a simple search for a person’s name seems to come with prodigious information about that person. Palantir has profited from this exploratory work in New Orleans, selling their technology to other cities in America as well as internationally. (According to a Wired story, “No one outside Palantir seems to know for sure how many police departments in America use its technology.”)
Palantir’s technology is also used in other capacities, like understanding terrorist networks and finding undocumented immigrants in the U.S. for ICE. Recently, Palantir was awarded a government contract to aggregate coronavirus data, tracking millions of Americans’ information.
Palantir’s founders have taken shots at other tech companies for allowing employees to dictate whether and which government contracts will be taken. Thiel denounced Google in a NYT op-ed and called them “seemingly treasonous” for working with China while also not contracting with the Department of Defense, and Karp recently explained Palantir’s HQ moving out of the Bay Area saying that Silicon Valley engineers are at odds with his company’s values when they do not want to work on national defense and intelligence projects.
The battle over technology-enabled, data-driven national defense just went public.
As an employee:
- Open letters, staged walkouts, protests, signed petitions all can be useful tools to send a signal to a company that employees care about the projects they are working on. Project Maven is an example of successful employee intervention at Google. Here is a post from Tableau employees advocating against working on a project for ICE.
- Tech Workers Coalition works on building movements for employees.
- Be aware of self-fulfilling prophecies and how data can be skewed through omission if you work on AI-related products.
- See if companies you work for have AI standards like Google’s.
As a consumer:
- Check out Algorithms of Oppression to brush up on AI literacy.
- Watch this talk with Safiya Umoja Noble, author of Algorithms of Oppression, and Meredith Broussard, author of Artificial Unintelligence, on algorithmic bias and what oversight might need to be required to roll out algorithm-based products.
As a citizen:
- The US government announced Department of Defense ethical practices for AI. Push for these key tenets to have measurable and transparent reporting.
- Check out the ACLU’s post about how defunding the police will actually make us safer. “Funneling so many resources into law enforcement instead of education, affordable housing, and accessible health care has caused significant harm to communities.”
- Support broad employee organizing protections. According to Bloomberg, under the Obama administration, the National Labor Relations Board “broadened employees’ rights to use their workplace email system to organize around issues on the job.” In 2017 and 2018, Google urged the NLRB to undo this.
As an investor:
- According to research from Harvard Law School, “Companies with dual-class share structures face more governance challenges compared to other companies, as they are more likely to exhibit more problematic corporate governance practices.”
- States Are Slashing Funding As Congress Stalls On Aid: “Collectively, state governments will have budget shortfalls of $312 billion through the summer of 2022.”
- Zillow, Nextdoor and Other Companies Pledge to Add Black Directors: “In all, about 66% of Fortune 500 company board members are white men and 18% are white women; 9% are Black men and women.”
- What Can America Learn from Europe About Regulating Big Tech?: “European lawmakers, however, have long outpaced their American counterparts; having adopted new privacy regulations in 2018, they have now begun drafting a series of new laws aimed at limiting the anticompetitive practices of the major tech companies in Europe.”
- The President’s Payroll Tax Cut Is Really A Loan That Workers Have to Pay Back. Let’s Call It What It Is.: “While workers will have extra money now, it’s just a short-term and temporary infusion of cash that needs to be paid back unless Congress eventually forgives the debt. And that’s a bet I would not place given the current political environment. If people are struggling now, how will they be able to afford to pay twice the payroll tax four months from now, and right after the holidays?”
- Apple Countersues ‘Fortnite’ Maker Epic Games, Seeks Punitive Damages: “In its filing Tuesday, Apple sought to portray itself as a victim of plotting by Epic. The tech giant described all the help it had given Epic in recent years and detailed how it alleged the game company had begun laying groundwork for what Apple called a “calculated and pre-packaged campaign” against it.”
- JP Morgan Flags Potentially ‘Illegal’ Actions of Employees and PPP Loan Recipients: “JPMorgan was the PPP’s biggest lender, doling out some $29.4 billion in funds across over 280,000 loans before the program ended on Aug. 8. The firm said in the memo Tuesday it had found ‘conduct that does not live up to our business and ethical principles’ that ‘may even be illegal.’”
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