It is the most political IPO of the year… and also one of the most anticipated.
Palantir, the mysterious US electronic surveillance giant with proven ties to the Trump administration, debuted on the New York Stock Exchange on Wednesday, September 30.
Analysts are forecasting a market valuation of around $ 20 billion, which would make it the second largest IPO in the United States in 2020 (after Snowflake, a Franco-American company specializing in online data storage).
Since its inception in 2003, Palantir has sparked more fantasies and rumors than any other Silicon Valley startup.
Myths that society has been careful not to contradict or confirm, thus contributing to its aura of mystery.
History riddled with controversies
He has been credited with a role in the hunt for Osama Bin Laden, the leader of the Al-Qaeda terrorist movement shot down by the US military in 2011. Palantir has been called a front for the CIA or a technological arm of the CIA. US border police.
As for its algorithms, they have been compared to a Big Brother of Big Data put at the service of the police and all that the American administration has of pharmacies to better monitor the population.
The IPO process, which requires companies to publish their financial records and reveal details of their activities, has helped to put some reason to all of its allegations.
If some of the rumors - especially concerning Osama bin Laden - are not based on anything concrete, this obligation of transparency has nevertheless confirmed that the history of Palantir is riddled with controversies and that the company operates gigantic personal databases for the benefit of agencies not always transparent about the use of this information.
Originally, Palantir wanted to provide a technological response to the post September 11, 2001 terrorist threat. Peter Thiel, the company's president and co-founder, sought to use the power of algorithms to track the movements of individuals suspected of terrorism and anticipate possible attacks on American soil.
The idea quickly won over In-Q-Tel, the CIA's investment fund, which loaned Palantir more than $ 2 million in 2004 to expand.
It was this initial alliance with the financial arm of the intelligence service that shaped the image of a start-up serving American spy services.
However, today, In-Q-Tel's share in Peter Thiel's group is almost non-existent.
To impose its solutions, Palantir has never hesitated to use methods that are at the very least aggressive.
The start-up thus provided its data analysis platform to American soldiers in Afghanistan, even though it had not been hired by the Ministry of Defense to do so.
This policy of fait accompli enabled him to land his first major contract with the Pentagon in 2006, in a hurry to regularize a legally dubious situation.
The start-up's algorithms have, among other things, made it possible to create maps indicating areas in Afghanistan where anti-personnel mines were likely to be found, based on the history of previous explosions.
Hunting illegal immigrants
In 2013, Palantir had succeeded in allowing a dozen other administrations, such as the Department of Health, the FBI, the NSA, the special forces or even military aviation, to benefit from its mastery of Big Data.
But his collaboration, since 2011, the most controversial remains that with the American border police (ICE, Immigration and Customs Enforcement).
Initially, Palantir was supposed to develop technological tools to help fight “international criminal networks and terrorism”, recalls a study conducted in 2019 by the NoTechForICE collective.
After the arrival in 2016 of Donald Trump at the White House, the start-up's algorithms were used to better apply the hunt for illegal immigrants promoted by the new Republican president.
Palantir then became the technological symbol of this migration policy considered inhuman by human rights organizations.
The refusal of the managers of the start-up to give in to calls to withdraw from this contract, while other groups like Microsoft had put their collaboration with the ICE on hold, contributed to deteriorate the image of Palantir.
This attitude also reminded the general public of the closeness between Peter Thiel and the Trump administration.
The Californian billionaire, who defines himself as libertarian and conservative, was one of the few entrepreneurs in Silicon Valley to stand up for Donald Trump in 2015. He worked for the transition team of the Republican candidate after his victory in the 2016 presidential election and counts General Michael Flynn, Donald Trump's former national security adviser, among his most ardent supporters.
Palantir has taken advantage of this political positioning, since it has added a dozen administrations to its client register since the beginning of the Trump era.
Zero profit
In its financial documents for the IPO, Palantir ignores its work for the ICE or its political proximity.
The start-up prefers to highlight its real successes such as its participation in the dismantling of a cell in the United States of the Mexican drug cartel Las Zetas or, even, the use of its platform by the police to coordinate a vast operation against New York gangs in 2018.
But Palantir doesn't just work for the US administration.
More than 40% of its turnover comes from the private sector and its international contracts.
The company works with large groups like Boeing or law firms.
It was, for example, its algorithms that enabled lawyers for the victims of financier Bernie Madoff to discover the extent of the fraud in 2009.
It has also set up in France, where it has been working with the DGSI, the intelligence service, since 2015, after the November attacks in Paris.
With such a network of clients, you might think Palantir is a profit machine.
Not at all: the Big Data “giant” has never made a profit and recorded $ 600 million in losses in 2019. Its problem?
To woo its new customers, Palantir offers one year of access to its platform at a very reduced price and the prices increase gradually thereafter.
It is a way of retaining customers… if they are satisfied.
And this is not always the case, far from it.
Most American police services have cut ties with the start-up, arguing that the rates were too high for the quality of the service offered, reports the Washington Post.
Promising contracts, especially with banks, have also fallen through.
Clearly, Palantir has above all succeeded in gaining a controversial reputation as a Big Brother who does the dirty technological work for the administration of Donald Trump, without really getting rich in the process.
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