Palantir Technologies: Intelligence as a Service
Intelligence Agencies are well versed in the adage that “Knowledge is Power”. One company can offer this, but in doing so, they must be the single guardian of that power.
When one reads about platforms facilitating transactions or spurring innovation, it is not often that one envisions something beyond traditional business and consumer markets. However in government, platforms and their inherent capabilities are beginning to reshape the way information is produced and shared among agencies. One compelling, perhaps even vital use case for platform technology is intelligence gathering and dissemination, and the data analytics company Palantir Technologies, valued at over $40B, appears to be tipping this space.
The Intelligence Ecosystem
The United States Government has sixteen intelligence agencies in total, stretching across the Departments of Defense, Energy, State, Homeland Security, Treasury, Justice and the Central Intelligence Agency. This fact alone is enough to appreciate how much diverse intelligence data accumulates among the hundreds of thousands of individuals comprising this complex ecosystem. Now imagine the difficulties in sharing intelligence across these agency boundaries. Each department has defined protocol, layers of classification, jurisdiction and idiosyncratic procedures, yet these fairly defined boundaries cannot afford to create walls between agencies. Nefarious human activity in the 21st Century is inextricably linked, from small scale criminal activity to full scale conventional threats, both domestic and abroad. Pooling resources and Intelligence access is paramount to uncovering patterns and linkages that underlie this spectrum of activity.
Palantir is a private company, founded by Peter Thiel, that has recently won several large scale government contracts, a concerted effort by a company looking to be the platform of choice that integrates this diverse ecosystem of intelligence. In commercial terms, it is fast becoming a Google-Facebook hybrid of Intelligence data collection, employing a powerful search engine that comprises agency data sources, unstructured cable traffic, structured identity data, email, telephone records, spreadsheets and network traffic. Not only does Palantir provide search and discovery capabilities, they enable analytical applications, knowledge management tools and secure collaboration forums. Privacy is not a luxury afforded to individuals using the network; every user action on the site is tracked and logged to ensure version control, robust paper trails and incentivized collaboration.
In becoming a centralized data receipt, processing, refinement, management, storage and access hub for intelligence agencies, Palantir hopes to mitigate the very real dangers of siloed intelligence networks. The platform will allow operational planners full reach across an amassed sea of data to make informed decisions. Additionally, if used properly, the platform prevents redundant work by intelligence analysts, thus freeing up resources for the unquenchable demand by operators. Positive feedback loops are the rocket fuel that drives platform growth in the commercial sector, and this is no different for intelligence. More engaged users from diverse agency backgrounds contribute to higher quality, multi-dimensional intelligence, which in turn incentivizes other agencies to pound at the door of contract officers and gain access to this intelligence oil well.
When it comes to monetizing a platform in the government space, Palantir has no choice but to compete for individual, agency level contracts. It’s a lot less smooth than amassing individual users on platforms like Facebook and Google, however single contracts yield windfall top lines. In 2019, Palantir along with BAE systems signed an $823 million contract to replace the Army’s Distributed Common Ground System (DCGS), the first Silicon Valley based company to be awarded a program of record. That same year, they won a $111 million contract to manage the Army’s human resources, supply chain and equipment data. And if that were not enough, this year they won a sole source contract with the US Navy for $80 million to manage logistics for warships and aircraft scattered across the globe.
Is this Sustainable?
The simple answer is – most definitely yes, should Palantir continue to win contracts across highly interlinked spaces. This is what worries some who predict a monopoly on the horizon. Contracts with intelligence, human resources and logistics are evident that Palantir is capitalizing on a “winner takes all” strategy, banking on the assumption that data collection is agnostic to both agency and functional boundaries, including the intelligence ecosystem. If this strategy pays off, there is little point in considering competition – the required overhaul of data so intertwined between agencies would be nothing short of a nightmare. The transition period would cause power outages in intelligence supply, unacceptable in a world where the threat never sleeps.
Successful collaboration among a diverse Intelligence ecosystem naturally yearns for single, plug and play platform, and Palantir Technologies is racing to be the winner that takes the prize. It begs the age old question, however, does heightened safety and security warrant absolute power in the hands of one privately held company?
Student comments on Palantir Technologies: Intelligence as a Service
I guess in my mind, the very obvious counter to the sustainability of the model is regulation. Will the U.S. government allow a private institution to hold that much power? I would err on the no side. Does that mean Palantir will get nationalized? I don’t think so either, but I can envision a world in which it gets turned into a public private partnership, with capped profits and stringent operating restrictions. Along a similar vain, the company has been rumored to go public for a while now. But can a company of such national interest be governed by a select number of large private shareholders who might have very different incentives that are not in the best interest of the country at large? Would be a very interesting proposition to see, but maybe that is part of the reason why the IPO has still not happened to this day.
Hey, interesting article!
I believe the network effect could have a debatable impact. As you explained there is a positive effect, as the more agencies the more value would be added to the platform – as more information would be shared. But this network could also have a negative effect. The more player there are on this platform, the more liability there would be, even if we can track the use and access to information. I believe some agencies would prefer to limit access to sensitive information (like ship logs) and that could deter them to join such network.