FOLLOW subscribe SHARE March 27, 2017 Good morning. I’m back from a week’s vacation, refreshed and ready to reengage. And I’m happy to start by offering you a story that’s one of the most remarkable I’ve read in some time. Its protagonist is Palantir—the big data company that has scarfed up all the office space in Palo Alto and now boasts a $20 billion valuation. Silicon Valley startups are famed for chutzpah, but Palantir has taken the cake with a recent lawsuit challenging entrenched Pentagon procurement practices. Traditional defense contractors—Raytheon, Lockheed, Northrup, etc.—make their money by cozying up to government officials and securing their place in the so-called “Iron Triangle” of cost-plus contracts at taxpayers’ expense. But Palantir has taken a combative approach, suing the government for pursuing a $6 billion boondoggle of a data-intelligence system rather than purchasing Palantir’s off-the-shelf software at a fraction of the cost. Douglas Philippone, the 45-year-old ex-Army ranger who leads the Palantir effort, eschews diplomacy, saying the Pentagon is pursuing a system that “won’t work and will waste money,” and that the government’s procurement officials must be “either stupid or corrupt.” Steven Brill takes a deep dive inside this extraordinary legal battle in the April issue of Fortune. Brill knows a thing or two about lawsuits—he’s the nation’s most distinguished legal journalist, having founded both the American Lawyer and Court TV. After reviewing all the documents and talking to many of the principals in the case, he concludes it is the most one-sided legal battle he has seen in a long career. The company already has won a preliminary victory in Court. But the court ruling only requires the Pentagon to give Palantir more serious consideration. It doesn’t force the government’s hand. And the entrenched Pentagon procurement system has survived countless reform efforts in the past. Can Palantir really hope to win this time? The answer may lie, not with the courts, but with Donald Trump’s Defense Secretary, James Mattis, and National Security Adviser, H.R. McMaster. Turns out both are familiar with, and said to be fans of, the Palantir system. And it doesn’t hurt that Palantir’s largest shareholder is Peter Thiel—the iconoclastic investor who broke ranks with his Silicon Valley colleagues last year to become an early supporter of Trump. You can read Brill’s extraordinary story online this morning, here. Or you can read it in our April magazine—which still offers readers a very elegant user interface. (Subscribe here.) More news below. Alan Murray @alansmurray alan.murray@fortune.com
Palantir, Trump and the battle to clean up military procurement Palo Alto-based Palantir Technologies has been in an eight-year fight with the U.S. military procurement establishment that blocked it from bidding on an Armydata analytics contract.The result of the battle, which could be determined by the Trump administration, could change how hundreds of billions of taxpayer dollars get spent each year.(Fortune Magazine)
Peter Thiel's data-mining outfit is watching your every move Just as the Cambridge Analytica drama is fading (somewhat) from memory, Bloomberg Businessweek is out with a sobering cover story about Peter Thiel's mysterious data-mining company Palantir. Reported by Peter Waldman, Lizette Chapman and Jordan Robertson, Bloomberg Businessweek's feature opens with previously undisclosed details about an internal program at JPMorgan Chase that was meant to "protect against perfidious traders and other miscreants" but turned into a "spying scandal." (Ad Age)