- The big data tech unicorn Palantir has filed to go public via a direct listing.
- Palantir relies on Amazon Web Services and Microsoft Azure to run its software, and this could pose a risk to its business if those cloud providers face disruptions.
- Because Palantir works with organizations like Immigrations and Customs Enforcement, this controversy has also followed AWS.
- Visit Business Insider's homepage for more stories.
The tech unicorn Palantir, which just filed to go public via direct listing, says its big data software is made possible thanks to cloud platforms from Amazon Web Services, Microsoft, "and other third parties."
Palantir builds software that helps companies analyze and mine large troves of data, largely hosted from the cloud. In Palantir's S-1 filing to go public, which was released Tuesday, the secretive startup says that it relies on those cloud providers for many key parts of its business, from hosting the product, to billing and order management, to accounting.
Palantir has drawn controversy both within and outside the company for its work with Immigrations and Customs Enforcement, the agency tasked with enforcing President Donald Trump's controversial immigration policies. The controversy has come to follow AWS, which has long been known to host Palantir's software. However, the S-1 reveals for the first time that Palantir is a user of the Microsoft Azure cloud, as well.
The S-1 does not specifically say how much it spends on AWS or Microsoft. However, it does say that over the next five-plus years, it has about $1.5 billion in "noncancelable purchase commitments," which it says is primarily related to cloud hosting services. In June, Palantir entered into an additional $45 million commitment for cloud hosting services, as well, though it did not say in the filing with whom the agreement was made.
AWS declined to comment. Business Insider has reached out to Microsoft for comment.
Controversy has followed AWS
Palantir has come under fire from activists because it reportedly sells software to ICE, which it's said to use to build profiles of undocumented immigrants and plan workplace raids. Despite the controversy, Palantir renewed its contract with ICE almost exactly a year ago.
Palantir's work with ICE has also sparked protests against Amazon. The immigration advocacy organization Mijente, for example, brought a giant cage to the Burning Man festival to protest Amazon and Palantir's work with ICE. Not long before, activists interrupted an AWS keynote in protest of Amazon's ties to Palantir.
Read more: Palantir, a secretive tech company started by members of the 'PayPal mafia' with close ties to the Trump administration, could be one of the biggest tech IPOs ever. Take a closer look at how it makes money
In 2018, a Medium blog post said over 450 Amazon employees wrote to CEO Jeff Bezos demanding it to stop working with Palantir. Employees also confronted Bezos at an all-hands meeting and circulated another internal letter demanding that Amazon stop working with Palantir and take a stand against ICE.
Risks of working with AWS and Microsoft
While Palantir depends on AWS and Microsoft to run its business, this also comes with risks, the S-1 says.
One risk is that if any of these clouds face any disruptions or security issues, it could negatively impact Palantir's business because it could lead to failures in its own products, the company warns in the S-1. Issues like denial of service attacks, phishing attacks, and computer viruses on these clouds could also damage Palantir's reputation, interrupt its operations, and increase its expenses, the company says.
Likewise, Palantir — and the clouds it relies on — operate out of data centers that are vulnerable to natural disasters like an earthquake or flood. The filing also warns of risks like terrorist attacks or a public health crisis like the ongoing coronavirus pandemic.
This could also damage Palantir's brand, causing customers to not renew their contracts or to decrease their use of Palantir.
"If we experience disruptions, failures, data loss, outages, or other performance problems, our business, financial condition, and results of operations could be adversely affected," the S-1 said.
The S-1 also notes that AWS, Microsoft Azure, and other third parties are not obligated to renew their agreements with Palantir on "commercially reasonable terms," and if they were to increase their pricing terms, end their contract or change it in an unfavorable, or establish better relationships with Palantir's rivals, Palantir may switch to a different cloud provider.
"If we are required to transfer to other cloud providers or invest in a private cloud, we could incur significant costs and experience possible service interruption in connection with doing so, or risk loss of customer contracts if they are unwilling to accept such a change," the S-1 said.
Do you work at Palantir, Microsoft, or AWS? Got a tip? Contact this reporter via email at [email protected], Signal at 646.376.6106, Telegram at @rosaliechan, or Twitter DM at @rosaliechan17. (PR pitches by email only, please.) Other types of secure messaging available upon request.
Disclosure: Palantir Technologies CEO Alexander Karp is a member of Axel Springer’s shareholder committee. Axel Springer owns Insider Inc, Business Insider’s parent company.
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