By Joseph Menn
SAN FRANCISCO (Reuters) - A group advocating ethical investing will ask backers of tech analytics company Palantir Technologies to push for changes to its business practices, a rare case of coordinated shareholder action against a privately held company.
The Investor Alliance for Human Rights, which claims more than 150 institutional members representing $4 trillion in managed assets, faults Palantir for contracts with government agencies including U.S. Immigration and Customs Enforcement.
“Through its multimillion-dollar U.S. government contracts, Palantir has played a mission critical role in enabling ICE (NYSE:ICE) to carry out its activities,” the group said in a presentation provided to Reuters in advance of its announcement. “The company is failing to fulfill its human rights responsibilities.”
Palantir said the report was misleading. “We always welcome an honest and open dialogue when it comes to complex societal issues, so it is disappointing to see a one-sided view,” said Courtney Bowman, Palantir’s director of privacy and civil liberties engineering.
Though Palantir itself is private, the group says investors include such publicly traded entities as BlackRock (NYSE:BLK), Allianz (DE:ALVG) and Alger Capital. The company is looking to raise another private financing round that would value the company at $25 billion, Reuters reported in September. It was co-founded by prominent venture capitalist Peter Thiel, who spoke at the 2016 Republican convention in support of then-candidate Donald Trump.
“The relative impunity of private companies heightens the risks of human rights impacts, increasing the need for private equity investors to push those companies through other means to respect human rights,” said alliance Director Paloma Munoz Quick.
The alliance last year criticized Amazon.com (NASDAQ:AMZN) Inc's human rights record, helping prompt unsuccessful shareholder resolutions on activities including the company’s sale of facial-recognition software. Amazon last week published its "global human rights principles" in which it acknowledged a “responsibility to respect and uphold internationally recognized human rights through the ethical treatment of our workforce and those within our value chain.”
Kate Elliot, senior ethical researcher at London-based Rathbone Greenbank Investments, an Alliance supporter, said she would raise human rights with Rathbone portfolio company RELX, formerly Reed Elsevier (LON:REL), which has a venture investment in Palantir.
“They are not immune from reputational damage because it’s a venture project,” Elliot said.
Microsoft (O:MSFT) and Alphabet's (O:GOOGL) Google have also drawn attention this year for venture investments in startups that critics say might have fallen afoul of those companies’ stated principles on facial recognition and artificial intelligence technologies.
Microsoft invested in Israeli firm AnyVision, whose facial recognition gear has been deployed by Israeli authorities at Palestinian checkpoints.
After media reports that AnyVision's gear was used for mass surveillance in Palestinian territory, Microsoft said such use “would violate our facial recognition principles" and last week hired former U.S. Attorney General Eric Holder to audit AnyVision's compliance with its ethics guidelines.
Google investment arm Gradient Ventures, meanwhile, has backed Cogniac, whose software is used to quickly process images from the battlefield. Google’s published principles include a commitment not to deploy AI for “weapons or other technologies whose principal purpose or implementation is to cause or directly facilitate injury to people.”
Google said Gradient investments follow the parent company principles but declined to discuss the Pentagon image processing.