What is Palantir doing in Israel?

Two weeks ago, Alex Karp, co-founder and CEO of software company Palantir Technologies (NYSE: PLTR), landed in Israel. Palantir was borne aloft by the growing trend of Big Data, years before OpenAI and similar companies arrived on the scene.

Karp, a Jewish resident of Silicon Valley, came to a public event at Tel Aviv University, and in a hall packed with students, journalists, and tech workers, mainly spoke about entrepreneurship and technology, but also showered praise on Israel.

In recent years, Palantir has become one of the most intriguing contractors of Israel’s security forces. The fact of such cooperation is no secret: immediately after his appearance at the university, Karp travelled to military headquarters in Tel Aviv, where he signed an upgraded agreement with the Ministry of Defense, and was even photographed with Danny Gold, head of the Israeli Directorate of Defense Research & Development (DDR&D), who became well known as the manager of the development of the Iron Dome missile defense system.

The picture didn’t appear in the Israeli press, but did make it to Bloomberg, which reported that Israel was set to buy from Palantir an AI-based system called AIP, designed to assist decision making on the basis of intelligence, and capable of analyzing enemy targets and proposing combat moves. Palantir expects revenue in the tens of millions of dollars from the agreement with Israel.

Just what is Palantir doing in Israel’s defense establishment? None of the parties would elaborate. Last summer, however, the company did allow a reporter for "Time" magazine a peep into its offices in London, from which the company fulfills an important role in the war in Ukraine. One of the most intriguing products that the company offers, according to "Time", is MetaConstellation, a system for managing aerial photographs from a huge network of satellites. Palantir enables the Ukrainians not just to gather extensive intelligence with the satellite photographs and to track intelligence targets, but also to respond to the intelligence quickly, in what is known as a very rapid "find, track, target, and prosecute" cycle.

Sharing classified information

A dilemma for armies and law enforcement agencies when they work with a private company, especially a foreign company, is over how much classified information to share with it, and where the information should be stored. Through its data cloud, Palantir facilitates data processing and storage at local sites. The company works with Microsoft, which recently launched its Israel cloud region on the basis of a server farm in Israel. Even so, in the end the data is in the code of a US company.

Even if Palantir receives intelligence information, Western armies are capable of exporting classified information by turning it into a non-classified signal. The signals are transmitted to the private companies, undergo analysis, and only when insights or anomalies are found are they transmitted back to the intelligence unit.

Palantir is believed to be finding it difficult to gain entry to the Israeli defense establishment, and it is certainly not at the heart of Israeli operations as it is in Ukraine. It is understood to be a partner in aspects of logistics and manpower management in the Israeli military, but it does not work with military intelligence. After examining its system, the IDF’s 8200 signals intelligence unit and the Israel Security Agency (Shin Bet) decided not to hire its services.

In order to work with Palantir, security organizations have to accept its unusual service model: besides software, Palantir provides analysts, AI experts who assist in deriving insights from the system. The fact that armies cannot work with the system by themselves creates several dilemmas in Israel. First of all, the security organization in question has to talk about classified information with the employee of a company that is not Israeli. Secondly, the organization becomes dependent on the analysts.

An Israeli company is preferable

"There are companies in Israel capable of developing systems that do what Palantir does," claims a senior person in the defense market who refused to be identified. "It’s regrettable that the defense establishment uses US aid funds when it could long ago have invested in one of the other defense companies in Israel. It’s easier to rely on an Israeli company and to allow it deeper into the security systems."

Dr. Liran Antebi, a senior researcher at the Institute for National Security Studies believes that the Israeli defense establishment has a great deal to gain from working with a company like Palantir. "At the rate at which artificial intelligence is developing around the world, it’s not certain that we can provide everything by ourselves. There’s a global arms race in this area, but Israel has no artificial intelligence strategy, and so its status in this field is eroded.

"It’s therefore important to bring systems like those of Palantir into use, to study its capabilities, if only in order to understand what will very soon be accessible to our enemies."

Had Israel been a customer of Palantir, could the disaster of October 7 have been prevented? The answer is probably no, since Palantir can only work on the information available to it.

Shay Michel, managing partner and head of the Tel Aviv office at Merlin Ventures, which grew out of the US defense industry, says, "In the end, as we saw on October 7, the problem is not with artificial intelligence. It doesn’t matter how much of that we have, the decisions will always have to be made by human beings.

"Even without Palantir, we have excellent systems today. The question is the degree of arrogance and lack of seriousness at the human level, and that’s where it’s important to have someone who knows how to make decisions more sensitively."

Published by Globes, Israel business news - en.globes.co.il - on January 29, 2024.