US government sues Palantir over recruitment practices

Palantir, the secretive data analytics company that has long relied on a reputation for hiring some of the top engineering talent in Silicon Valley, is facing a threat to a core part of its business after being sued by the US government over its recruitment practices.

The Department of Labor issued a complaint on Monday accusing the company of discriminating against Asians, who made up an overwhelming majority of applicants for job openings at the company that were studied by the department.

The challenge, filed before the department’s administrative law judges, seeks to cancel Palantir’s US government contracts and bar it from applying for any more until it has fixed the alleged shortcomings.

A ban would be financially damaging for the company, which traces its roots to working on antiterrorism and other national security projects. But while government work is still a big part of Palantir’s business, it has branched out into working with commercial companies — including many large banks — that have come to account for the majority of its business.

Earlier this year, it teamed up with Credit Suisse to develop data-driven analysis to identify rogue traders and insider dealing.

Palantir is one of the highest valued private technology start-ups in Silicon Valley, after Uber and Airbnb, raising funds last year at a valuation of $20bn.

The Palo Alto-based start-up, which takes its name from the seeing stone in Lord of the Rings, counts In-Q-Tel — the CIA’s venture capital arm — among its earliest investors.

In a statement on Monday, Palantir rejected the government’s claims and said it intended to “vigorously defend against these allegations”.

“Despite repeated efforts to highlight the results of our hiring practices, the Department of Labor relies on a narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011,” it said.

The complaint is tied to openings for three types of engineering position that were studied by the regulators. Asians made up between 73-85 per cent of the applicants for each of the positions, but ended up getting fewer than half the positions available in each category, the labor department said.

In the most striking example, only four out of 21 positions for an engineering internship went to Asians despite the high application rate, something that had only a “one in a billion” likelihood of happening by chance, according to the complaint.