Palantir CEO Alex Karp claims AI companies are stealing customers’ data while charging them for unproductive tokens — says ‘livid’ businesses ‘are paying for tokens that create no value’

Alex Karp, CEO of well-known AI data analytics company Palantir, delivered quite the bombshell of an interview to CNBC‘s Squawk Box. Although the interview’s topic was about the firm’s partnership with Nvidia, apropos the recently launched Sovereign AI OS Architecture, Karp bluntly claimed that frontier AI companies like OpenAI and Anthropic siphon customers’ valuable information while delivering questionable value.

He continued by stating that American enterprises are quietly “livid,” as “they are paying for tokens that create no value,” and that the AI players “are stealing [their customers’] weights and alpha.” The latter items refer to customers’ business processes and interconnections between their data, along with the data itself. Palantir’s shares jumped about 9% the day of the interview, while those of other AI companies experienced a dip.

For context, many of Palantir’s products are on-premises solutions or a variation thereof, and they carry a truckload of certifications like the DOD-required CMMC Level 2 or ISO27001/17/18. Karp’s business also alleges that it does not train any models and merely utilizes other entities’, without retraining them with customer data. Instead, the company’s particular approach is coined “ontology” and, as a simplification, focuses on business data classification, entity definitions, and behavior.

Improving the training of an LLM requires an influx of new and improved information, which is why Karp claims that frontier labs are double-dipping by both selling customers LLM utilization all while using their data for improving said LLMs — in other words, the risk for a customer is that they’re arguably teaching the bots’ abilities and information that could get their business easily replicated and potentially replaced.

He puts the value of a token in question by using an old business analogy: if the frontier players supposedly generate so much value for their customers, why don’t they treat it as an investment and charge a percentage of said value? Not too long ago, Palantir CTO Shyam Sankar shared the same view in an equally abrasive manner: “more tokens means more slop,” questioning the productivity gains of the “tokenmaxxing” fad that tech leaders like Nvidia’s Jensen Huang have promoted.

Karp is likewise not too keen on the promises that frontier companies make about data harvesting, calling Silicon Valley’s general attitude of “you can trust me because I never lied” straight-up “B.S.” He further notes that enterprises want to know who owns the data, where it is cached, and whether the prompts are secure, while also taking a dim view of services that then rely on third parties, as those might not be bound by the same contractual obligations. Furthermore, he described the notion of the Silicon Valley zeitgeist applying its views to defense-related information as effing insane [sic].

A portion of the world has a dim view of Palantir’s defense-related business ethics, something that Karp acknowledges, all while displaying at least some self-awareness that Silicon Valley leadership arguably lacks. He plainly states that he too profits from the aforementioned practices, though there’s little doubt his talking points serve the interest of selling on-premises services.