(Bloomberg) — Palantir Technologies Inc.’s stock fell 7.5% on Friday following a report that a battlefield communications system it worked on with defense tech firm Anduril Industries Inc. was seriously flawed — a claim both companies said was out of date and inaccurate.
The report on Friday, published by Reuters, centered on a September Army memo expressing concerns over Anduril’s NGC2 prototype system, which stands for Next Generation Command and Control, and includes subcontractors Palantir and Microsoft Corp. A representative for Palantir said that, “No vulnerabilities were found in the Palantir platform.”
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In a statement, the Army’s chief information officer also said the problems with the NGC2 system were “identified early and mitigated immediately,” and that the issues were fixed in a controlled testing environment.
Friday’s share move was the biggest decline for Palantir since August, and the stock was the worst S&P 500 performer for the day. The drop follows a remarkable upward trajectory for the company, whose shares have gained more than 2,000% in the last three years. Other tech companies also slipped Friday following threats from the White House to lay off government workers.
Lieutenant General Jeth Rey said that finding security vulnerabilities was an important part of integrating advanced technology in a statement about the report. “We found a risk and we mitigated it right out of the gate,” he said. “I think it’s a good news story for us going forward.”
According to an Army memo dated Sept. 5, reported by Breaking Defense and Reuters, the communications networks for the companies had been vulnerable to “insider threats, external attacks, and data spillage,” with “critical deficiencies in fundamental security controls, processes, and governance,” before the interventions.
Anduril also said that the problems had been addressed. “The recent report reflects an outdated snapshot, not the current state of the program,” the company said. “NGC2 is progressing through the normal process of iterative development, we find risks early, address them quickly, and harden the system before fielding.”
Army CIO Leo Garciga said that the problems identified in the memo were part of the process of updating military technology — something many technologists and defense experts say is badly needed as the nature of warfare evolves. “It’s important to see these memos in the context of modernizing the Army and improving the speed of capability delivery,” he said in a statement, adding that the Army was trying to get new tools to soldiers “in a much more rapid fashion than we have done historically.”
