Your Data, Their Dividends: How Government Outsourcing Erodes Democratic Transparency
A protest against President Donald Trump and Elon Musk outside the U.S. Capitol on Presidents’ Day, February 17th, 2025. Photo courtesy of Jason Gooljar.
In the name of efficiency and cost reduction, government agencies continue to outsource essential functions such as data processing, cloud hosting platforms, financial systems, and health services to private contractors, enabling corporations to monopolize Americans’ data. Palantir USG—a subsidiary of Palantir Technologies—is a data and analytics software company that exemplifies this trend. The company, which provides data-management solutions to federal agencies, recently secured a $217.8 million contract with the Department of Defense. Palantir was among 18 other companies as part of the Space C2 Data Software Services contract—aiding in combat decision-making by providing data to military leaders from disparate sources.
However, increasing privatization of core government functions enables corporations like Palantir to leverage secrecy laws, reclassifying public information as assets. This results in accountability gaps where constitutional oversight should exist. By concentrating governmental power in private entities not subject to public records laws, systematic privatization diminishes Americans' access to data about their government and the world they live in, which is a necessary precondition for meaningful democratic participation.
The data-broker industry—valued at approximately $434 billion in 2025 and estimated to surpass $616 billion by 2030—continues to draw attention from federal regulators for the risks it poses to American consumers. These risks include data breaches of sensitive personal information, discrimination in housing and employment, as well as dragnet surveillance by government agencies without proper legal process. Despite these concerns, the industry continues to grow rapidly, driven by the profitability of personal data. As data becomes increasingly privatized, so does its worth. The value of intellectual property (IP) is rooted in its exclusivity; owners can exclude their competitors from accessing an asset and its future economic benefits. Individual-level data is in high demand among data brokers, who sell it at a premium to other companies that seek to use it for targeting ads, strategizing business decisions, and more.
The privatization of government functions continues to rapidly expand, with the U.S. federal government spending nearly $755 billion on contracts in 2024 alone. Among these contracts, Palantir’s close integration with U.S. Immigration and Customs Enforcement (ICE) is particularly alarming. Palantir describes itself as a “data processor” with no direct role in the decision-making process. The company utilizes a software system, ImmigrationOS, to track immigrants in real time. ImmigrationOS is described as a tool to streamline deportation logistics from “identification to removal.” The company uses centralized federal information, such as IRS tax data and passport records, to locate immigrant populations. This data is transferred into Palantir’s private proprietary systems, which lack important public oversight. ICE and Palantir have not disclosed how ImmigrationOS integrates data, how many people are tracked, or how it flags certain individuals.
The lack of public oversight raises the risk of algorithmic bias, which further erodes government accountability and transparency. ImmigrationOS’s AI-driven systems are designed by select individuals, who decide what data is included and what gets overlooked, which results in biased judgment influencing the tool’s algorithm. Building mass surveillance systems without close oversight, independent auditing, and mandatory bias testing can lead to misidentification and misuse—critically impacting vulnerable individuals facing wrongful detainment and prosecution.
Similarly, President Donald Trump allowed agency heads to provide the Department of Government Efficiency (DOGE) with access to Americans’ Internal Revenue Service (IRS) data, Social Security records, wage information, and federal payment systems. Especially seen during Trump’s administration, these contract deals lack essential ethical safeguards designed to prevent the misuse of government information. This includes private data such as economic performance, which could be exploited for personal purposes. The lack of protection in a centralized database also significantly increases the risk of individuals having their personal data internally mishandled or leaked.
Both Palantir and DOGE continue to leverage legal mechanisms to bypass public records laws, exploiting special exceptions under the Freedom of Information Act (FOIA). While FOIA operates on a principle of transparency, Exception 3 permits agencies to withhold records when a separate statute specifically authorizes withholding records. Over the past decade, Congress has passed an increasing number of statutes circumventing FOIA’s presumption of public openness. Although Exception 3 can serve a legitimate purpose by allowing Congress to protect national security interests and confidential data, lobbying efforts have driven the creation of additional laws that serve their interests. Lobbyists continue to successfully propose excessive Exception 3 statutes that abuse FOIA’s actual intent. Several Congress members have also expressed concerns about its misuse, as these statutes threaten public access to information, which is essential for having a transparent democratic process. A democracy cannot meaningfully function when this vital information is inaccessible to the public it is supposed to serve.
The growing outsourcing of government functions demands substantial reform, especially regarding careful oversight of secrecy laws and abuse of FOIA statutes. As Americans continue to lose access to information about their health, public safety, demographics, environment, and employment, their ability to hold the government accountable and make informed decisions erodes. The risks of unchecked privatization also remain particularly critical in systems like ImmigrationOS, which lack public visibility on decision-making that deeply impacts thousands of lives. Government transparency and corporate accountability are vital where power is concentrated across overlapping private and public entities.
Elif Sahin (GS ‘27) is a staff writer at CPR studying political science and statistics. She can be reached at ees2219@columbia.edu.