If they truly have insider government backing, they may never collapse for the same reason as GM, Lockheed Martin, Raytheon, etc. If your backer is a state with access to a printing press, failure is synonymous with either failure of said state or loss of political favor. Such entities are de-facto government agencies and are not subject to the normal rules of economics.<p>From the government&#x27;s POV the advantage of creating and sustaining these kinds of private sector de-facto government agencies is that by being nominally private they escape reams of government red tape as well as FOIA and congressional oversight requirements. You get all the (ironically) privacy benefits of being private but are still more or less a government agency. It&#x27;s basically a cut-out. The CIA is fairly well known to do this a lot since it also lets them conduct domestic operations that are technically forbidden to them. It&#x27;s also done for a lot of black project government R&amp;D to exempt said projects from disclosure requirements that would bust their secrecy.<p>As with all government activities, whether this practice is &quot;evil&quot; or not depends quite a bit on the details of what is being done and why. Federal red tape is so onerous that to some extent you <i>have</i> to escape it to get certain kinds of work done at all.<p>I don&#x27;t know just <i>how</i> in bed Palantir is, but they certainly seem to be such an entity from an outsider&#x27;s perspective.