The Palantir problem Coles could not explain away

For a few days in July, shoppers approaching Coles stores were met by an advertisement that looked remarkably like the supermarket’s own billboard. “Here at Coles, we’re always watching you,” it read in familiar red and white.Community advocacy organisation GetUp had bought digital billboards near hundreds of stores as part of its campaign against Coles’ relationship with contentious US technology company Palantir. The advertisements vanished quickly but the suspicion behind them was far more durable. In September, Coles confirmed the three-year partnership would end, and the technology company whose name derives from Tolkien’s all-seeing stones will disappear from Australia’s supermarket aisles beyond 2027.Signed in February 2024, Coles claims the arrangement bought Palantir’s Foundry and AI tools into more than 840 supermarkets to help with rostering, workforce planning, bakery production, trading performance and supply-chain decisions. The system worked across more than 10 billion rows of operational data from stores, team members, shifts to allocations. That figure sounds enormous although one employee can generate many records over a working day. For customers, the real question is who can access the data and why has Coles never clearly explained those limits?Under Coles’ control, but what about access?Coles has rejected the suggestion that Palantir surveilled shoppers and says the software operated inside Coles’ own environment, under Coles controls, and had no involvement with CCTV, facial recognition or crime-prevention systems. Palantir, according to Coles, did not control the data and could not independently repurpose it. “The software is deployed within Coles’ own environment and is operated and isolated under Coles controls..Palantir does not control the data, nor can it independently repurpose it,” a Coles’ spokesperson said. But what does “isolated” technically mean and what has been accessed?Coles already holds a substantial amount of consumer information through ordinary retailing, including transaction histories, loyalty data, online activity and in-store video. There is no evidence that those customer datasets were fed into Palantir. For University of Sydney retail academic, Lisa Asher, the larger issue is the opacity around sophisticated retail technology. “We don’t know what the technology is behind it, how that data is being used,” she said. “And there’s not a lot of transparency over it.” Her concern extends beyond Palantir to a supermarket environment increasingly filled with self-checkout cameras, loyalty analytics and automated monitoring.About PalantirPalantir’s own reputation – a company that emerged from the US national-security world, received early backing from CIA-linked venture fund In-Q-Tel, has worked with US Immigration and Customs Enforcement or “ICE” on deportation operations and has partnered with Israel’s Ministry of Defence – has made that ambiguity harder to contain. Its co-founder Peter Thiel has become a prominent political donor, even earning a South Park satire last year in which his character demanded children’s personal data and installed AI face detection around a school. Asher believes the public context surrounding Palantir has changed considerably since Coles signed the agreement. “The reality of what this company stands for has now entered public debate,” she said.Retail expert Dean Salakas sees another puzzle, Coles says the technology worked. “If you say this is working really well, then removing it,  there’s obviously more to the story,” he said. From a large retailer’s perspective, replacing technology of this scale is no small exercise and Salakas estimates a tender alone can take around three months, supplier selection and negotiation considerably longer, followed by months of change planning and implementation across hundreds of stores. “its a very short period of time in an organisation like that,” he said.Reputational riskSalakas also says major retail tenders traditionally assess far more than price. During his time running tenders, he says suppliers were judged on both quantitative and qualitative grounds, including financial durability and reputational risk. “You couldn’t just look at what’s the best saving,” he said. “You had to think about reputational risk.” As retailers race to adopt AI, he believes that process is becoming more demanding. “Every CEO should be thinking about that in every tender. Who am I partnering with? What do they do? Do we want to be associated?”Above all, it’s Coles’ own communication that remains the biggest lesson. Salakas believes Coles should be more clear with people. “I think they’ve made a strategic error in the way they’ve communicated,” he said, adding that being cagey just adds to distrust anyway. Asher argues the obligation should extend beyond investors. “If they’re going to incorporate technology and they’re a publicly listed company, there should be greater disclosures required,” she said, “because they owe it not just to their investors, but also to their customers.” Coles may have used Palantir for entirely orthodox operational purposes, but when customers are left to guess who can see their data and what is being analysed, with seldom disclosure on where the boundaries sit, even ordinary technology can begin to feel intrusive.