Elon Musk Expands Control Over US Agencies While Alex Karp Struggles To Maintain Pentagon Ties

Key Takeaways

• The Department of Government Efficiency, led by Tesla boss Elon Musk, has gained unprecedented access to U.S. federal agencies and their data.
• Musk’s cost-cutting team has been described as gaining “God mode” access to the United States Agency for International Development.
• In contrast, Palantir, a prominent defense contractor, is struggling to keep its close ties with the Pentagon.

Elon Musk’s leadership of the Department of Government Efficiency (DOGE) has significantly increased his influence and control within the U.S. government.

In addition to mass layoffs and budget cuts, DOGE has gained unprecedented access to some federal U.S. agencies and their critical data.

Meanwhile, Palantir Technologies, a prominent defense contractor led by CEO Alex Karp, is facing challenges in maintaining its relationship with the Pentagon.

Elon Musk’s DOGE Gains Control

Under Musk’s guidance, DOGE has aggressively targeted federal agencies to deploy massive layoffs and defunding rounds.

So far, critical departments of the U.S. government, including Education, Energy, and the United States Agency for International Development (USAID), have been impacted.

These sweeping actions have been justified as promoting efficiency but have been criticized for impacting the U.S. government’s essential services.

Critics have also raised concerns about the amount of sensitive data Musk’s DOGE can now access and control within the government.

Talking to The Atlantic , a USAID employee in senior leadership claimed DOGE had gained “God mode” in unrestricted access to the agency.

Elsewhere, DOGE has gained access to NASA, and is expected to enter the IT systems of the CDC and Federal Aviation Administration.

DOGE is also reportedly seeking access to the Internal Revenue Service’s Integrated Data Retrieval System, which would allow the Musk-led team to view American citizens’ tax records.

Palantir’s Struggling Pentagon Relationship

Palantir Technologies is currently facing challenges in maintaining its relationship with the Pentagon.

The Trump administration aims to cut $50 billion in U.S. defense programs over the next five years, directing an 8% annual reduction in the overall budget.

This directive has raised concerns for companies like Palantir, which derive a significant portion of their revenue—over 40% in Palantir’s case—from U.S. government contracts.

Following the announcement, Palantir’s stock experienced a notable decline on Wednesday, Feb. 19, dropping 10% to $112.06 per share, with an additional 5.2% decrease after hours.

By Monday, Feb. 23, shares had fallen 27% over the past four days, marking the stock’s worst four-day performance since May 2022.

Alex Karp Defends DOGE

Despite these concerns, Karp has defended the Trump administration and Musk’s cost-cutting efforts.

“The single best thing that helps my company is meritocracy,” Karp said at an ECNY event on Tuesday, Feb. 26.

“We have hundreds of contracts. I don’t know, maybe there’s a contract that doesn’t deserve to be renewed. Maybe there’s a contract that does deserve to be renewed that gets cancelled.”

Although DOGE’s sweeping cost cuts have the potential to harm Palantir’s relationship with the Pentagon, Karp appears to remain in line with Musk and Trump’s way of thinking.

“Pen test everything. Test the unit economics,” he told the ECNY conference.

This is not the first time Karp has complimented Musk, Trump, and DOGE.

During the company’s quarterly earnings call on Monday, Feb. 3, the Palantir CEO said : “We love disruption, and whatever is good for America will be good for Americans and very good for Palantir.”

“Disruption, at the end of the day, exposes things that aren’t working,” he said. “There will be ups and downs. There’s a revolution. Some people are going to get their heads cut off. We’re expecting to see really unexpected things and to win.”

Alex Karp Announces Share Sale

Karp’s recent comments come after his announced plans to sell up to 10 million shares in his company, potentially valued at $1.23 billion, by September.

Although insider sales can be routine, the timing of the budget cut discussions raised further concerns among investors about the company’s future prospects.

Before the Feb. 18 stock drop, Palantir had been a consistently top-performing stock in the U.S. for the past two years.

The defense contractor even experienced a 50% increase in its share price within the last twelve months.