Spain blacklists Palantir from public and private contracts over security risks

Spain just told Palantir to pack its bags. Or at least, to stop unpacking new ones.

On July 1, the Spanish government issued a directive through SEPI, the state holding company that oversees the country’s publicly owned enterprises, instructing its portfolio companies to avoid entering new contracts with Palantir Technologies. The reason: concerns over classified national security information and what officials see as risks to national sovereignty.

The directive targets firms operating in defense, communications, and infrastructure. We’re talking about heavyweights like Telefónica, defense contractor Indra, and naval shipbuilder Navantia.

What’s actually happening

Here’s the thing: this isn’t technically a ban. It’s not legislation. It’s not even a formal regulation.

It’s more like a strongly worded internal memo with teeth. SEPI is directing the companies it controls to exercise “vigilance” regarding sensitive data, which in practice means no new Palantir contracts.

That distinction matters. Existing contracts remain intact, at least for now. Palantir’s most notable Spanish deal, a contract worth approximately €16.5 million with CIFAS (the Centro de Inteligencia de las Fuerzas Armadas, Spain’s military intelligence center), runs through November 2026. So the company isn’t getting kicked out mid-project. It’s just not being invited back.

The company, co-founded by Peter Thiel and led by CEO Alex Karp, has long positioned itself as the Western world’s answer to authoritarian surveillance tech.

A European pattern emerges

Spain isn’t acting in isolation. France announced similar restrictions on June 10, specifically linked to Palantir’s operations. Germany has been having its own version of this conversation.

The concept driving all of this is “digital sovereignty.” The basic idea is that nations should control their own critical data infrastructure rather than outsourcing it to foreign companies, particularly ones whose other clients include the CIA and the Pentagon.

The market angle

Palantir is a publicly traded company with a market cap that reflects heavy reliance on government contracts. If the European market starts systematically closing doors, investors will need to reprice that revenue stream. The immediate market reaction has been minimal, which makes sense given that the CIFAS contract alone is relatively small.

For Palantir specifically, the company may need to fundamentally restructure its European operations. Options could include establishing legally independent European subsidiaries with ring-fenced data, partnering with local firms, or accepting that certain markets are simply closing.

Spain’s directive may not be a formal ban, but it functions like one. And when three of Europe’s largest economies are all having the same conversation within weeks of each other, calling it a trend is probably an understatement.

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