Palantir CEO Alex Karp is warning that companies facing unlimited legal liability will end up partly owned by the government, and that the process could hit the whole stock market — bad news for those companies' shareholders.

• Karp argues that once a business faces unlimited liability from lawsuits, its only escape is handing the government a big stake, around half the company.
• Each step of that process would wipe out value: the handover itself, then government people joining the board, and so on.
• He says the damage might not stay contained and could drag down the entire market.
• Without nationalization, he expects a flood of lawsuits from clients, which is why he sees a government takeover as unavoidable.

Outlook: Expect more debate over who is on the hook for liability at big tech and AI firms, with Karp betting the answer ends in government ownership.