US Bans Anthropic, Gives OpenAI Pentagon AI Contract
The U.S. government has designated AI firm Anthropic a “supply chain risk” and banned it from all federal contracts over safety concerns. Within hours, rival OpenAI announced a new multi-year deal giving the Pentagon access to its most advanced models, cementing its position as the government's preferred AI partner.
The dispute escalated after months of negotiations over Anthropic's insistence on "red lines" to prevent its AI, Claude, from being used for mass domestic surveillance or in fully autonomous weapons systems. The Pentagon, however, demanded access for all "lawful purposes," leading to an impasse. Defense Secretary Pete Hegseth announced the "supply chain risk" designation, a measure historically applied to foreign adversaries, which could prevent military contractors from using Anthropic's technology. Anthropic, which had a $200 million contract, has stated it will challenge the designation in court, calling it "legally unsound." OpenAI's new five-year contract is reportedly worth $1.2 billion. The company stated the agreement includes the same safeguards Anthropic had advocated for, prohibiting the use of its models for mass surveillance and ensuring human oversight for weapons systems. The ban on Anthropic sparked a show of solidarity within the tech industry. Over 400 employees from Google and OpenAI signed an open letter titled "We Will Not Be Divided," urging their leadership to stand with Anthropic and refuse demands for unrestricted military use of AI. This clash recalls the 2018 employee protests at Google over Project Maven, a Pentagon initiative to use AI for analyzing drone footage. The backlash led Google to withdraw from the project, highlighting ongoing ethical debates surrounding AI's role in warfare. The "supply chain risk" designation is a significant escalation in the government's dealings with domestic tech firms. Previously, this designation has been used against foreign companies like China's Huawei and Russia's Kaspersky Lab to block them from federal networks and supply chains. President Trump publicly criticized Anthropic, calling them "Leftwing nut jobs" for trying to "STRONG-ARM" the Pentagon. Defense Secretary Hegseth accused the company of attempting to "seize veto power over the operational decisions of the United States military."
