Trump Bans Anthropic, OpenAI Gets Pentagon Deal
President Trump ordered a total federal ban on Anthropic, citing "supply chain risk" after the company refused to lower AI safeguard thresholds for Pentagon use — forcing infrastructure providers like AWS and GCP to sever ties or lose military contracts. Hours later, OpenAI announced a major classified Pentagon contract, reportedly accepting the same restrictions Anthropic rejected but with more flexible contract language.
The dispute centered on Anthropic's refusal to permit its AI to be used for autonomous weapons or domestic mass surveillance. The Pentagon insisted the technology must be available for all "lawful military purposes," a stance Anthropic CEO Dario Amodei argued was paired with legalese that could disregard their safeguards at will. Anthropic, which structured itself as a public benefit corporation, said it could not "in good conscience accede" to the demands. Defense Secretary Pete Hegseth designated Anthropic a "Supply-Chain Risk to National Security," a label typically reserved for foreign adversaries. This designation requires defense contractors to certify they are not using Anthropic's models. President Trump directed all federal agencies to halt the use of Anthropic's technology, giving the Pentagon a six-month transition period to phase out systems already in place. The standoff followed Anthropic's recent changes to its "Responsible Scaling Policy." The company announced it would no longer pause the development of potentially dangerous models if competitors were moving ahead, citing that government action on AI safety has been slow while the policy environment has shifted to prioritize competitiveness. In announcing the OpenAI deal, CEO Sam Altman stated the Pentagon respects their safety principles, including prohibitions on domestic mass surveillance and a requirement for human responsibility in the use of force. OpenAI published some contract language indicating it retains full control over its safety measures and that cleared OpenAI personnel will be involved in deployment. The company believes its agreement has more extensive guardrails than Anthropic's previous contract. Anthropic had been operating under a $200 million contract signed in July, becoming the first AI lab to deploy models on the Pentagon's classified networks. In 2025, the Pentagon had also awarded contracts with a $200 million ceiling to Google, OpenAI, and xAI to accelerate AI adoption. The "supply chain risk" designation has historical precedent, though it is more commonly applied to foreign technology firms. The Trump administration previously used similar executive orders and blacklisting against companies like Huawei, ZTE, and WeChat, citing national security risks, though some of those actions were challenged in court. Anthropic has stated it is "deeply saddened" by the designation and plans to challenge the decision in court. The company warned the move could establish a precedent that affects how American tech firms negotiate with government agencies. Federal agencies now have a six-month period to transition away from any embedded Anthropic technology.
