US Bans Anthropic, Taps OpenAI for Pentagon
The Trump administration has banned all federal agencies from using Anthropic's technology, designating it a "supply chain risk." Within hours, OpenAI announced it had secured a landmark contract to become the Pentagon's primary AI supplier, a move expected to reshape the AI competitive landscape.
The dispute escalated after Anthropic refused to lift its internal safeguards against using its AI for mass domestic surveillance and fully autonomous weapons. Defense Secretary Pete Hegseth had given Anthropic a deadline to provide the military with "full, unrestricted access" to its models, a demand the company stated it could not meet "in good conscience." The "supply chain risk" designation is a tool historically used against foreign adversaries like China's Huawei and Russia's Kaspersky Lab, making its application to a U.S.-based company unprecedented. This move effectively blacklists Anthropic from doing business with any company that is a contractor or supplier to the U.S. military. Anthropic has announced its intention to challenge the designation in court. President Trump framed the decision as a response to a "Radical Left, WOKE COMPANY" attempting to dictate military policy. This aligns with the administration's broader AI strategy, which includes an executive order aimed at "Preventing Woke AI in the Federal Government" and promoting ideologically neutral systems. The Pentagon had previously awarded contracts worth up to $200 million each to several AI companies, including both Anthropic and OpenAI, to develop AI for military use. Anthropic's Claude AI was already deeply integrated into government systems, including on classified networks for mission-critical applications. OpenAI's new agreement with the Pentagon, reportedly worth up to $200 million, includes specific prohibitions on using its AI for mass surveillance and autonomous weapons—the very safeguards Anthropic had requested. OpenAI CEO Sam Altman stated the Department of Defense "agrees with these principles" and that they were written into the contract. The OpenAI deal includes additional technical safeguards, such as cloud-only deployment, OpenAI retaining full control over its safety systems, and having cleared company engineers working inside the Pentagon's deployment. OpenAI has stated its contract provides "better guarantees and more responsible safeguards than earlier agreements, including Anthropic's original contract." The move has drawn criticism from some lawmakers and tech industry insiders, who warn that banning a leading domestic AI company over a contract dispute sets a dangerous precedent. In a show of solidarity, nearly 500 engineers from rival companies, including Google and OpenAI, signed an open letter backing Anthropic's stance.
