OpenAI Inks Pentagon Deal After Rival Anthropic Banned
The U.S. government has awarded OpenAI a major Pentagon contract just hours after banning rival AI firm Anthropic from federal use over national security concerns. The Trump administration designated Anthropic a "supply chain risk" in an unprecedented move that concentrates defense AI work with OpenAI. CEO Sam Altman stated the deal includes "technical safeguards" as its models are integrated into U.S. military and intelligence systems.
The dispute escalated after Anthropic refused to remove safeguards that would prevent its AI, Claude, from being used for mass domestic surveillance or to power fully autonomous weapons. The Pentagon insisted on the ability to use the technology for all "lawful purposes," leading to a standoff that culminated in the ban. Defense Secretary Pete Hegseth formally designated Anthropic a "supply chain risk," a label historically applied to foreign adversaries like Chinese tech giant Huawei, not American companies. This action blocks all federal agencies and, crucially, any company that does business with the U.S. military, from using Anthropic's services. In a statement, President Donald Trump accused the "Leftwing nut jobs at Anthropic" of trying to "STRONG-ARM" the military and putting national security in jeopardy. Anthropic CEO Dario Amodei stated the company could not "in good conscience accede" to the Pentagon's demands and has vowed to challenge the unprecedented designation in court. OpenAI's agreement to deploy its models on classified networks reportedly includes the very same "red lines" Anthropic fought for. CEO Sam Altman confirmed the deal prohibits domestic mass surveillance and requires "human responsibility for the use of force," with cleared OpenAI engineers working on-site with the government. The deal is part of a broader "OpenAI for Government" initiative launched in June 2025, which came with an initial $200 million contract to develop AI for national security challenges. The work is intended to cover everything from cyber defense and data processing to administrative functions. This turmoil comes as OpenAI announced a new $110 billion funding round, valuing the company at $840 billion. Meanwhile, nearly 500 engineers from rival companies, including Google and OpenAI itself, signed an open letter backing Anthropic's position on AI safety safeguards.
