US Gov Bans Anthropic, Signs Deal with OpenAI
The Trump administration has banned AI firm Anthropic from all government and military contracts, citing “supply risk.” Just hours later, the Pentagon announced a new strategic deal with rival OpenAI, making its systems available for defense and intelligence applications and positioning it as the government's preferred AI vendor.
The dispute escalated after months of negotiations over a contract worth up to $200 million, in which Anthropic refused to remove safeguards that prevent its AI, Claude, from being used for mass surveillance or in fully autonomous weapons systems. The Pentagon, under Defense Secretary Pete Hegseth, demanded "full, unrestricted access" for any lawful purpose. In an unprecedented move against a domestic company, Hegseth designated Anthropic a "supply-chain risk," a label historically used for foreign adversaries like China's Huawei. This designation bars any contractor or supplier doing business with the U.S. military from also conducting commercial activity with Anthropic, a move the company called "legally unsound" and plans to challenge in court. President Trump publicly stated on Truth Social that he was directing all federal agencies to cease using Anthropic's technology, giving a six-month phase-out period for the Defense Department. He referred to the company as "Leftwing nut jobs" and accused them of trying to "strong-arm" the military. Anthropic's Claude had been the first and only foundational AI model approved for use on certain classified Defense Department networks, where it was utilized by agencies like the CIA and NSA for intelligence analysis. The ban now forces a potentially disruptive transition away from these integrated systems. The new OpenAI deal will see its large language models deployed on military classified networks. CEO Sam Altman stated the agreement includes prohibitions on domestic mass surveillance and ensures human responsibility for the use of force, terms he urged the government to offer to all AI companies. OpenAI's relationship with the Pentagon has been growing, with the company removing a ban on military applications from its usage policy in 2024 and appointing former NSA Director Paul Nakasone to its board. This follows a separate $200 million contract in June 2025 for OpenAI to develop "frontier AI" for national security challenges.
