Pentagon Blacklists Anthropic
The U.S. Department of Defense has designated AI firm Anthropic a national security risk, barring it from military contracts over concerns about its data handling. Anthropic plans to mount a legal challenge. Meanwhile, cloud partner Microsoft stated it will continue offering Anthropic's models to commercial customers.
The designation of Anthropic as a "supply chain risk" is unprecedented; this label has historically been applied to foreign adversaries like China's Huawei, not American companies. The move came after President Donald Trump directed all federal agencies to immediately halt the use of Anthropic's technology in a post on Truth Social. The core of the dispute lies in Anthropic's refusal to grant the Pentagon "unfettered access" to its AI model, Claude. Anthropic established two non-negotiable "red lines": a prohibition on using its AI for mass domestic surveillance and for fully autonomous weapons systems that can operate without human intervention. Prior to the blacklisting, Anthropic had a $200 million contract with the Department of Defense and was the first AI company to have its models cleared for use on classified networks. Defense Secretary Pete Hegseth had given Anthropic a deadline to drop its safeguards or face penalties, which included potential termination of the contract or invocation of the Defense Production Act. Hours after negotiations with Anthropic broke down, competitor OpenAI announced it had signed a contract to integrate its AI into the U.S. Department of Defense's classified network. OpenAI's CEO, Sam Altman, stated the company will uphold principles opposing domestic mass surveillance and the use of its AI for autonomous weapon systems. Microsoft, a major partner that has committed to investing up to $5 billion in Anthropic and has a deal for $30 billion in Azure cloud computing capacity, is standing by the AI firm. Microsoft has stated it will continue to offer Anthropic's models to its commercial customers through its Azure platform. The designation immediately bars tens of thousands of U.S. military contractors from conducting any commercial activity with Anthropic. The company has a six-month period to wind down its existing defense-related services. A bipartisan group of 30 former defense officials has called on Congress to investigate the Pentagon's decision, warning it could undermine the U.S.'s competitive edge in AI. Legal experts have also questioned the statutory authority for applying a "supply chain risk" designation, which is intended to prevent sabotage by foreign adversaries, to a domestic contract dispute.
