By Emmanuel Bobby
President Donald Trump announced Friday that he is directing all federal agencies to immediately stop using technology from AI company Anthropic, intensifying a months-long clash between the firm and the Defense Department over how its systems can be used.
“I am directing EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic’s technology. We don’t need it, we don’t want it, and will not do business with them again!” Trump wrote on Truth Social.
Soon after, Defense Secretary Pete Hegseth said he would designate Anthropic a “Supply-Chain Risk to National Security,” a label typically applied to foreign adversaries. The designation would bar military contractors and suppliers from working with the company. Both Trump and Hegseth said agencies would have six months to phase out existing contracts.
OpenAI Strikes Pentagon Deal
Hours after the announcement, Sam Altman, CEO of OpenAI, revealed that his company had reached an agreement with the Defense Department to deploy its AI models on classified networks.
Altman said the department demonstrated “a deep respect for safety” and aligned with OpenAI’s principles, including prohibitions on domestic mass surveillance and maintaining human responsibility in the use of force, including autonomous weapons systems.
“AI safety and wide distribution of benefits are the core of our mission,” Altman wrote, adding that OpenAI would implement safeguards to ensure its systems behave as intended. It remains unclear how OpenAI’s agreement differs from the terms Anthropic had been negotiating.
Anthropic Threatens Legal Challenge
Anthropic said it had not yet received formal communication from the administration but vowed to contest any designation in court.
“We will challenge any supply chain risk designation in court,” the company said in a statement, arguing such action would be legally unsound and set a dangerous precedent for American companies negotiating with the government.
Anthropic CEO Dario Amodei has repeatedly stated that the company will not allow its systems to be used for domestic mass surveillance or fully autonomous lethal weapons. The Pentagon has maintained it must be permitted to deploy AI tools for “any lawful use,” a position that may conflict with Anthropic’s stated limits.
“I believe deeply in the existential importance of using AI to defend the United States and other democracies,” Amodei wrote Thursday night. “But using these systems for mass domestic surveillance is incompatible with democratic values.” He also said current frontier AI systems are not reliable enough to power fully autonomous weapons.
Industry Backlash
The administration’s move sparked swift criticism across the AI sector. An open letter addressed to the Pentagon and Congress circulated Friday evening, warning against government retaliation against private companies over contract negotiations. The letter was signed by multiple AI and tech leaders, including OpenAI employees Boaz Barak and William Feng, and Alexander Persky-Sterm, CEO of Waymark.
“This situation sets a dangerous precedent,” the letter said. “Punishing an American company for declining to accept changes to a contract sends a clear message to every technology company in America: accept whatever terms the government demands, or face retaliation.”
Dean Ball, a former senior policy adviser for artificial intelligence in the Trump administration, called the move “attempted corporate murder” in a post on X, warning it could chill investment in U.S.-based AI firms.
Meanwhile, Undersecretary of Defense Emil Michael sharply criticized Amodei online, accusing him of attempting to influence military policy and jeopardizing national security.
Lawmakers Urge De-Escalation
Members of Congress from both parties have called for a cooling of tensions. In a public letter, Sens. Ed Markey and Chris Van Hollen described the Pentagon’s actions as a “chilling abuse of government power.” Rep. George Whitesides said he was concerned the dispute could push the department toward rapid AI deployment without sufficient safeguards.
Sen. Mark Warner, the ranking member of the Senate Intelligence Committee, said the president’s directive raises questions about whether national security decisions are being driven by careful analysis or political considerations.
Anthropic currently holds a contract worth up to $200 million with the Pentagon to advance responsible AI in defense operations and works alongside data analytics firm Palantir to deliver services on classified defense and intelligence systems.
Broader Stakes for the AI Industry
Unlike traditional defense technologies, cutting-edge AI systems are largely developed in the private sector by companies such as Anthropic, OpenAI and Google. As the Pentagon seeks to integrate AI into military and intelligence operations, it has increasingly had to negotiate usage terms with private firms that have their own ethical frameworks and red lines.
Until this week, Anthropic had been the only major AI company cleared to offer services on classified networks. In an internal memo to employees, Altman said OpenAI shares similar red lines regarding mass surveillance and autonomous lethal weapons, adding that the issue now extends beyond a single company.
“This is no longer just an issue between Anthropic and the Department of War,” Altman wrote. “This is an issue for the whole industry.”
How other major technology companies — including Google, Meta and xAI — may respond remains unclear, but the standoff signals a new phase in the evolving relationship between Silicon Valley and the U.S. national security establishment.
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