US President Donald Trump has ordered all federal agencies to stop using technology from Anthropic with immediate effect. He published the decision on Truth Social on Friday. “We don’t need it, we don’t want it, and will not do business with them again!” Trump wrote.
Anthropic now stands at the center of a fierce confrontation with the White House. The company refused to grant the US military unrestricted access to its artificial intelligence tools. Defense Secretary Pete Hegseth responded by declaring Anthropic a “supply chain risk.” No US company has ever received that label in public before.
Anthropic announced that it will challenge any such designation in court. The company argued that the move would lack legal foundation and create a dangerous precedent for American businesses negotiating with the government.
Pentagon Demands Full Access to AI Systems
The dispute escalated after days of private and public exchanges between Anthropic CEO Dario Amodei and Hegseth. Anthropic raised concerns in recent months about potential government uses of its AI systems. The company warned against mass surveillance and fully autonomous weapons.
Hegseth and Pentagon officials insisted that Anthropic must accept “any lawful use” of its technology. Hegseth wrote on X that the government would immediately apply the supply chain risk designation. That step would bar any military contractor from engaging in commercial activity with Anthropic.
Anthropic stated on Friday evening that it had not received formal notice from the White House or the military about the negotiations. The company nevertheless rejected the pressure campaign. “No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons,” Anthropic said.
Trump uses the term “Department of War” as an alternative name for the Defense Department.
Six-Month Phase-Out and Industry Impact
Trump ordered agencies to phase out Anthropic’s tools from all federal projects within six months. Anthropic said the decision will primarily affect companies that also work with the military. Those firms may need to stop using Anthropic products for defense-related contracts.
Before Trump’s announcement, Anthropic pledged to ensure a smooth transition if the Defense Department discontinued its services.
Trump sharply criticized the company on Truth Social. He warned that Anthropic must cooperate during the phase-out period. He threatened to use the “Full Power of the Presidency” to enforce compliance. He cited potential civil and criminal consequences if the company resisted.
Anthropic has supplied AI tools to US government and military agencies since 2024. It became the first advanced AI company to deploy systems in agencies handling classified operations.
Rival OpenAI Enters the Debate
The standoff triggered reactions across the AI sector. Sam Altman, chief executive of OpenAI, expressed support for Amodei’s stance. He told employees that OpenAI maintains similar red lines for military applications.
In an internal memo, Altman wrote that OpenAI would reject any military use that violates the law or exceeds cloud deployment limits. He specifically mentioned domestic surveillance and autonomous offensive weapons as unacceptable. He later confirmed on X that OpenAI reached an agreement with the Department of War to deploy its AI models on classified cloud networks.
Amodei built his career as an early OpenAI employee. He left the company with several colleagues after disputes with Altman. The group founded Anthropic and now competes directly with OpenAI for corporate and government clients. Both startups develop chatbots, AI agents, and enterprise tools.
Altman admitted that he does not fully understand how the conflict escalated. He questioned Anthropic’s earlier deal structure with the Pentagon and Palantir Technologies. He stressed that the dispute now concerns the entire AI industry.
Showdown in Washington Intensifies
Hegseth summoned Amodei to Washington, DC on Tuesday as tensions mounted. The meeting ended with two clear ultimatums if Anthropic refused to grant full access. Hegseth threatened to invoke the Defense Production Act. That law would allow the government to use Anthropic’s products at its discretion. He also repeated his intention to apply the supply chain risk label.
By Thursday, Amodei stated that he would rather end cooperation with the Pentagon than accept those demands.
A former Defense Department official said Anthropic appears to hold the stronger position. The former official argued that the dispute provides the company with favorable publicity. He added that Anthropic does not depend financially on the military contract.
Anthropic’s work with the Pentagon forms part of a $200 million agreement. The company recently secured a valuation of $380 billion. Analysts based that figure on current revenue and projected earnings.
The former official described the Pentagon’s legal arguments as extremely weak. He said the threats to invoke the Defense Production Act or apply the supply chain risk designation rest on flimsy grounds.
