The Pentagon’s unprecedented supply chain ban on Anthropic over AI ethics demands has ignited a legal battle and divided Silicon Valley
WASHINGTON: The Trump administration has declared AI firm Anthropic a supply chain risk. This unprecedented designation, typically reserved for foreign adversaries, follows a dispute over the company’s ethical conditions for military use.
Defense Secretary Pete Hegseth announced the move after Anthropic insisted on contractual bans against mass surveillance and fully autonomous weapons. The Pentagon has used Anthropic’s models for classified operations for over two years.
The financial contract was worth US$200 million (RM777.7 million). The existential threat is the supply chain designation, which would force any US military contractor to sever ties with Anthropic.
Dean Ball, a former Trump AI policy advisor, called the decision “corporate murder”. He warned it sends a clear message to investors: do business on our terms, or we will end your business.
Anthropic vowed to challenge the designation in court. The company called it a “dangerous precedent for any American company that negotiates with the government”.
Legal experts say the company has strong grounds. However, the court process could take months, threatening Anthropic’s plans for a public listing this year.
Business professor Erik Gordon told AFP the company would survive. “Anthropic will suffer a setback when it loses the government as a client, but it will survive and continue to grow,” he said.
He added that the company “has one of the best products”.
Hours after the ban, rival OpenAI announced a deal for Pentagon use of its AI in classified systems. CEO Sam Altman said the agreement contains the same two limitations Anthropic demanded.
OpenAI agreed the Pentagon could use its technology for “any lawful purpose”. This was a formulation Anthropic had refused, preferring explicit contractual bans.
OpenAI also says its technology will be cloud-only. An engineer will be deployed to oversee classified use.
Critics are calling on OpenAI employees to quit. They are urging pressure on leadership to support its archrival Anthropic.
“OpenAI caved and framed it as not caving, and screwed Anthropic while framing it as helping them,” said Miles Brundage, OpenAI’s former head of policy research.
The decision has hardened political battle lines in Silicon Valley. Anthropic’s antagonist is venture capitalist David Sacks, the White House’s chief AI policymaker.
He argues the company’s safety-first approach will cede ground to China. He is aligned with Emil Michael, the Pentagon’s de facto chief technology officer.
Hundreds of engineers at Google, Amazon, Microsoft and OpenAI signed petitions. They urged their leaders to refuse Pentagon demands for unrestricted AI use.
No major tech company has publicly defended Anthropic. Several executives at competing firms expressed anonymous concern that the ban sets a dangerous precedent.
Elon Musk posted that “Anthropic hates Western Civilization”. He aligned publicly with the administration.
