The U.S. Department of Defense has reportedly issued an ultimatum to artificial intelligence firm Anthropic: remove contractual limits on how its Claude AI model may be used by the U.S. military by Friday at 5:00 p.m. — or risk losing a $200 million defense contract and potentially facing action under the Defense Production Act.
The warning was delivered during a high-level meeting between Defense Secretary Pete Hegseth and Anthropic CEO Dario Amodei, according to officials familiar with the discussion.
At stake is the future of one of the Pentagon’s most advanced AI systems currently operating inside classified networks.
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The Core Dispute: Who Decides “Lawful Use”?
Anthropic’s Claude AI currently operates within Pentagon classified systems under an agreement first awarded in summer 2025. However, the company has imposed restrictions barring use of Claude in:
- Fully autonomous lethal weapons systems
- Domestic mass surveillance of U.S. citizens
Defense officials argue that once a system is approved for classified military use, the government — not private vendors — determines lawful applications.
According to reporting, Hegseth emphasized that AI systems deployed for defense must be usable for “all lawful military purposes” without company veto power or oversight.
Anthropic’s leadership, meanwhile, has built its brand around safety guardrails and ethical AI governance.
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Escalating Pressure
If Anthropic refuses to remove its usage limitations, the Pentagon is reportedly weighing several actions:
- Canceling its $200 million contract
- Designating the company as a “supply chain risk”
- Invoking the Defense Production Act
The “supply chain risk” designation is typically used against firms tied to foreign adversaries. Applying it to a domestic AI developer would be unprecedented and could limit the company’s ability to operate within defense contractor ecosystems.
The Defense Production Act — a Cold War-era law — would allow the federal government to compel cooperation from companies deemed critical to national defense.
Officials say voluntary compliance remains the preferred outcome, but preparations for stronger measures are underway.
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Classified Operations and AI Expansion
Claude reportedly operates within classified environments via Amazon’s Top Secret Cloud and Palantir’s AI platforms. Reports indicate the system has already been integrated into military planning workflows.
The Pentagon is simultaneously negotiating AI contracts with other major developers, including OpenAI, Google, and xAI, each potentially worth up to $200 million.
The standoff with Anthropic marks one of the clearest public clashes between Silicon Valley’s AI safety philosophy and the Pentagon’s operational doctrine.
Strategic Implications
This confrontation highlights a deeper tension:
- Tech firms want guardrails to prevent misuse of advanced AI systems.
- The military insists operational authority rests with the government.
As AI becomes embedded in defense planning, intelligence analysis, and battlefield logistics, the question of who sets limits on its use carries enormous consequences.
If Anthropic yields, it could signal that national security priorities override corporate AI ethics frameworks.
If it resists, it may lose access to one of the largest defense technology markets in the world.
Conclusion
With Friday’s deadline approaching, negotiations remain ongoing. The outcome could set a defining precedent for how artificial intelligence companies collaborate — or clash — with the U.S. national security establishment.
The decision will shape not only Anthropic’s future but also the broader framework governing AI integration into military systems for years to come.
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