The Pentagon is headed for a showdown with Anthropic, one of the world's most powerful AI companies, over the military use of its AI model after Anthropic's CEO rejected the Defense Department's ultimatum that it loosen safety restrictions or be blacklisted from lucrative military work.
At stake are hundreds of millions of dollars in contracts and access to some of the most advanced AI tools on the planet. Here's what to know about the fight and what the consequences could be.
The Pentagon and Anthropic do not see eye-to-eye on how AI should be used in warfare
For months, Anthropic CEO Dario Amodei has insisted that Anthropic's AI model, Claude, must not be used for mass surveillance in the U.S. or to power entirely autonomous weapons, such as a drone that uses AI to kill targets without human approval. He has described those uses as "entirely illegitimate" and says they are "bright red lines" for the company.
The Pentagon says that it does not intend to use Anthropic's tools for surveillance or autonomous weapons. But it says that it's not up to a contractor like Anthropic to make decisions about how its technology is used, and says AI companies including Anthropic need to allow the U.S. government to use their tools "for all lawful purposes."
"Legality is the Pentagon's responsibility as the end user," a senior Pentagon official who declined to give their name told NPR this week.
On Thursday, Amodei said Anthropic could not accept the Pentagon's latest changes to the terms of its contract.
"I believe deeply in the existential importance of using AI to defend the United States and other democracies, and to defeat our autocratic adversaries," the CEO wrote in a lengthy statement about the impasse. "Anthropic understands that the Department of War, not private companies, makes military decisions. We have never raised objections to particular military operations nor attempted to limit use of our technology in an ad hoc manner," he said.
"However, in a narrow set of cases, we believe AI can undermine, rather than defend, democratic values," Amodei continued. He described domestic mass surveillance and fully autonomous weapons as uses that are "simply outside the bounds of what today's technology can safely and reliably do." Those uses "have never been included in our contracts with the Department of War, and we believe they should not be included now," he added.
Amodei's rejection comes as Anthropic's relationship with the Pentagon has grown increasingly acrimonious. At a meeting on Tuesday between Defense Secretary Pete Hegseth and Amodei, Hegseth threatened to punish the company if it does not bend to the administration's demands, according to two people with direct knowledge of the meeting who were not authorized to speak publicly.
One person close to the discussion said Hegseth dangled the possibility of canceling Anthropic's $200 million contract with the Defense Department, while a Pentagon official said repercussions could include forcing Anthropic to allow the federal government to use its AI model against its will and effectively blacklisting Anthropic from working with the U.S. military.
"These threats do not change our position: we cannot in good conscience accede to their request," Amodei wrote on Thursday. "But given the substantial value that Anthropic's technology provides to our armed forces, we hope they reconsider."
The Pentagon has given Anthropic a hard deadline
In a post on X on Thursday, Pentagon spokesman Sean Parnell warned that Anthropic had until Friday afternoon before the Pentagon would take action.
"They have until 5:01 PM ET on Friday to decide. Otherwise, we will terminate our partnership with Anthropic and deem them a supply chain risk for DOW," Parnell wrote, using the Pentagon's rebranded "Department of War" acronym.
The Department of War has no interest in using AI to conduct mass surveillance of Americans (which is illegal) nor do we want to use AI to develop autonomous weapons that operate without human involvement. This narrative is fake and being peddled by leftists in the media.… https://t.co/3pjWZ66aXz
— Sean Parnell (@SeanParnellASW) February 26, 2026
Anthropic said on Thursday the Pentagon had sent the company new contract language overnight that, in the company's view, "made virtually no progress on preventing Claude's use for mass surveillance of Americans or in fully autonomous weapons."
The statement continued: "New language framed as compromise was paired with legalese that would allow those safeguards to be disregarded at will. Despite DOW's recent public statements, these narrow safeguards have been the crux of our negotiations for months."
Anthropic said it's ready to continue negotiations and is "committed to operational continuity for the Department and America's warfighters."
What is a "supply chain risk"?
Deeming Anthropic a supply chain risk would be unusual, according to Geoffrey Gertz, a senior fellow at the Center for a New American Security. The designation has "traditionally been used for foreign adversary technology," he said, such as Chinese telecommunications company Huawei.
It's unclear exactly how far-reaching the Pentagon designation would be. It could mean that other Pentagon contractors would be prohibited from using Anthropic's tools in their work for the Pentagon, or it could prohibit them from using Anthropic's tools at all. That second case would be particularly damaging to the company, Gertz said.
At the same time, the Pentagon has threatened to invoke the Defense Production Act to force Anthropic to remove its guardrails. That too would be an extraordinary step, Gertz said. The Defense Production Act is designed to give the government control over certain commercial sectors in extraordinary circumstances. It is "traditionally evoked very rarely in true emergency crisis situations," he said. The goal in this case, presumably, would be to use the act to compel Anthropic to loosen restrictions on the use of its AI tools.
Gertz noted that these two threats against Anthropic appear to be somewhat contradictory: "It's this funny mix where they both are such a risk that they need to be kicked out of all systems, and so essential that they need to be compelled to be part of the system no matter what," he said.
Whatever happens at the end of today, this fight is probably far from over
The Pentagon's contract with Anthropic is worth as much as $200 million, a relatively small portion of the company's $14 billion in revenue. While the Pentagon has similar contracts with other AI companies including Google, OpenAI and xAI, Anthropic was the first to be cleared for classified use after defense officials deemed it the most advanced and secure model for sensitive military applications.
If the contract were simply cancelled, that might be the end of it, Gertz said. But if the Pentagon either tries to compel Anthropic to remove its guardrails or hits it with a wider supply-chain-risk designation, then the company will almost certainly have to fight back, he predicts.
"Certainly if the Pentagon seeks to escalate it," Gertz said, "I suspect we'll see more legal fights."
NPR's Bobby Allyn contributed to this report.
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