The Pentagon has delivered an ultimatum to Anthropic, the only AI company currently operating on classified military systems.
Defense Secretary Pete Hegseth told Anthropic it must agree to the department’s contract terms by 5:01 p.m. Friday or face severe consequences, The New York Times reports.
If the company refuses, the administration could invoke the Defense Production Act, compelling access to its model while simultaneously labeling Anthropic a supply chain risk, a move that could jeopardize existing government contracts.
The standoff follows a Tuesday meeting at the Pentagon between Hegseth and Anthropic CEO Dario Amodei. While the discussion was described as civil, people briefed on the meeting say the Secretary escalated the situation after Anthropic declined to accept the Pentagon’s proposed terms.
At the center of the dispute is how the military can use Anthropic’s models.
Pentagon officials want AI contracts to stipulate that the department may deploy the systems for any lawful purpose. Anthropic has sought assurances that its models will not be used for mass surveillance of Americans or in autonomous weapons systems without human oversight.
An Anthropic spokesperson says the company remains in good-faith negotiations and wants to support the government while ensuring its models are used in ways they can “reliably and responsibly do.”
A senior Pentagon official rejected the framing of the dispute, saying the issue is not about guardrails but about ensuring that lawful use is the only constraint placed on military deployment.
Anthropic was the first AI firm authorized to operate on classified networks and built a specialized version of its model, Claude Gov, for that environment. Supporters of the company argue it is being penalized for trying to define acceptable-use boundaries early.
The Defense Production Act is typically invoked in manufacturing contexts, making its potential use against a software company unusual. The threat underscores how central advanced AI models have become to military operations and how contentious their deployment terms now are.
The deadline now looms over a contract dispute that could reshape how AI companies engage with the US defense establishment.
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