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Anthropic has said the Pentagon’s designation of AI labs as a supply chain risk will not affect the “vast majority” of its customers as it vowed to fight the measure in court.
The Defense Department has written to Anthropic formalizing that the group is now seen as a risk to military supply chains, company Chief Executive Dario Amodei confirmed on Thursday.
The move marks an escalation in the dispute between the Pentagon and one of America’s leading AI labs over the terms governing the military’s use of its technology. This came while its AI models were still being used in operations, including the US war against Iran.
The supply chain risk designation has raised concerns about Anthropic’s commercial partnerships with several groups, including Amazon, which also work with the Pentagon. This required Anthropic’s partners to sever ties with the company on military contracts.
Widespread application of the measure would have severely impacted Anthropic’s revenues, which reach $19 billion on an annual basis, and its access to potentially critical data center infrastructure.
But according to Amodei, the Defense Department limited the scope of the order “to the use of the cloud by customers as a direct part of the contract with the War Department, not all use of the cloud by customers with such contracts.”
This designation is typically reserved for companies from countries such as China and Russia, which are considered U.S. rivals.
Amodei said on Thursday that the company “does not believe that this action is legally justified and we have no choice but to challenge it in court”.
Independent legal experts have also questioned whether designating the company as a national security risk would avoid legal scrutiny.
After negotiations over Anthropic’s working terms with the military failed last Friday, Defense Secretary Pete Hegseth threatened sweeping action against the $380 billion start-up.
Hegseth wrote that “effective immediately, any contractor, supplier or partner that does business with the United States military may not conduct any commercial activity with Anthropic”.
Amodei had refused to go over two “red lines” barring the use of his company’s AI model cloud in lethal autonomous weapons and mass domestic surveillance.
“From the very beginning, this has been a fundamental principle: The military is able to use technology for all legitimate purposes,” a senior department official said Thursday.
“The Army will not allow a vendor to insert itself into the chain of command and put our warfighters at risk by restricting the legitimate use of a critical capability,” the official said.
Amodei said on Thursday that his company and the Pentagon have had productive talks over the past several days.
The situation flared up on Wednesday with the publication of a message written by Amodei to Anthropic employees.
In a 1,600-word note written last Friday, Amodei accused the Pentagon of “straight up lies” and said he was ousted because Anthropic “did not appreciate (President Donald) Trump’s dictator-style approach,” unlike OpenAI CEO Sam Altman.
Following Anthropic’s statement on Thursday, Under Secretary of Defense for Research and Engineering Emil Michel indicated that negotiations had stalled.
“There are no active negotiations between the Pentagon and Anthropic,” Michael posted on Twitter.
Amodei apologized for the memo to employees in a statement, saying: “This was a difficult day for the company, and I apologize for the tone of the post. It does not reflect my careful or well-considered views.”
