President Donald Trump ordered every federal agency to immediately cease use of Anthropic's technology, posting that the government does not need the company's products and would not do business with it again, with a six-month phase-out for agencies like the Department of War. After a 5 p.m.

Friday deadline passed without Anthropic agreeing to Pentagon contract terms, Defense Secretary Pete Hegseth moved to designate the company a national security supply-chain risk — a designation usually reserved for foreign adversaries — and barred defense contractors from using its AI.

Hegseth called the decision final, saying warfighters would never be held hostage by the ideological whims of Big Tech.

Anthropic's CEO Dario Amodei had made clear the company would not drop two demands: no use of its AI for fully autonomous weapons, meaning AI rather than humans making final battlefield targeting decisions, and no mass domestic surveillance.

The company said the Pentagon's latest contract language made virtually no progress on preventing Claude's use for either purpose, and that new compromise language was paired with legalese that would allow its safeguards to be disregarded at will.

The Pentagon claims it has no intention of using the AI for mass surveillance or autonomous kinetic operations, but argues Anthropic's guardrails could jeopardize military operations.

Adam Conner, vice president for technology policy at American Progress, wrote that the Pentagon could essentially declare war not on a foreign nation but on one of America's most successful AI companies, calling it an unprecedented and unnecessary peacetime move signaling that private companies must do the administration's bidding or face existential consequences.

Trump also threatened major civil and criminal consequences if Anthropic fails to be helpful during the phase-out period.

Anthropic said it has not received direct communication from either the Pentagon or the White House on the status of negotiations, and it called the supply-chain risk designation legally unsound.

The company said the move would set a dangerous precedent for any American company that negotiates with the government, and announced it would challenge the designation in court.

Notably, the standoff comes just as Anthropic is lobbying Congress on its own draft federal AI safety bill — obtained by Politico and reported by Mother Jones and TradingView — that would bar agencies other than Commerce from suspending an AI model's development or use, following export restrictions that reportedly shut down two of its advanced models over the summer.

In a striking counterpoint, OpenAI CEO Sam Altman announced late Friday that his company had reached a deal with the Pentagon to deploy its AI models on the department's classified network.

Altman said the agreement embeds two key safety principles: prohibitions on domestic mass surveillance and human responsibility for the use of force, including for autonomous weapon systems, which he said the Pentagon agrees with, reflects in law and policy, and incorporated into the contract.

OpenAI asked the Department of War to offer the same terms to all AI companies, expressing a strong desire to de-escalate away from legal and governmental action.

Anthropic's services will continue under the Department of War for up to six months to allow a transition to a different provider, but the court challenge appears certain to define the next phase of the fight.

Meanwhile, Senate Armed Services Committee leaders privately urged Hegseth and Amodei to extend negotiations and work with Congress, noting the issue of lawful use requires deciding whether additional legislative or regulatory language is needed.

The standoff also lands amid congressional disagreement over AI oversight: Politico reports Anthropic's draft bill sets a steep intervention threshold — over $1 billion in foreseeable damage or more than 50 killed or seriously injured — while lawmakers remain divided over how much authority Washington should have over advanced AI.