Anthropic and the U.S. Pentagon are in a high-stakes dispute over how the military can use Anthropic’s AI systems, in a confrontation that has quickly become one of the most important commercial-policy tests in the AI sector this year. Reuters reported this week that Anthropic has no intention of easing key military-use restrictions, even after a meeting between Anthropic CEO Dario Amodei and U.S. Defense Secretary Pete Hegseth.
At the center of the standoff is Anthropic’s refusal to remove safeguards that block use of its models for autonomous weapon targeting and U.S. domestic surveillance. Reuters says Pentagon officials have argued that government use should be constrained by U.S. law, not a private company’s usage policy. Axios separately reported that Pentagon negotiators are pushing for an “all lawful purposes” standard in discussions not only with Anthropic, but also with other major AI labs.
According to Reuters, Hegseth presented Anthropic with an ultimatum during this week’s meeting, with options including designating Anthropic a supply-chain risk or invoking the Defense Production Act to force changes. Reuters also reported the Pentagon gave Anthropic a deadline of Friday at 5 p.m. to respond. The commercial implications are significant because Anthropic has been deeply integrated into sensitive government workflows, and Reuters notes it was until recently the only large language model provider on classified U.S. networks.
Anthropic has kept its public messaging measured. A company spokesperson told Reuters the talks “continued good-faith conversations” and were aimed at ensuring Anthropic can support national security “reliably and responsibly.” Axios also quoted an Anthropic spokesperson saying the company is in “productive conversations, in good faith” with the Department of War on how to handle “new and complex issues.”
The Pentagon’s side has also framed the issue as operational rather than ideological. Axios quoted chief Pentagon spokesman Sean Parnell saying the relationship is under review and that partners must be willing to help U.S. forces “win in any fight.” Axios further quoted a senior Pentagon official warning that disentangling Anthropic would be painful and that the department would “make sure they pay a price” if forced to do so.
For investors and enterprise buyers, the dispute matters beyond one contract. Reuters and Axios both indicate this is a precedent-setting battle over whether frontier AI providers can enforce product-level guardrails once their systems are embedded in national security environments. Reuters also cited government-contracts lawyer Franklin Turner, who said punitive action against Anthropic would be “unprecedented” and likely trigger litigation.
In business terms, this is no longer just an AI ethics debate. It is a power struggle over who sets the operating rules for strategic software: the vendor, the customer, or the state.