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The Trump administration has designated AI startup Anthropic as a supply chain risk to national security, ordering federal agencies to immediately stop using its AI model Claude.
The classification has historically been applied to foreign companies and marks a rare move against a U.S. technology firm.
President Donald Trump announced that agencies must cease use of Anthropic’s technology, allowing a six month phase out for departments heavily reliant on its systems, including the Department of War.
Defense Secretary Pete Hegseth later formalized the designation and said no contractor, supplier or partner doing business with the U.S. military may conduct commercial activity with Anthropic.
At the center of the dispute is Anthropic’s refusal to grant the Pentagon unrestricted access to Claude for what officials described as lawful purposes.
Chief executive Dario Amodei sought two exceptions covering mass domestic surveillance and the development of fully autonomous weapons.
He argued that current AI systems are not reliable enough for autonomous weapons deployment and warned that mass surveillance could violate Americans’ civil rights.
Anthropic has said a proposed compromise contract contained loopholes that could allow those safeguards to be bypassed.
The company had been operating under a 200 million dollar Department of War contract since June 2024 and was the first AI firm to deploy models on classified government networks.
After negotiations broke down, the Pentagon issued an ultimatum that Anthropic declined, leading to the blacklist.
The company plans to challenge the designation in court, arguing it may exceed the authority granted under federal law.
While the restriction applies directly to Defense Department related work, legal analysts say the move could create broader uncertainty across the technology sector.
Anthropic relies on cloud infrastructure from Amazon, Microsoft and Google, all of which maintain major defense contracts.
A strict interpretation of the order could complicate those relationships.
President Trump has warned of serious civil and criminal consequences if Anthropic does not cooperate during the transition.
Even as Anthropic faces federal restrictions, OpenAI has moved ahead with its own classified agreement with the Pentagon.
The company said Saturday that it had finalized a deal to deploy advanced AI systems within classified environments under a framework it describes as more restrictive than previous contracts.
In its official blog post, OpenAI said, "Yesterday we reached an agreement with the Pentagon for deploying advanced AI systems in classified environments, which we requested they also make available to all AI companies." It added, "We think our agreement has more guardrails than any previous agreement for classified AI deployments, including Anthropic’s."
OpenAI outlined three red lines that prohibit the use of its technology for mass domestic surveillance, for directing autonomous weapons systems and for high stakes automated decision making.
The company said deployment will be cloud only and that it will retain control over its safety systems, with cleared engineers and researchers involved in oversight.
"We retain full discretion over our safety stack, we deploy via cloud, cleared OpenAI personnel are in the loop, and we have strong contractual protections," the company wrote.
The contract references existing U.S. laws governing surveillance and military use of AI, including requirements for human oversight in certain weapons systems and restrictions on monitoring Americans’ private information.
OpenAI said it would not provide models without safety guardrails and could terminate the agreement if terms are violated, though it added that it does not expect that to happen.
Despite its dispute with Washington, Anthropic appears to be gaining traction among consumers.
Claude recently climbed to the top position in Apple’s U.S. App Store free rankings, overtaking OpenAI’s ChatGPT.
Data from SensorTower shows the app was outside the top 100 at the end of January but steadily rose through February.
A company spokesperson said daily signups have reached record levels this week, free users have increased more than 60 percent since January and paid subscriptions have more than doubled this year.
