OpenAI signed a contract with the U.S. military to provide AI systems that securely process classified information, displacing Anthropic’s Claude. OpenAI negotiated limits on how its technology can be used, but they leave room for interpretation.
What happened: The agreement between OpenAI and the U.S. Department of War came only hours after a week-long standoff between the White House and Anthropic, which wanted to limit military use of its technology for surveillance and autonomous weapons. The standoff ended with a White House ban on doing business with Anthropic. OpenAI CEO Sam Altman later said the hasty contract he had negotiated was a mistake — the parties renegotiated some restrictions around surveillance and autonomous weapons — and made his company look “opportunistic and sloppy.” Anthropic vowed to sue the government for limiting its business without proper reason or authority.
Power struggle: The U.S. military has been expanding its use of large language models from Anthropic, OpenAI, Google, and xAI at least since early 2025, when President Trump directed federal agencies to eliminate obstacles to AI development.
- On January 3, the U.S. military launched an operation against Venezuela in which it used Anthropic’s technology via a cloud platform provided by Palantir, which performs data analytics for military and law-enforcement agencies. Anthropic executives reportedly expressed concern about that use to Palantir, which relayed the conversation to the government. Anthropic later denied it had objected to the Venezuela operation.
- The following week, the Department of War launched a program to experiment with leading AI models in combat, intelligence, and organizational management. The program required AI companies to renegotiate existing contracts.
- In subsequent negotiations, Anthropic stipulated that Claude could not be used in surveillance of U.S. citizens or to operate fully autonomous weapons. The Department of War said it would not tolerate external limitations. Although the department said it did not intend to use Claude for surveillance or autonomous weapons, the only limits it would accept were those required by U.S. law.
- On February 23, xAI and the Department of War reached an agreement to allow the military to use Grok in classified systems for “all lawful uses.”
- The next day, Secretary of Defense Pete Hegseth met with Anthropic CEO Dario Amodei and vowed to designate Anthropic a “supply chain risk to national security” if the company did not agree to relax its restrictions by 5:01 p.m. on Friday. Contractors that supply the U.S. military are barred from doing business with companies that are deemed supply-chain risks. This designation previously had been applied only to non-U.S. companies that posed a risk to national security.
- Within hours, OpenAI, too, signed a contract that allows the Department of War to use its technology “for all lawful purposes” while retaining its own safety guardrails.
- Anthropic continued to negotiate but balked at the language about lawful purposes, since the law has not stopped the government from spying on U.S. citizens in the past. The Department of War said it wanted to analyze unclassified, commercial bulk data on U.S. citizens, including locations and web data. While the U.S. military is prohibited from conducting surveillance on U.S. citizens, it is allowed to aggregate and analyze commercial data.
- On February 27 just before 1:00 p.m. — four hours before the deadline — President Trump posted on Truth Social, a social network owned by the President, directing all federal agencies to stop using Anthropic’s technology within six months. The post threatened “major civil and criminal consequences” if Anthropic did not cooperate, calling Anthropic an “out-of-control, Radical Left AI company run by people who have no idea what the real World is all about.”
- At 5:14 p.m. that day, Hegseth announced on the X social network that he had designated Anthropic a supply-chain risk to national security, forbidding contractors, suppliers, and partners that do business with the United States military from using its technology.
- Subsequently, some non-military U.S. agencies terminated their use of Anthropic products.
- On March 2, OpenAI’s Altman announced that his company’s agreement had been rushed. It was amended, ostensibly to build in limits on uses for surveillance and autonomous weapons, but also leaving substantial ambiguity. The revised contract prohibits uses of OpenAI technology for domestic surveillance of U.S. citizens including via analysis of “commercially acquired personal or identifiable information,” which presumably allows uses of other types of information. It also bars uses to “independently direct autonomous weapons in any case where law, regulation, or Department policy requires human control,” apparently leaving room to use the technology to operate autonomous weapons in other ways.
Behind the news: A number of U.S. laws empower the Department of War to name supply-chain risks to national security. This designation allows the government to exclude such risky companies from either defense contracts or all federal contracts and to disallow other contractors from working with them. The only use of this power in the public record occurred last year, when the Department of War issued an order against Acronis, a Swiss cybersecurity firm that has reported ties to Russia, Lawfare reported. Other laws empower other federal departments to name supply-chain risks. For instance, in 2024 the Department of Commerce designated Kaspersky, a Russian cybersecurity company, a supply-chain risk to federal information systems, in 2020 the Federal Communications Commission labeled the Chinese electronics manufacturers Huawei and ZTE risks to communications supply chains.
Why it matters: AI is rapidly becoming entangled in issues of national security and national identity. The disputes between Anthropic, the White House, and the Department of War, and their implications for OpenAI, xAI, and Google, raise difficult questions about limits on the power of governments to manage warfare and the power of AI companies to set the terms of their models’ use. The Department of War, which would like a free hand to use AI as it sees fit, imposed an unprecedented penalty — which struck many observers as a harsh retaliation against Anthropic’s firm stand — and Anthropic showed faith that courts will rule the punishment invalid.
We’re thinking: The U.S. Congress is responsible for making rules that protect the Americans from mass surveillance and autonomous weapons. Exercising that responsibility could head off conflicts between the government and AI developers. Laws that placed appropriate limits on AI applications would provide clear guidelines to help resolve such power struggles between the military and technology companies.