Anthropic vs. The Pentagon: Claude AI’s Military Contract Collapses — Then Talks Resume

TLDR

• Anthropic’s $200M Pentagon contract collapsed after the DoD demanded Anthropic remove language restricting “analysis of bulk acquired data”
• President Trump directed federal agencies to stop using Anthropic’s tools; Defense Secretary Hegseth threatened to label the company a national security supply-chain risk
• OpenAI quickly signed its own Pentagon deal, but CEO Sam Altman later said his company “shouldn’t have rushed” and called for Anthropic not to be designated a supply-chain risk
• Anthropic’s Claude topped the Apple App Store following the public fallout, with annualized revenue jumping from $14 billion to $19 billion
• Talks between Anthropic CEO Dario Amodei and Pentagon officials have since resumed

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Anthropic CEO Dario Amodei is back in talks with the U.S. Department of Defense after negotiations over the military’s use of Claude AI broke down on Friday, according to The Financial Times.

Amodei is reportedly meeting with Emil Michael, under-secretary of defense for research and engineering, in an effort to salvage a deal governing Pentagon access to Claude models.

The original $200 million Pentagon contract made Claude the first major AI model deployed in the government’s classified networks. The deal was signed by mid-2025.

Talks broke down when the DoD asked Anthropic to delete a specific phrase about “analysis of bulk acquired data” from the contract terms. Amodei said in an internal memo that this phrase covered exactly the scenario he feared most.

Anthropic had sought guarantees its tools would not be used for domestic surveillance or autonomous weapons. The Pentagon pushed back, arguing it should be able to use the technology for any lawful purpose.

President Trump then directed federal agencies to stop using Anthropic’s tools. Defense Secretary Pete Hegseth said he would designate the company a supply-chain risk to national security.

OpenAI Steps In — Then Steps Back

Within hours of the White House’s move against Anthropic, OpenAI announced a new deal with the Pentagon. The timing triggered a public backlash.

ChatGPT saw a surge in app uninstalls, while Claude climbed to the top of the Apple App Store. Anthropic’s annualized revenue pace rose from $14 billion to $19 billion in a matter of weeks.

Anthropic investors, including Amazon CEO Andy Jassy, have discussed the situation directly with Amodei. Other investors reached out to the Trump administration to avoid a broader ban on Anthropic’s AI for all Pentagon contractors.

Some investors were frustrated, saying the problem was as much about “ego and diplomacy” as it was about policy substance.

Anthropic’s Business at Stake

Enterprise sales make up roughly 80% of Anthropic’s revenue. The company’s anticipated IPO depends heavily on continued revenue growth.

A tech industry group that includes Nvidia, Google, and Anthropic sent a letter to Hegseth on Wednesday expressing concern about designating a U.S. company as a supply-chain risk.

As of the latest reports, some talks between Anthropic and the Pentagon are continuing, though the terms remain unclear.

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