Trump bans all federal agencies from using Anthropic AI

President Trump ordered every federal agency to immediately stop using Anthropic's AI technology after the company refused Pentagon demands to remove safety restrictions on its Claude AI model. Defense Secretary Pete Hegseth designated Anthropic a "Supply-Chain Risk to National Security" -- a label previously reserved for foreign adversaries -- after a Friday deadline passed without agreement. The standoff centered on a $200 million Pentagon contract for classified AI work, which Anthropic will lose under a six-month phase-out order.

The core dispute is a question that will define how AI companies work with governments: who controls the limits on what an AI system can do? Anthropic refused two specific demands -- that Claude be available for fully autonomous weapons and mass domestic surveillance. The Pentagon insisted on "any lawful use" with no restrictions. Anthropic's public statement left no room for compromise: "No amount of intimidation or punishment from the Department of War will change our position." The company, valued at $380 billion, said it will challenge the national security designation in court. OpenAI CEO Sam Altman publicly backed the same red lines on weapons and surveillance -- even as OpenAI announced its own Pentagon deal for non-classified work on the same day.