Anthropic is heading into Friday in a no-win situation.
The artificial intelligence startup has until 5:01 p.m. ET to decide whether it will agree to allow the Department of Defense to use its models in all lawful use cases without limitation. If it doesn’t, Defense Secretary Pete Hegseth has threatened to label the company a “supply chain risk” or force it to comply by invoking the Defense Production Act.
Anthropic signed a $200 million contract with the DoD in July, and was the first AI lab to integrate its models into mission workflows on classified networks. The company has been negotiating the terms of its agreement with the agency, and has asked for assurance that its technology won’t be used for fully autonomous weapons or domestic mass surveillance of Americans.
“In a narrow set of cases, we believe AI can undermine, rather than defend, democratic values,” Anthropic CEO Dario Amodei, who co-founded the company in 2021, wrote in a statement on Thursday. “Some uses are also simply outside the bounds of what today’s technology can safely and reliably do.”
The DoD has refused to budge, and negotiations have devolved into a stalemate that’s turned into the most high-profile test to date of Anthropic’s stated values. The company has spent years carefully crafting its reputation as the champion of safe and responsible AI deployment, positioning itself in contrast to OpenAI, where Amodei worked before leaving to start Anthropic.
But Anthropic is simultaneously facing intense pressure to justify its massive $380 billion valuation, supported by large institutional and strategic investors, while it races to stay on the cutting edge of model development and fend off competition from OpenAI and other rivals including Google and Elon Musk’s xAI. All three of those companies’ models are used by the Defense Department.
Caving to the DoD’s demands could damage Anthropic’s reputation and alienate employees and customers. But if Anthropic refuses to agree to give the military unfettered access to its models, it could lose out on meaningful revenue in the short term and be shut out of potential future opportunities with other companies that do business with the government.
“There are no winners in this,” Lauren Kahn, a senior research analyst at Georgetown’s Center for Security and Emerging Technology, told CNBC in an interview. “It leaves a sour taste in everyone’s mouth.”
Sean Parnell, the chief Pentagon spokesperson, said Thursday that the DoD has “no interest” in using AI for fully autonomous weapons or to conduct mass surveillance of Americans, which he noted is illegal. He said the agency wants Anthropic to agree to allow its models to be used for “all lawful purposes.”
“This is a simple, common-sense request that will prevent Anthropic from jeopardizing critical military operations and potentially putting our warfighters at risk,” Parnell wrote in a post on X on Thursday. “We will not let ANY company dictate the terms regarding how we make operational decisions.”
In a separate post on Thursday, Emil Michael, the undersecretary of defense for research and engineering and a former Uber executive, wrote that Amodei is a “liar and has a God-complex.” He accused Amodei of wanting “nothing more than to try to personally control the U.S. Military.”
Hegseth set Anthropic’s Friday deadline during a meeting with Amodei earlier this week, and warned that punishment for not agreeing could be severe. He said Anthropic could be labeled a “supply chain risk,” a designation that’s typically reserved for companies from countries viewed as adversaries. The label would force DoD vendors and contractors to certify that they don’t use Anthropic’s models.
Amodei said his company won’t be intimidated.
“These threats do not change our position: we cannot in good conscience accede to their request,” he wrote in his Thursday statement.
‘The juice isn’t worth the squeeze’
The escalating conflict is one that other AI labs, industry experts and government contractors have been watching closely. Kahn warned that the government could push away tech companies with promising products if they conclude “the juice isn’t worth the squeeze.”
“I’m really, truly, honestly worried that private companies will say, ‘It’s not worth our time to work with the defense sector moving forward,'” Kahn said, adding that the people “who will be really suffering are the war fighters.”
OpenAI CEO Sam Altman told CNBC on Friday that he doesn’t “personally think the Pentagon should be threatening DPA against these companies.” He said he thinks it is important for companies to choose to work with the department as long as it is going to comply with legal protections and the “few red lines” that the field shares with Anthropic.
“For all the differences I have with Anthropic, I mostly trust them as a company, and I think they really do care about safety, and I’ve been happy that they’ve been supporting our war fighters,” Altman said in an interview. “I’m not sure where this is going to go.”
Several employees from Anthropic and elsewhere in the industry have taken to social media in recent days to express their support for the company.
Josh McGrath, a technical staffer at OpenAI, wrote in a post on X on Tuesday that he’s “at a loss for words about what’s happening.”
More than 330 employees from Google and OpenAI have also signed an open letter titled “We Will Not Be Divided” that aims to create a “shared understanding and solidarity in the face of this pressure” from the department, according to its website.
“We hope our leaders will put aside their differences and stand together to continue to refuse the Department of War’s current demands for permission to use our models for domestic mass surveillance and autonomously killing people without human oversight,” the letter says.
United States Secretary of War Pete Hegseth speaks during a visit to Sierra Space in Louisville, Colorado on Monday, Feb. 23, 2026.
Aaron Ontiveroz | Denver Post | Getty Images
For Anthropic, it’s just the latest conflict with the Trump administration.
David Sacks, the venture capitalist serving as the White House AI and crypto czar, previously accused Anthropic of supporting “woke AI” because of its stance on regulation, and of “running a sophisticated regulatory capture strategy based on fear-mongering,” after a company executive wrote an essay in October titled “Technological Optimism and Appropriate Fear.”
Amodei has also largely avoided rubbing elbows with President Donald Trump, in contrast to other industry executives, including Altman, Apple CEO Tim Cook and Google CEO Sundar Pichai. Amodei notably didn’t attend Trump’s inauguration last year.
In January, Hegseth published a memo titled “Accelerating America’s Military AI Dominance.” In it, he wrote that the DoD must not employ AI models that “incorporate ideological ‘tuning,'” and said the department “must also utilize models free from usage policy constraints that may limit lawful military applications.”
While Amodei has held firm on his company’s commitment to safe use of its models, he said Thursday that Anthropic’s “strong preference” is to continue to work with the DoD and to support U.S. national security.
“Should the Department choose to offboard Anthropic, we will work to enable a smooth transition to another provider, avoiding any disruption to ongoing military planning, operations, or other critical missions,” Amodei wrote.
— CNBC’s Kate Rooney contributed to this report
WATCH: Anthropic rejects Pentagon’s ‘final offer’ in AI safeguard fight
