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Pentagon Labels Anthropic a Security Risk After $200M Contract Collapse Over AI Use Terms

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The US Department of Defense terminated an estimated $200 million contract with AI company Anthropic in 2026 after negotiations broke down over how the military could use its models. Anthropic CEO Dario Amodei refused to sign a clause permitting 'any lawful use,' seeking explicit prohibitions on domestic mass surveillance and autonomous weapons, while the government pushed for fewer restrictions. Following the breakdown, Defense Secretary Pete Hegseth designated Anthropic a 'Supply-Chain Risk to National Security' — reportedly the first time such a label, typically reserved for foreign adversaries, was applied to an American company. OpenAI subsequently stepped in to take on the Pentagon work Anthropic had declined. A federal judge issued a preliminary injunction in March 2026, suggesting the designation may constitute retaliation protected under the First Amendment, leaving the matter unresolved in court.

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Pentagon Labels Anthropic a Security Risk After $200M Contract Collapse Over AI Use Terms · ShortSingh