The United States government has officially designated a leading
American artificial intelligence company a supply chain risk to
national security. Which is a label they usually
save for foreign adversaries. We are talking about the exact
same classification used for Huawei and ZTE.
The Department of War has effectively placed a Do not
touch order on Anthropic. That sounds like a lot more than
just a cancelled contract. Oh, it is.
It's an absolute blacklist. It prohibits military
contractors, suppliers, basically any partners from
conducting commercial activity with the company.
If the government can blacklist a domestic company for refusing
to remove safety guardrails from its software, does the private
sector actually retain any control over how its technology
is used in warfare? That is the multibillion dollar
question here. And this whole thing didn't
start in some corporate boardroom.
It started with a specific military operation, specifically
the raid in Caracas to capture Nicolas Maduro, right?
Operation absolute resolve. Exactly.
According to reports, the US military utilized Anthropic's
model CLAWED during the planning and execution of this operation.
Now Anthropic doesn't have a direct contract to sit in the
situation room. The integration happened through
Palantir. We should probably clarify
Palantir's role here, because they aren't just, you know, a
simple database company. No, no.
Think of Palantir as as the operating system for Modern
Warfare. They have this platform called
the Maven Smart system. It ingests satellite imagery,
drone feeds, intercepted communications, basically all
the messy data of war. And it synthesizes it into a
coherent picture for the commanders on the ground.
Right. And they were running clawed
inside that ecosystem to help process all that information.
The mission itself was technically a success.
I mean, the administration got what they wanted, but the
friction actually started afterward.
Yeah, it started because Anthropic asked a question.
Following the operation, company leadership allegedly inquired
whether their technology had been utilized in the raid, and
that inquiry triggered an immediate alarm at the Pentagon.
Why though? I mean, if I sell a product,
asking how it was used seems pretty standard.
Not when you were dealing with classified operations.
But Anthropic felt they had to ask because of constitutional
AI. Let's use plain English for
that. What exactly is Constitutional
AI? Sure, so most AI models are
trained on massive amounts of Internet text and then just fine
tune to be helpful. Anthropic takes a totally
different approach. They give the model a
constitution, a specific set of ethical principles it has to
follow. Like rules against generating
harm or things like that. Exactly.
Rules like do not help kill people, do not violate privacy,
do not create hate speech. The model essentially checks its
own output against this Constitution before it even
responds. So to know if the model actually
followed its own constitution, the company needs to know what
it was doing. Yes, they need a degree of
transparency to ensure their ethical guidelines aren't being
violated, and the Pentagon viewed this request for
transparency as a massive liability.
Because it's an operational security issue for them.
Right. They saw a private vendor in San
Francisco claiming they had the right to audit a military
operation. To the generals, that just looks
like a vendor trying to exercise veto power over national
security decisions. They see a tool they bought and
the tool maker wants to verify if it was used to hurt someone.
And that friction LED directly to the ultimatum.
The Pentagon, led by Secretary Pete Hegseth, issued a directive
to all AI vendors. The rule was very simple.
AI vendors must allow their tools to be used for all lawful
purposes. All lawful purposes.
That phrase does a lot of heavy lifting, but Anthropic refused
to agree to that broad language. They did.
They insisted on maintaining 2 very specific red lines in their
contract, regardless of whether the government called it lawful
or not. What were the 2 lines?
1st, The AI cannot be used for mass domestic surveillance of
American citizens. OK, that seems straightforward.
And the second. Second, it cannot be used for
fully autonomous weapons. Wait, hold on, let me just make
sure I have this straight. What is the specific definition
of an autonomous weapon in this context?
We are talking about systems that select and engage targets
without human intervention. In military terminology, it's
lethal autonomous weapons systems.
Meaning the software processes the sensor data, identifies a
human being as a target, and authorizes the strike.
Yes, all without a person ever pressing a button.
So Anthropic basically said we will not build the software that
decides who dies. Correct.
The government's counter argument is that lawful use
already covers those concerns. They argue that if an action is
legal under the Constitution, a private company has no right to
block the government from using its procured tools to execute
it. But we if the Pentagon says
lawful use is the only standard they will accept, and they
refuse to sign a ban on autonomous weapons, are they
admitting they plan to use them? That is the real Gray area, the
Pentagon spokesperson stated. They have no interest in mass
surveillance or autonomous weapons without human oversight
right now. They actually called those fears
fake. However, they refuse to sign a
contract that explicitly forbade it.
Exactly. Their position is entirely about
operational flexibility. They on a you they cannot have a
Terms of Service agreement overriding a commander's
decision in the field 5 or 10 years from now.
And Anthropic is saying the technology just isn't safe
enough for that. That is their core argument.
They point out that current large language models
hallucinate. They make up facts.
They misinterpret context entirely.
Which is a known issue across the industry.
Yes. So Anthropic believes relying on
them for autonomous killing is reckless and mass surveillance
violates fundamental rights. They view these strictly as
safety issues. While the administration argues
that lawful is the only standard that matters and what corporate
policies cannot constrain the military?
Exactly. OK, let's pause here to reset
the pace. Usually when a company says no
to the government, they just lose the contract.
They don't get the money. Right.
You walk away, you lose the revenue, maybe your stock dips a
bit, but you just continue doing business with everyone else.
But the administration didn't just cancel the contract in this
case, they went much further. They absolutely did.
President Trump ordered all federal agencies to immediately
cease using Anthropics technology, and then Secretary
Hegseth followed up by designating the company a supply
chain risk under 10US Code Section 3252.
I want to focus on that specific statute, NUS Code section 3252.
What does that actually mean? This is a statute designed
specifically to prevent espionage and sabotage by
foreign enemies. It is the exact legal tool used
to ban Huawei and ZTE because of fears they were funneling data
straight to the Chinese Communist Party.
So it implies the company is an active threat to the integrity
of the nation's defense. Yes, and applying it to an
American firm for a contract dispute is entirely
unprecedented. It acts as a corporate death
penalty in the federal sector because.
It's not just the Pentagon that has to top using them now.
Exactly. It effectively forces any
company that wants to work with the military.
Companies like Boeing, Lockheed Martin or Palantir to strip
Anthropic out of their own internal workflows.
So if I'm an engineer at Lockheed Martin and I use Claude
to write code or summarize technical documents for my daily
work. You are now a liability.
Lockheed Martin cannot risk its massive government contracts by
harboring a designated supply chain risk in its software
stack. They have to RIP it completely
out. There's a massive contradiction
in the order itself though. It claims Anthropic is a
security risk, but simultaneously mandates they
continue providing services for a six month transition period.
Which really highlights that this isn't about espionage.
Think about it, if Huawei was actively spying on the Pentagon,
you wouldn't say, OK, keep the routers plugged in for six more
months while we find a replacement.
Right, you would cut the line immediately.
You would sever it that second. So that tells us they need the
tech. They absolutely need the tech,
they just don't want the rules that come with it.
Keeping them on for six months admits that the government is
highly dependent on these models.
So this designation is just a power play.
Completely. It threatens Anthropics entire
enterprise ecosystem and its projected IPO.
It signals to the rest of Silicon Valley that
noncompliance comes with an existential cost.
And almost immediately, another company stepped in to take
advantage. Yes, hours after the ban on
Anthropic was announced, open AICEO, Sam Altman announced a
new agreement. The pivot was instant open AI
stepped right into the vacuum. They announced an agreement to
deploy open AI models on the Department of War's classified
networks. Here's the part that is really
confusing to me. Open AI claims they have the
exact same red lines as Anthropic regarding surveillance
and autonomous weapons. Publicly, yes, their safety
guidelines prohibit the exact same things.
So if they have the same red lines, why did the Pentagon ban
one and sign the other? Why is Anthropic a security risk
and Open AIA trusted partner? It comes down to the mechanism
of enforcement. Anthropic wanted strict
contractual prohibitions. They wanted a written veto in
the deal that they could enforce legally.
Open AI adopted A layered approach instead.
What does a layered approach actually mean in this context?
It means they are relying on a cloud only deployment structure
and the government's own interpretation of the law.
Open AI agreed to the All Lawful Use standard.
So they are effectively betting that the government won't define
mass surveillance or autonomous weapons as lawful.
Correct. Altman stated that the
department agrees domestic surveillance is illegal, so they
didn't need to fight over it. Open AI integrated their safety
stack into the deployment rather than demanding external
oversight of specific missions. So Anthropic wanted the
government to sign a paper saying we promise not to do X,
Open AI said. We know X is illegal, so we
don't need you to sign a paper. Essentially, yes.
They gave the Pentagon the lawful use language they
demanded while assuring the public that their technical
architecture prevents the bad stuff.
It sounds like Open AI gave the Pentagon an optical win.
And a contractual 1 The Pentagon gets to say we don't bow to
terms of service and Open AI gets the massive contract.
During this entire fallout, the administration publicly attacked
Anthropic as a radical left and woke company.
The record really contradicts that characterization.
Though Anthropic is funded by major corporate players like
Amazon and Google, their CEO Dario Amadei has publicly stated
that AI is existentially important for National Defense.
He's not exactly a pacifist. Far from it.
He has explicitly stated he supports helping the US military
defeat autocratic adversaries. He even admitted in interviews
that autonomous weapons might eventually be necessary.
Wait, really? So what is his actual objection?
His objection is entirely that the current technology isn't
safe enough yet. He argues that LLMS hallucinate
and make unpredictable errors and therefore shouldn't be
making keel decisions today. That seems like a technical
argument, not a political one. Exactly.
It suggests the woke label is just political cover.
The real issue here is the sovereign AI doctrine.
Meaning what? The administration is
establishing that the state, not private labs, is the final
arbiter of how technology is deployed.
It is a fundamental shift from a safety first model to a
deployment first mandate. They are worried about falling
behind. They are looking straight at
China. The argument is that if American
companies are permitted to constrain the military with
safety guardrails, the United States will lose the advantage
to an adversary that operates without any such constraints.
They want the tech to be totally subservient to national security
objectives. This supply chain risk, does it
stop at the Pentagon? No, the General Services
Administration has already terminated Anthropics One Gov
deal. That means agencies totally
outside the military, like the Department of Energy or the EPA,
might have to stop using Quad. It it effectively chills the
entire market for them. It forces every company to make
a hard choice. If you want to do business with
the US government in any capacity, you cannot use the
Risk software. It consolidated power strictly
around the vendors who agree to the government's terms.
To wrap this up, Anthropic held the line on their terms of
service and was designated a National Security Risk Open AI
aligned with the government's legal framework and became the
primary partner for the military.
The main take away here is that the Silicon Valley consensus,
this era where companies felt they could dictate ethical terms
to the government, is effectively dead.
The government has demonstrated it is entirely willing to use
the full weight of executive power to ensure AI companies are
subservient to national security objectives.
If you're not subscribed yet, take a second and hit follow on.
Whatever a you're using, it helps us keep making this.
We appreciate you being here.