Pentagon threatens to make Anthropic a pariah if it refuses to drop AI guardrails

By Hadas Gold, Haley Britzky, CNN

(CNN) — Defense Secretary Pete Hegseth gave Anthropic CEO Dario Amodei a Friday deadline to comply with demands to peel back safeguards on its AI model or risk losing a Pentagon contract.

He also threatened to put the AI company on what could amount to a government blacklist.

At issue is the guardrails Anthropic placed on its AI model Claude. The Pentagon, which has a $200 million contract with Anthropic, wants the company to lift its restrictions for the military to be able to use the model for “all lawful use,” according to two sources familiar with the discussions.

But Anthropic has concerns over two issues that it isn’t willing to drop, the source said: AI-controlled weapons and mass domestic surveillance of American citizens. According to one source familiar, Anthropic believes AI is not reliable enough to operate weapons, and there are no laws or regulations yet that cover how AI could be used in mass surveillance.

A source familiar with the Tuesday meeting says the Pentagon plans to terminate Anthropic’s contract by Friday if the company does not agree to its terms. A Pentagon official told CNN the company has until 5:01pm on Friday to “get on board or not.” And if it doesn’t, Hegseth will ensure “the Defense Production Act is invoked on Anthropic, compelling them to be used by the Pentagon regardless of if they want to or not.” Hegseth will also label Anthropic a supply chain risk, the official said.

The DPA is a law that gives the government the ability to influence businesses in the interest of national defense, recently invoked by the Trump administration during the pandemic. The supply chain risk designation would prohibit companies with military contracts from using Anthropic’s products in any of their military work. It could deal a major blow to the AI firm at a time when it’s trying to expand its reach in the enterprise space, considering many large corporations have military contracts. The designation is usually reserved for companies seen as extensions of foreign adversaries like Russia or China.

CNN has asked the Pentagon for clarification on how Anthropic could be both compelled under the DPA while also being labeled a supply chain risk.

During the meeting, the tone was cordial and respectful and there were no raised voices, the source familiar said, adding that Hegseth praised Anthropic’s products and said they want to work with them.

But Amodei reiterated Anthropic’s redlines on autonomous weapons and mass surveillance, and a source familiar said Anthropic has no plans to budge and adhere to the Pentagon’s demands.

The Pentagon official told CNN the issue has “nothing to do with mass surveillance and autonomous weapons being used” and that the “Pentagon has always followed the law.”

“You can’t lead tactical ops by exception,” the official said. “Legality is the Pentagon’s responsibility as the end user.”

An Anthropic spokesperson described the meeting to CNN as a “good-faith” conversation about usage of the company’s technology.

“Anthropic CEO Dario Amodei met with Secretary Hegseth at the Pentagon this morning. During the conversation, Dario expressed appreciation for the Department’s work and thanked the Secretary for his service,” Anthropic said in a statement to CNN. “We continued good-faith conversations about our usage policy to ensure Anthropic can continue to support the government’s national security mission in line with what our models can reliably and responsibly do.”

The negotiations have been ongoing for a couple months, the source said, but in recent weeks reports began surfacing about the tensions between the two sides.

Then last week, Axios reported Hegseth was close to cutting the Pentagon’s contract with Anthropic and designating the company a “supply chain risk.”

“Anthropic is committed to using frontier AI in support of US national security,” the Anthropic spokesperson said on Tuesday. “That’s why we were the first frontier AI company to put our models on classified networks and the first to provide customized models for national security customers.”

Anthropic’s fight with the Pentagon could create an opening for its competitors. The Pentagon official confirmed Elon Musk’s xAI company is “on board with being in a classified setting,” while others are “close.”

Anthropic has long positioned itself as the AI company most concerned with AI safety. Its founders were all former OpenAI employees who left the company over disagreements about the ChatGPT maker’s direction, approach to safety and pace of AI development. Anthropic also recently announced it is giving $20 million to a political group campaigning for more regulation of AI.

CNN’s Kaanita Iyer contributed to this report.

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