By Andrea Shalal, Jeffrey Dastin and Ryan Patrick Jones
WASHINGTON, Feb 27 (Reuters) – U.S. President Donald Trump said on Friday he is directing the government to stop work with Anthropic and the Pentagon said it will declare the startup a supply-chain risk, dealing a major blow to the artificial intelligence lab after a showdown about technology guardrails.
Trump added there would be a six-month phase-out for the Defense Department and other agencies that use the company’s products. If Anthropic does not help with the transition, Trump said, he would use “the Full Power of the Presidency to make them comply, with major civil and criminal consequences to follow.”
Spokespeople for Anthropic, which won up to $200 million from the Pentagon in a contract last year, did not immediately respond to a request for comment.
The planned designation as a supply-chain risk, announced by Defense Secretary Pete Hegseth, means that contractors could be barred from deploying Anthropic’s AI as part of work for the Pentagon. The defense industrial base includes tens of thousands of contractors, including major public companies.
The designation is typically reserved for suppliers from adversary nations. Such action was taken to remove Chinese tech giant Huawei from the Pentagon’s supply chains: Starting in 2017, the U.S. restricted Defense Department use of Huawei equipment, prohibited federal agencies from purchasing its technology, and halted federal grant and loan funds for Huawei equipment.
Anthropic could launch a court challenge to the designation, which poses an existential threat to its business with the government and may harm its private-sector relationships, according to Franklin Turner, an attorney who specializes in government contracts.
“Blacklisting Anthropic is the contractual equivalent of nuclear war,” he said.
WEAPONS, SURVEILLANCE CONCERNS
The Pentagon had set a Friday deadline to resolve an escalating feud with San Francisco-based Anthropic over how the military could use AI at war.
AI leader Anthropic has raced to win fierce competition to sell novel technology to businesses and government, particularly for national security, ahead of a widely expected initial public offering. The company has said it has not finalized an IPO decision.
At the same time, the battle over technological guardrails had raised concerns that the Defense Department would follow U.S. law but few other constraints when deploying AI for national-security missions, regardless of safety or ethics terms required by the technology’s developers.
Anthropic had sought guarantees that its AI would not be used for fully autonomous weapons or for mass domestic surveillance – applications in which the Pentagon has said it had no interest.
Anthropic was the first frontier AI lab to put its models on classified networks via cloud provider Amazon.com and the first to build customized models for national security customers, the startup has said.
Its product Claude is in use across the intelligence community and armed services.
U.S. Senator Mark Warner, a Democrat and vice chairman of the Select Committee on Intelligence, criticized the action taken by Trump, a Republican.
“The president’s directive to halt the use of a leading American AI company across the federal government, combined with inflammatory rhetoric attacking that company, raises serious concerns about whether national security decisions are being driven by careful analysis or political considerations.”
Tech companies and the Pentagon have repeatedly locked horns since at least 2018, when employees at Alphabet’s Google protested against the Pentagon’s use of the company’s AI to analyze drone footage. A rapprochement ensued with companies including Amazon and Microsoft jousting for defense business, while several big-tech CEOs pledged cooperation last year with the Trump administration.
But theoretical “killer robots” have remained a concern held by human-rights and technology activists. At the same time, Ukraine and Gaza have become theaters for increasingly automated systems on the battlefield.
(Reporting by Jeffrey Dastin in San Francisco, Ryan Patrick Jones in Toronto, Andrea Shalal, Mike Stone and Chris Sanders in Washington, Jack Queen in New York and Ismail Shakil in Ottawa; Writing by Daphne Psaledakis; Editing by Caitlin Webber, Matthew Lewis and Edmund Klamann)
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