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Today, we will talk about the AI companies that are lining up to power the Pentagon’s next generation of autonomous systems, except one big player, and it might cost them.
Let's get into it.
TODAY'S DEEP DIVE
Why Anthropic Is Saying No to the Pentagon
The Pentagon is quietly becoming the most important AI customer in the world. They are launching secretive contests and billion‑dollar programs for everything from planning tools to autonomous drone swarms.
Most AI companies see this as a golden opportunity. SpaceX and xAI have entered a classified 100 million dollar Pentagon contest to build voice‑controlled autonomous drone swarms, on top of a 200 million dollar contract to integrate their AI into military systems and a separate deal to deploy Grok in government sites.
OpenAI is collaborating too, helping translate human voice commands into structured instructions for military systems, though it says it will stop short of controlling weapons behaviour.
Amid all this, one company is pulling in the opposite direction: Anthropic.
While everyone else is racing to win Pentagon favour, Anthropic is in a public fight with the Department of Defence (DoD) over how far its AI can be used for surveillance and weapons. The Pentagon is now threatening to label Anthropic a “supply chain risk,” a designation usually reserved for hostile foreign vendors.
The Pentagon, Washington, D.C., USA
What the Pentagon wants
The Pentagon’s position is simple and aggressive: it wants the major AI labs to let the military use their models for “all lawful purposes.” In practice, that includes:
Weapons development
Intelligence gathering and large‑scale data analysis
Battlefield operations and targeting
Potentially autonomous systems that use AI in the decision loop
From the Pentagon’s perspective, AI is now too strategically important to be fenced off with usage policies. If the tech works, they want to be able to apply it across the full spectrum of military operations.
What Anthropic is refusing
Anthropic has drawn two hard lines in its usage policies for Claude:
No mass surveillance of US citizens.
No autonomous weaponry that can kill without meaningful human oversight.
Anthropic is reportedly willing to relax some safeguards and already allows Claude to be used in certain classified systems, but refuses to simply flip the switch to all lawful purposes. That is the core of the standoff.
The Pentagon, frustrated after months of negotiations, is now considering cutting Anthropic off entirely and designating it a supply‑chain risk. That would force every defense contractor that currently uses Claude to drop Anthropic from their stack.
One senior official was quoted saying they will “make sure they pay a price for forcing our hand like this”. That is unusually harsh language for a US‑based vendor.
Why everyone else is leaning in
At the same time, companies like SpaceX, xAI, and OpenAI are moving in the opposite direction.
SpaceX and xAI are competing to build software that can control swarms of autonomous drones via voice command, including targeting and mission execution phases.
OpenAI is taking a narrower role, focusing on converting voice commands into digital instructions, while claiming it will not directly manage weapons behavior.
Beyond that, the Pentagon has launched a broader Drone Dominance initiative worth over 1 billion dollars to field hundreds of thousands of cheap, weaponized drones by 2027. AI sits at the centre of all of this.
For AI companies hungry for revenue, influence, and serious government use cases, it is hard not to see defence work as an irresistible market.
Why Anthropic’s stance matters
Anthropic’s position is not just a branding exercise. It creates real tension between two visions of how frontier AI should be used:
If the use is legal and the customer is the US government, the vendor should enable it. Trust the state, not the AI company, to set ethical boundaries.
Some capabilities are too risky to hand over without conditions, even to your own government. Vendors should enforce red lines in their models.
Anthropic is betting on the second view. It is effectively saying, “We would rather lose Pentagon business than build systems for mass domestic surveillance or kill‑chain autonomy.”
The Pentagon is signalling that this stance makes Anthropic unreliable as a supplier for critical systems. If it follows through on the supply chain risk label, Anthropic could get locked out of a huge and growing category of AI demand.
The uncomfortable trade-off
The bigger question hiding underneath this fight:
Who should decide where AI is used in war, elected governments, or private labs?
If governments decide, AI companies become infrastructure, not moral gatekeepers. They implement whatever their customers legally ask for.
If labs decide, they effectively gain veto power over how states can apply powerful technology in defence, intelligence, and warfare.
Neither option is clean.
Letting private companies dictate military doctrine feels wrong in a democracy. Letting any government, even a democratic one, push models into “all lawful purposes” without vendor‑level guardrails feels equally dangerous in an era of autonomous weapons and totalizing surveillance.
Anthropic’s fight with the Pentagon is the first major test case of where that line gets drawn.
The Bottom Line
This isn’t just defence‑industry drama. It signals where AI is heading:
If Anthropic gets punished and locked out, every other lab will learn the same lesson: do not say no to the Pentagon. Future usage policies will be written with that threat in mind.
If Anthropic holds its ground and still survives commercially, it sets a precedent that labs can enforce red lines on military AI use and live to tell the tale.
Either way, AI is moving deep into military applications. Drone swarms, battlefield planning, intelligence analysis, targeting systems, all of it is getting smarter. The open question is whether anyone is allowed to say “no” to some uses.
Right now, Anthropic is testing that question in real time.
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ONE LAST THING
If you were running an AI lab, would you take Pentagon money with no usage limits? Or would you do what Anthropic is doing and risk being cut off? Hit reply, I read every response.
See you tomorrow with another story.
— Vivek
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