By Swetha Anil Kumar
OpenAI CEO Sam Altman announced Friday that his company had reached an agreement with the U.S. Department of Defense, hours after the Trump administration banned rival Anthropic from all federal use.
Anthropic, based in San Francisco, makes the Claude AI model. Until this week, Claude was the only artificial intelligence tool deployed on the Pentagon’s classified networks. Negotiations between Anthropic and the Department of Defense broke down over two conditions Anthropic refused to remove from any contract. First, Claude would not be used in autonomous weapons systems where an AI, not a human, makes the decision to use lethal force. Second, it would not be used to conduct mass surveillance of American citizens.
The Pentagon sought the right to deploy the technology without those restrictions. Anthropic did not agree.
On Friday, February 27, President Trump ordered all federal agencies to immediately stop using Anthropic’s products. Defence Secretary Pete Hegseth designated the company a national security supply-chain risk, a classification previously applied to foreign entities such as China’s Huawei. Federal agencies were given six months to phase out Claude. The contract under negotiation was valued at up to $200 million.
Within hours, Altman posted on X confirming that OpenAI had signed a separate agreement with the Pentagon. The contract includes a prohibition on the use of AI in autonomous weapons decisions and a prohibition on domestic mass surveillance, the same two conditions Anthropic had demanded.
Altman had circulated an internal memo to staff, obtained by multiple news outlets, stating that these were existing principles at OpenAI and that the company would not negotiate on them.
Altman called on the Pentagon to offer the same contract terms to all AI companies. More than 60 OpenAI employees and over 300 Google employees had signed an open letter urging their employers to stand alongside Anthropic.
Reporting from Axios and Fortune cited Pentagon officials describing the breakdown with Anthropic as partly driven by tensions between Defence Department leadership and Anthropic CEO Dario Amodei.
Anthropic has said it will take legal action to challenge its national security designation, calling it retaliatory and without legal basis.