Anthropic makes last-ditch effort to salvage deal with Pentagon after blowup

Anthropic CEO Dario Amodei is reportedly back at the negotiating table with the Department of Defense in an attempt to salvage the company’s relationship with the US military and prevent it from being iced out of defense work for being a “supply chain risk.” Talks between the two parties imploded on Friday after weeks of bitter public feuding over the startup’s refusal to grant the Pentagon unrestricted access to its AI, with rivals like OpenAI rushing to fill the void.

Amodei is in talks with under-secretary of defense for research and engineering Emil Michael about a new contract that would allow the US military to continue using Anthropic’s Claude AI models, according to the Financial Times, citing unnamed sources with knowledge of the matter. Michael attacked Amodei on social media last week amid a tense standoff over acceptable military uses of AI, calling the executive a “liar” with a “God-complex” and accusing him of “putting our nation’s safety at risk.”

Securing a new deal could be a matter of survival for the US startup. Secretary of Defense Pete Hegseth said he would designate Anthropic a supply chain risk on Friday, a category typically reserved for companies with ties to foreign governments that pose national security risks to the United States. The designation would have a ripple effect throughout the US tech ecosystem, forcing firms to ditch Claude and sever ties with the company if they want to keep working on defense contracts.

A newly leaked memo sent from Amodei to Anthropic staff on Friday, first reported on by The Information and also seen by the FT, is likely to inflame already tense relations between the company and the Trump administration. In it, Amodei reportedly criticized OpenAI’s deal with the Pentagon as “safety theater” and described the messaging from both parties as “straight up lies.”

Amodei suggested Anthropic’s relationship with the federal government had soured because, unlike OpenAI or its executives, “we haven’t donated to Trump” and “we haven’t given dictator-style praise to Trump.” OpenAI CEO Sam Altman is one of many Silicon Valley heavyweights cosying up to the transactional president since he returned to office and cofounder Greg Brockman, also OpenAI’s longtime president, is a Trump mega-donor.

In the memo, Amodei also said the Department of Defense was close to accepting Anthropic’s terms:

“Near the end of the negotiation the [department] offered to accept our current terms if we deleted a specific phrase about ‘analysis of bulk acquired data’ which was the single line in the contract that exactly matched this scenario we were most worried about. We found that very suspicious.”

Anthropic’s ugly dispute with the Pentagon has centered around the Defense Department’s insistence on carte blanche access to the company’s technology and the startup’s refusal to compromise on its two red lines for military use: no mass surveillance of Americans and no lethal autonomous weapons, AI systems with the power to kill without human oversight. Hegseth has insisted the AI technology used by the department should be available for “any lawful use,” terms Anthropic has refused amid concerns it could cross these red lines. xAI and OpenAI have reportedly agreed to those terms.