A Big Tech industry group, including Amazon and Nvidia, expressed concern over the Pentagon's move to designate AI company Anthropic as a supply-chain risk. This stems from a months-long dispute where the Pentagon wants AI for all lawful military uses, while Anthropic refuses to allow its technology to power autonomous weapons or mass surveillance.
Investors are actively working to resolve the conflict, engaging with Anthropic executives and reaching out to Trump administration contacts to avoid a broader ban. The clash is seen as a key test of how much control AI companies can retain over their technology's military applications.
The main topics covered are the Pentagon's risk designation of Anthropic, the core dispute over ethical "red lines" for military AI use, and the efforts by investors and industry groups to mediate the conflict.
A Big Tech industry group consisting of major Anthropic backers Amazon and Nvidia on Wednesday expressed concern over the Pentagon's decision to declare the artificial intelligence company a supply-chain risk as other investors raced to contain fallout from the lab's fight with the U.S. Defense Department.
In a letter dated Wednesday, the Information Technology Industry Council, whose members include Nvidia, Amazon.com, Apple and OpenAI said, "We are concerned by recent reports regarding the Department of War's consideration of imposing a supply-chain risk designation in response to a procurement dispute."
The letter does not name Anthropic. In recent days, CEO Dario Amodei has discussed the matter with some of Anthropic's major investors and partners, including Amazon.com âCEO Andy Jassy, two of the â people said. Venture â capital firms, including Lightspeed and Iconiq have also been in contact with Anthropic executives, two sources said.
Lightspeed and Iconiq are also talking to other investors about potential solutions, according to one of the sources.
Some investors are also reaching out to their contacts in the Trump administration in hopes of tamping down the tensions, two sources said. The discussions focus on avoiding a ban of Anthropic's AI from all Pentagon contractors, the people said.
Anthropic and the Pentagon are continuing some talks in the meantime, one of the people said. Reuters was unable to determine what such talks entailed. U.S. President Donald Trump has called on Anthropic to help the government phase out its AI systems. The Pentagon declined to comment. Investors, including Amazon, did not immediately respond to a request for comment.
Anthropic and the Defense Department, which the Trump administration renamed the Department of War, have been in a months-long dispute over how the military can use its technology on the battlefield. The clash is widely seen as a referendum on how much control AI companies can have over the technology they've built, systems they hope can transform education, public services and other aspects of society.
The Pentagon has pushed AI companies â to drop red âlines in favour of abiding by an all-lawful use clause. But Anthropic has refused to back down on bans for its Claude AI to power autonomous weapons and mass U.S. surveillance.
Anthropic was first among peer AI companies to work with classified information through a supply deal via cloud provider Amazon.
OpenAI said Friday that it reached its own classified deal with the Pentagon and that Anthropic should not be â labelled a risk to the department.
"Our red lines were the same as Anthropic's, which is at this point in time, no domestic surveillance and no use of AI for autonomous weapons," Connie LaRossa, who works on national security policy at OpenAI, said on a panel at an Aspen Digital conference in Northern California on Wednesday.
"We are actually working to have the secure risk designation removed from Anthropic ... That shouldn't be applied to a U.S. industry counterpart with such an important tool."
Funding risks
During talks with Anthropic executives, investors have reiterated their support for the San Francisco-based AI lab while also expressing their desire to find a solution with the Pentagon, the seven people said. Some investors told Reuters they were frustrated that CEO Amodei antagonised rather than cultivated Pentagon officials. "It's an ego and diplomacy problem," one of the people briefed on the matter said.
At this point, some investors said, Amodei cannot be seen as capitulating to the administration without alienating a core group of employees and consumers who have flocked to Anthropic because of his stance.
Amodei, who did not respond to a request for comment, has said Anthropic cannot "in good conscience accede to their request." While speaking to investors late Tuesday, Amodei said the company would "continue to work to figure out a solution with âthe DoW."
The investors taking a stance on Pentagon talks are focused on helping Anthropic avoid being designated a "supply-chain risk" by the U.S. government, which, if implemented, could deliver a severe blow to the startup's fast-growing sales to business customers.
Demand has risen for Anthropic's products, such as its chatbot Claude and coding assistant Claude Code. Claude was the most-downloaded free app in the Apple App Store on Monday, surpassing OpenAI's ChatGPT. Defense Secretary Pete Hegseth has said such a risk designation would require all â government contractors to stop using Anthropic's technology in any part of their business.
Anthropic has publicly pushed back on Hegseth's comments, saying he does not have the statutory authority to block use of its AI outside of defence contracts. The Pentagon did not answer a request for comment on Anthropic's claim. Anthropic also said Friday it would challenge any supply-chain risk designation in court.
Still, some investors worry the spat could scare off potential customers who are looking to avoid being in the administration's crosshairs, generally, one of the people said. These worries come at a critical time for the startup. Anthropic has raised tens of billions of dollars on lofty expectations for its enterprise sales, which make up about 80% of Anthropic's revenue, the startup has said.
The success of future share sales, including its widely anticipated initial public offering, hinges on Anthropic's continuing to build its business revenue. Anthropic is in the process of letting employees sell shares to investors, and the company has previously said there is no decision yet on its IPO.
Anthropic's revenue run rate, or its projected annual revenue based on current data, is about $19 billion, one of the people said, up from $14 billion just a few weeks ago. The push from investors came as several U.S. government agencies started terminating their use of Anthropic's technology, with the State Department switching to rival OpenAI, following Trump's order on Friday to dump Anthropic within the next six months.
In a letter dated Wednesday, the Information Technology Industry Council, whose members include Nvidia, Amazon.com, Apple and OpenAI said, "We are concerned by recent reports regarding the Department of War's consideration of imposing a supply-chain risk designation in response to a procurement dispute."
The letter does not name Anthropic. In recent days, CEO Dario Amodei has discussed the matter with some of Anthropic's major investors and partners, including Amazon.com âCEO Andy Jassy, two of the â people said. Venture â capital firms, including Lightspeed and Iconiq have also been in contact with Anthropic executives, two sources said.
Lightspeed and Iconiq are also talking to other investors about potential solutions, according to one of the sources.
Some investors are also reaching out to their contacts in the Trump administration in hopes of tamping down the tensions, two sources said. The discussions focus on avoiding a ban of Anthropic's AI from all Pentagon contractors, the people said.
Anthropic and the Pentagon are continuing some talks in the meantime, one of the people said. Reuters was unable to determine what such talks entailed. U.S. President Donald Trump has called on Anthropic to help the government phase out its AI systems. The Pentagon declined to comment. Investors, including Amazon, did not immediately respond to a request for comment.
Anthropic and the Defense Department, which the Trump administration renamed the Department of War, have been in a months-long dispute over how the military can use its technology on the battlefield. The clash is widely seen as a referendum on how much control AI companies can have over the technology they've built, systems they hope can transform education, public services and other aspects of society.
The Pentagon has pushed AI companies â to drop red âlines in favour of abiding by an all-lawful use clause. But Anthropic has refused to back down on bans for its Claude AI to power autonomous weapons and mass U.S. surveillance.
Anthropic was first among peer AI companies to work with classified information through a supply deal via cloud provider Amazon.
OpenAI said Friday that it reached its own classified deal with the Pentagon and that Anthropic should not be â labelled a risk to the department.
"Our red lines were the same as Anthropic's, which is at this point in time, no domestic surveillance and no use of AI for autonomous weapons," Connie LaRossa, who works on national security policy at OpenAI, said on a panel at an Aspen Digital conference in Northern California on Wednesday.
"We are actually working to have the secure risk designation removed from Anthropic ... That shouldn't be applied to a U.S. industry counterpart with such an important tool."
Funding risks
During talks with Anthropic executives, investors have reiterated their support for the San Francisco-based AI lab while also expressing their desire to find a solution with the Pentagon, the seven people said. Some investors told Reuters they were frustrated that CEO Amodei antagonised rather than cultivated Pentagon officials. "It's an ego and diplomacy problem," one of the people briefed on the matter said.
At this point, some investors said, Amodei cannot be seen as capitulating to the administration without alienating a core group of employees and consumers who have flocked to Anthropic because of his stance.
Amodei, who did not respond to a request for comment, has said Anthropic cannot "in good conscience accede to their request." While speaking to investors late Tuesday, Amodei said the company would "continue to work to figure out a solution with âthe DoW."
The investors taking a stance on Pentagon talks are focused on helping Anthropic avoid being designated a "supply-chain risk" by the U.S. government, which, if implemented, could deliver a severe blow to the startup's fast-growing sales to business customers.
Demand has risen for Anthropic's products, such as its chatbot Claude and coding assistant Claude Code. Claude was the most-downloaded free app in the Apple App Store on Monday, surpassing OpenAI's ChatGPT. Defense Secretary Pete Hegseth has said such a risk designation would require all â government contractors to stop using Anthropic's technology in any part of their business.
Anthropic has publicly pushed back on Hegseth's comments, saying he does not have the statutory authority to block use of its AI outside of defence contracts. The Pentagon did not answer a request for comment on Anthropic's claim. Anthropic also said Friday it would challenge any supply-chain risk designation in court.
Still, some investors worry the spat could scare off potential customers who are looking to avoid being in the administration's crosshairs, generally, one of the people said. These worries come at a critical time for the startup. Anthropic has raised tens of billions of dollars on lofty expectations for its enterprise sales, which make up about 80% of Anthropic's revenue, the startup has said.
The success of future share sales, including its widely anticipated initial public offering, hinges on Anthropic's continuing to build its business revenue. Anthropic is in the process of letting employees sell shares to investors, and the company has previously said there is no decision yet on its IPO.
Anthropic's revenue run rate, or its projected annual revenue based on current data, is about $19 billion, one of the people said, up from $14 billion just a few weeks ago. The push from investors came as several U.S. government agencies started terminating their use of Anthropic's technology, with the State Department switching to rival OpenAI, following Trump's order on Friday to dump Anthropic within the next six months.
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