Defense Contractors Drop Claude AI as Trump Ban Forces Rapid Exodus from Anthropic

The US military is still using Claude -- but defense-tech clients are fleeing | TechCrunch

The aftermath of Anthropic's dispute with the Department of Defense has left the company in an awkward place -- both actively in use as part of the ongoing conflict between the U.S. and Iran, and decoupling from many of its clients in the defense industry. Part of the confusion is the overlapping and contradictory restrictions made by the U.S. government. President Trump has directed civilian agencies to discontinue use of Anthropic products, but the company was given six months to wind down its operations with the Department of Defense. The next day, the U.S. and Israel launched a surprise attack on Tehran, launching a continued conflict before Trump's directive could be fully executed. The result is that, as the U.S. continues its aerial attack on Iran, Anthropic models are being used for many targeting decisions. And while Secretary of Defense Pete Hegseth has pledged to designate the company as a supply-chain risk, no official steps have been taken to that end, so there are no legal barriers to the use of the system. An article in The Washington Post on Wednesday unearthed new details on how Anthropic's systems are being used in conjunction with Palantir's Maven system. As Pentagon officials planned the strikes, the systems "suggested hundreds of targets, issued precise location coordinates, and prioritized those targets according to importance," the Post reports. The article characterized the system's function as "real-time targeting and target prioritization." At the same time, many companies involved in the defense industry have already replaced Anthropic models with competitors. Lockheed Martin and other defense contractors began swapping out the company's models this week, according to a Reuters report. Many subcontractors are caught in a similar bind: a managing partner at J2 Ventures told CNBC that 10 of his portfolio companies "have backed off of their use of Claude for defense use cases and are in active processes to replace the service with another one." The biggest open question is whether Hegseth will make good on the supply-chain risk designation, which would likely result in a heated legal case. But in the meantime, one of the leading AI labs is quickly being partitioned out of military tech -- even as it's used in an active war zone.

Defense tech companies are dropping Claude after Pentagon's Anthropic blacklist

"Most of our companies are actively involved in large defense contracts and so are very strict in their interpretation of the requirements," said Alexander Harstrick, managing partner at J2 Ventures, which backs startups in the space. Harstrick told CNBC in an email that 10 of his firm's portfolio companies that work with the Department of Defense, "have backed off of their use of Claude for defense use cases and are in active processes to replace the service with another one." Meanwhile, defense contractors like Lockheed Martin are expected to remove Anthropic's technology from their supply chains, Reuters reported late Tuesday. It's a sudden reversal for Anthropic, which gets about 80% of its revenue from enterprise customers, CEO Dario Amodei told CNBC in January. The company entered the DoD's ecosystem in late 2024 through a partnership with software and services provider Palantir. Months after that agreement, Claude became the first major model deployed in the government's classified networks through a $200 million contract with the DoD. The model's popularity continued to soar across the business world, particularly in the area of coding assistants. Defense Secretary Pete Hegseth declared on X that any contractor or supplier doing business with the U.S. military is barred from commercial activity with Anthropic. The announcement came after Anthropic executives refused to comply with the government's demands over its model use. They wanted assurances that their AI would not be tapped for fully autonomous weapons or mass domestic surveillance of Americans. Anthropic's models are still being used to support the U.S. military operations in Iran, even after the announcement from the Trump administration, as CNBC previously reported.

Defense firms navigate Anthropic-Pentagon quarrel

The very public Pentagon-Anthropic feud also risks spooking the defense-tech market as it gains wider public acceptance. Driving the news: Axios asked 14 big-name defense contractors about their dealings with Anthropic as well as whether and how they use Claude. * Northrop Grumman said it has "very limited use of Claude" but would not continue the "pilot effort." The AI space, it said, is "rapidly changing." * Leidos said it employs a "range of commercial AI tools" and has licensed Claude for "limited use." The company is "prepared to adjust" its "technology stack as required" to match government policy. * HII said it does not have a relationship with Anthropic. * Both RTX and L3Harris Technologies declined to comment. * Others, including Anduril Industries, BAE Systems and GE Aerospace, did not respond by deadline. Flashback: The Defense Department last week probed Boeing and Lockheed Martin's exposure to Anthropic. At the time, a source familiar told Axios the department would reach out to "all the traditional primes." * Boeing is the seventh-largest defense contractor in the world ranked by defense revenue. Lockheed is first.

Trump Administration Orders Defense Contractors to Remove Anthropic's AI

US defense contractors, like Lockheed Martin, are expected to follow the Pentagon's order to purge Anthropic's prized AI tools from their supply chains, government contracting and technology attorneys said, even though the Trump administration's ban on their use may fail in court. US defense contractors, like Lockheed Martin, are expected to follow the Pentagon's order to purge Anthropic's prized AI tools from their supply chains, government contracting and technology attorneys said, even though the Trump administration's ban on their use may fail in court. The expected exodus from Anthropic was a sign of how quickly firms adjust to the Trump administration's preferences, as they seek to win pieces of its trillion-dollar annual budget, government attorneys said. Last Friday, capping off a heated weeks-long dispute with Anthropic over technology guardrails on Claude tools used by the military, President Donald Trump announced a federal agency-wide ban on the company with a six-month phase out period. Defense Secretary Pete ⁠Hegseth went ⁠further, promising to designate Anthropic as a supply chain risk to national security and posting: "Effective immediately, no contractor, supplier or partner that does business with the United States military may conduct any commercial activity" with the company. Anthropic said it would challenge the ban in court. The move raised immediate legal questions, since none of the authorities that the Trump administration could use to ban Anthropic allow it to also bar its general use by defense contractors, according to lawyers who specialize in technology and contracting laws. But the shaky legal basis for the prohibition won't stop companies that depend on the Pentagon from complying with it, the attorneys said, as Lockheed Martin has pledged to do. "We will follow the president's and the Department of War's direction," Lockheed Martin said in a statement, referring to the Department of Defense when asked about its Anthropic use following the moves by the Trump administration. "We expect minimal impacts," the company said, adding that it doesn't depend on any single AI vendor "for any portion ⁠of our work." With huge government contracts at stake, defense contractors would be quick to comply with the Pentagon's ban, lawyers said. "Most companies that do significant business with the government are hyper-aware of what the U.S. government wants and they're likely already taking steps to cleanse their supply chains of Anthropic," said Franklin Turner, an attorney who specializes in government ⁠contracts. "Regardless of the legal justification, I think the threat is the point ... it has already done harm, significant harm to the company," he added, referring to Anthropic. When asked whether they would comply with Trump's order on Anthropic, General Dynamics, Raytheon parent RTX, and L3Harris declined to comment. The Defense Department did not immediately respond to a request for comment. Anthropic declined to comment but referred Reuters to its Friday statement, in which it asserted that the Pentagon does not have the statutory authority to bar its contractors from using Claude. Quick to follow administration bans Defense contractors have complied in the past year with Trump's other directives regarding their agreements with the government, according to the news outlet Breaking Defense. According to the site, they speedily removed references to Diversity, Equity and Inclusion initiatives last year after President Trump signed an executive order mandating all agencies include language in contracts and grant awards requiring any winner to "certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws." Under the authority that the Defense Department is most likely to use, known as the DOD Supply Chain Risk Authority, the agency could bar would-be contractors from using Anthropic in their work for the government, government contracting attorneys said. However, it would not have the power to ban them from using it in their business entirely. Jason Workmaster, a contract lawyer at Miller Chevalier, described the decision to bar Pentagon contractors from using Anthropic as a "highly aggressive position." "If ⁠and when challenged, there would be a high likelihood that DOD would be found not to have the authority to do this, unless there are facts that we do not know about," he said. It is not even clear if the US military has the authority to designate Anthropic as a supply chain risk to bar its own use of the technology. The Supply Chain Risk Authority has specific requirements for what constitutes a supply chain risk, such as the threat that an adversary may sabotage, introduce unwanted capabilities, or otherwise "subvert" the technology in order to "surveil, deny or disrupt" its use. Meanwhile the Federal Acquisition Supply Chain Security Act (FASCSA), which creates a similar authority, requires the agency to follow several steps prior to a ban, such as giving the business the opportunity to respond and notifying Congress, among others. The US government so far hasn't shown publicly that it satisfied the requirements, said Alan Rozenshtein, a University of Minnesota law professor who specializes in technology regulation. "Capitalism and free markets rely on the rule of law," he said. "This is the opposite of that." The Trump administration used FASCSA last year to bar intelligence agencies from buying products from Acronis AG, a Swiss cybersecurity and data protection company.

Lockheed Pledges To Ax Anthropic's Claude AI After Trump Ban: Company Says Will Follow President's 'Direction' - Lockheed Martin (NYSE:LMT)

Lockheed Martin Corp. (NYSE:LMT) has pledged to remove Anthropic's Claude AI tools from its operations after President Donald Trump imposed a federal agency-wide ban on the company, with a six-month phase-out period. According to a Reuters report, Lockheed said, "We will follow the president's and the Department of Defense's direction," adding it expects "minimal impacts" and does not depend on any single AI vendor "for any portion of our work." Legal Authority Questioned Attorney Franklin Turner, an innovative business lawyer who resolves complex government contracts issues, told Reuters that firms are "already taking steps to cleanse their supply chains," adding the threat has "already done significant harm to the company." According to the report, Attorney Jason Workmaster, whose practice focuses on government contracts-related litigation, called the Pentagon's move "highly aggressive," saying the Department of Defense would likely be found lacking authority if challenged. The attorney said the Pentagon's main tool, the DOD Supply Chain Risk Authority, limits use to government contracts and does not completely restrict commercial activity. Anthropic Vows Legal Fight as Claude Ban Triggers App Store Surge Anthropic earlier said it would challenge the ban in court. Dario Amodei, CEO of the California-based AI safety and research company, earlier said the company refused unrestricted Pentagon use over concerns about domestic surveillance and autonomous weapons. University of Minnesota law professor Alan Rozenshtein told Reuters that capitalism and free markets depend on the rule of law, and that what's being proposed is the opposite of that. Lockheed Market Standing Lockheed Martin has a market capitalization of $153.65 billion, with a 52-week high of $692.00 and a 52-week low of $410.11. The Relative Strength Index (RSI) of LMT stands at 64.24. With a strong Momentum in the 85th percentile, Benzinga's Edge Stock Rankings indicate that LMT has a positive price trend across all time frames. Photo Courtesy: JHVEPhoto on Shutterstock.com Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Defense contractors, like Lockheed, seen removing Anthropic's AI after Trump ban

WASHINGTON, March 3 (Reuters) - U.S. defense contractors, like Lockheed Martin, are expected to follow the Pentagon's order to purge Anthropic's prized AI tools from their supply chains, government contracting and technology attorneys said, even though the Trump administration's ban on their use may fail in court. The expected exodus from Anthropic was a sign of how quickly firms adjust to the Trump administration's preferences, as they seek to win pieces of its trillion-dollar annual budget, government attorneys said. Last Friday, capping off a heated weeks-long dispute with Anthropic over technology guardrails on Claude tools used by the military, President Donald Trump announced a federal agency-wide ban on the company with a six-month phase out period. Defense Secretary Pete Hegseth went further, promising to designate Anthropic as a supply chain risk to national security and posting: "Effective immediately, no contractor, supplier or partner that does business with the United States military may conduct any commercial activity" with the company. Anthropic said it would challenge the ban in court. The move raised immediate legal questions, since none of the authorities that the Trump administration could use to ban Anthropic allow it to also bar its general use by defense contractors, according to lawyers who specialize in technology and contracting laws. But the shaky legal basis for the prohibition won't stop companies that depend on the Pentagon from complying with it, the attorneys said, as Lockheed Martin has pledged to do. "We will follow the president's and the Department of War's direction," Lockheed Martin said in a statement, referring to the Department of Defense when asked about its Anthropic use following the moves by the Trump administration. "We expect minimal impacts," the company said, adding that it doesn't depend on any single AI vendor "for any portion of our work." With huge government contracts at stake, defense contractors would be quick to comply with the Pentagon's ban, lawyers said. "Most companies that do significant business with the government are hyper-aware of what the U.S. government wants and they're likely already taking steps to cleanse their supply chains of Anthropic," said Franklin Turner, an attorney who specializes in government contracts. "Regardless of the legal justification, I think the threat is the point ... it has already done harm, significant harm to the company," he added, referring to Anthropic. When asked whether they would comply with Trump's order on Anthropic, General Dynamics, Raytheon parent RTX, and L3Harris declined to comment. The Defense Department did not immediately respond to a request for comment. Anthropic declined to comment but referred Reuters to its Friday statement, in which it asserted that the Pentagon does not have the statutory authority to bar its contractors from using Claude. QUICK TO FOLLOW ADMINISTRATION BANS Defense contractors have complied in the past year with Trump's other directives regarding their agreements with the government, according to the news outlet Breaking Defense. According to the site, they speedily removed references to Diversity, Equity and Inclusion initiatives last year after President Trump signed an executive order mandating all agencies include language in contracts and grant awards requiring any winner to "certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws." Under the authority that the Defense Department is most likely to use, known as the DOD Supply Chain Risk Authority, the agency could bar would-be contractors from using Anthropic in their work for the government, government contracting attorneys said. However, it would not have the power to ban them from using it in their business entirely. Jason Workmaster, a contract lawyer at Miller Chevalier, described the decision to bar Pentagon contractors from using Anthropic as a "highly aggressive position." "If and when challenged, there would be a high likelihood that DOD would be found not to have the authority to do this, unless there are facts that we do not know about," he said. It is not even clear if the U.S. military has the authority to designate Anthropic as a supply chain risk to bar its own use of the technology. The Supply Chain Risk Authority has specific requirements for what constitutes a supply chain risk, such as the threat that an adversary may sabotage, introduce unwanted capabilities, or otherwise "subvert" the technology in order to "surveil, deny or disrupt" its use. Meanwhile the Federal Acquisition Supply Chain Security Act (FASCSA), which creates a similar authority, requires the agency to follow several steps prior to a ban, such as giving the business the opportunity to respond and notifying Congress, among others. The U.S. government so far hasn't shown publicly that it satisfied the requirements, said Alan Rozenshtein, a University of Minnesota law professor who specializes in technology regulation. "Capitalism and free markets rely on the rule of law," he said. "This is the opposite of that." The Trump administration used FASCSA last year to bar intelligence agencies from buying products from Acronis AG, a Swiss cybersecurity and data protection company. (Reporting by Mike Stone, Alexandra Alper and Courtney Rozen in Washington; Editing by Chris Sanders and Sonali Paul) By Mike Stone, Alexandra Alper and Courtney Rozen