The Saga
- 4 days ago
- 2 min read
Even if you are not a technologist or you don’t follow big tech, you should still follow the saga of Anthropic versus the Department of Defense.
It is epic.
It is one company standing up.
It has the hallmarks of a phyrric victory.
It could annihilate a company that is doing amazing work.
Here is the background and conflict in a nutshell.
Anthropic makes Claude, an AI coding technology. You tell Claude in natural language (English) what you want to code and it produces useful code very quickly and effectively. Anthropic is a dominant market player. 42-54% of the AI workload in enterprises is done by Claude. Anthropic’s customer base grew from 1,000 in 2023 to 300,000 in 2025 and their annual revenue exceeds 4B. Other coding technologies such as Cursor and Replit rely heavily on Claude. Google and AWS offerings are intricately tied into Claude. In the absence of regulatory and legislative guardrails for AI, Anthropic has the industry’s strongest guardrails for AI use.
Like all big tech, Anthropic has government contracts, most significantly with the Pentagon for about 200M. And now, enter the Secretary of Defense stage left.
He wants unfettered use of Claude for any purpose suited for national defense, including mass surveillance and to drive fully automated weapons.
Anthropic says no because the guardrails for that kind of use are missing and the end result could go against democratic values.
In fact, Anthropic’s response to an ultimatum from the Pentagon - with a deadline for today - is to walk away from government contracts than to allow unfettered use. Not because Claude is incapable but the absence of guardrails makes it dangerous to use AI in all situations at this moment in time.
It is important to understand the Pentagon’s threat - comply or else we will forcibly use your product under the aegis of the Defense Production Act AND (not or!) label you as a supply chain risk. In other words - it is so good we must forcibly use Claude for what the nation needs, but it’s too dangerous hence a massive risk. That is the ultimate head scratcher.
I am waiting with bated breath for the next episode to unfold. Curious minds want to know what their peers - OpenAI, Google, xAI - will do next after the expected cancellation of the defense contracts and forcible use.
The AI bubble in the stock market is making everyone nervous. This might be the pin prick that causes a domino effect. One can only hope otherwise but the writing on the wall is unnerving to say the least.
Keep an eye on this story. Watch Anthropic. Read about Dario Amodei, its brilliant CEO. And see if the Pentagon will win this round but lose the war ultimately because Claude is so deeply embedded in everything and the company will continue to innovate with safety in mind. Or will this put the brakes on Anthropic’s spectacular rise?
The jury is out while the saga continues, but one thing is for sure: we live in an exciting, weird, scary, amazing time!
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