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Anthropic refused Pentagon demands to lift restrictions on its AI technology, leading President Trump to order federal agencies to cease using the company's services within six months. The conflict arose over the use of AI in military operations, with Anthropic opposing deployments in autonomous weapons and mass surveillance.

The company holds a $200 million contract with the Department of Defense, which now risks termination. In the wake of this dispute, OpenAI has secured a new agreement with the Pentagon, filling the gap left by Anthropic. The Pentagon has labeled Anthropic a 'supply chain risk' to national security, prompting further ramifications for their business dealings with government entities.