US President Donald Trump has said he would direct every federal agency to immediately stop using technology from AI developer Anthropic.
"We don't need it, we don't want it, and will not do business with them again!" Trump wrote in a Truth Social post on Friday.
Anthropic is mired in a row with the White House after refusing demands that it agree to give the US military unfettered access to its AI tools. The refusal led US Defence Secretary Pete Hegseth to say he's deemed Anthropic a "supply chain risk".
The label would make Anthropic the first US company ever to publicly receive such treatment. The company said that it "will challenge any supply chain risk designation in court".
Trump's directive came after days of back and forth, in public and private, between the company's CEO Dario Amodei and Hegseth.
The company had grown concerned in recent months about the government potentially using its AI tools, like Claude, in what it described as "mass surveillance" and "fully autonomous weapons".
Hegseth and the Pentagon have insisted that Anthropic agree to "any lawful use" of its tools and technology.
Both Trump and Hegseth announced their decisions against Anthropic on social media, with the defence secretary saying on X that Anthropic would be "immediately" designated a supply chain risk, prohibiting any business working with the military from "any commercial activity with Anthropic".
Anthropic said on Friday evening that it had yet to hear anything directly from the White House or the military "on the status of our negotiations".
Nevertheless, the company said being designated a supply chain risk "would both be legally unsound and set a dangerous precedent for any American company that negotiates with the government".
"No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons", the company added.
The Department of War is a secondary name Trump has given to the defence department.
Anthropic's tools will be phased out of all government work over the next six months, Trump said.
As for Anthropic's other customers, the company said the only impact will be on companies that also contract with the military. Those companies may have to stop using Anthropic for work being done on behalf of the department.
Prior to Trump's pronouncement, Anthropic had said that, if the US Department of Defense chose to stop using the company's tools, the company would "work to enable a smooth transition to another provider".
Yet, Trump berated the company on his Truth Social platform, saying Anthropic "better get their act together, and be helpful during this phase out period, or I will use the Full Power of the Presidency to make them comply, with major civil and criminal consequences to follow".
Anthropic has been in use by the US government and military since 2024 and was the first advanced AI company to have its tools deployed in government agencies doing classified work.
Prior to Trump's decision on Friday, Anthropic received support in its stance against the government.
OpenAI boss Sam Altman offered support to rival AI executive Amodei. He sent a note to staff stating that he had the same "red lines" when it came to the application of the firms' products.
In the note seen by the BBC, Altman said any OpenAI contracts for the military would also reject uses that were "unlawful or unsuited to cloud deployments, such as domestic surveillance and autonomous offensive weapons".
He later confirmed on X that OpenAI had reached a deal with the Department of War to use its AI models on classified cloud networks.
Amodei is a long-time figure in tech, rising to prominence as an early employee of OpenAI. He and a handful of other OpenAI employees left the company to found Anthropic after disagreements with Altman.
The two startups now compete directly for users and corporate customers with an evolving offer of AI chatbots, agents and other tools.
"I do not fully understand how things got here; I do not know why Anthropic did their deal with the Pentagon and Palantir in the way they originally did it," Altman wrote in his company memo.
"But regardless of how we got here, this is no longer just an issue between Anthropic and the [Department of War] DoW; this is an issue for the whole industry and it is important to clarify our stance."
Hegseth on Tuesday called Amodei to Washington DC for a meeting amid growing tensions. It culminated in two contradictory ultimatums if Anthropic refused to grant the department free rein of its tools.
Hegseth said he would invoke the Defense Production Act, allowing the government to use Anthropic's products as it saw fit, and deem it a "supply chain risk".
By Thursday, Amodei said he would rather stop working with the Pentagon than acquiesce to such threats.
A former official with the DoD, who asked not to be named, told the BBC that Anthropic appeared to have the upper hand in the fight.
"This is great PR for them and they simply do not need the money," the former official said.
Anthropic's work with the Pentagon is part of a contract worth $200m (£149m). The company's most recent valuation came earlier this month and put the company's worth at $380 billion, based on its current revenue and future expected earnings.
The former official added that the defence department's basis for threatening Anthropic with invoking either the Defense Production Act and being labelled a supply chain risk was "extremely flimsy".
