☕️ Pentagon vs. Anthropic: A $200M AI Contract on the Brink of Collapse

This week, a high-stakes power struggle erupted between the Pentagon and AI safety pioneer Anthropic, threatening a $200 million contract and exposing a fundamental conflict at the heart of the national security AI landscape. The dispute, which centers on the military’s use of AI in combat operations, comes as OpenAI makes a major push into the enterprise with new consulting partnerships and a growing public backlash against the AI boom begins to take shape. The era of unchecked AI enthusiasm may be over, replaced by hard questions about control, ethics, and the real-world consequences of deploying these powerful systems.

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A dispute between the Pentagon and AI firm Anthropic has escalated into a full-blown crisis, with a defense contract worth up to $200 million hanging in the balance. The conflict, first reported by The Washington Post and NBC News, centers on the military’s use of Anthropic’s Claude AI model and the company’s strict safety policies. Tensions reportedly flared after the alleged use of Anthropic’s technology in a January raid to capture Venezuelan leader Nicolás Maduro, leading to a review of the relationship by the Pentagon.

The core of the issue is a new AI strategy document from the Department of Defense that demands “any lawful use” of AI, effectively eliminating company-specific guardrails. This puts the Pentagon on a direct collision course with Anthropic, which has built its brand on a commitment to AI safety and has firm policies against using its technology for autonomous weapons or domestic surveillance. While Anthropic has been a key partner for the U.S. government, even being the first to offer its models on classified networks, this new directive from the Pentagon may be a bridge too far.

The standoff highlights the immense challenge of integrating powerful AI systems into military operations while navigating complex ethical and safety concerns. As one side pushes for unrestricted use and the other holds firm on its principles, the future of AI in national security hangs in the balance. The outcome of this high-stakes negotiation will have far-reaching implications for the entire AI industry and the role it plays in shaping the future of warfare.

OpenAI is making a major play for the enterprise market, announcing multi-year partnerships with Accenture, Boston Consulting Group, Capgemini, and McKinsey & Co. The deals are designed to help businesses integrate OpenAI’s new “Frontier” agent platform into their workflows, pairing OpenAI’s technology with the deep industry expertise of the world’s top consulting firms. The move is a clear signal that OpenAI is serious about monetizing its technology and capturing a larger share of the lucrative enterprise AI market.

The public’s love affair with AI may be coming to an end. A new report from The New York Times highlights a growing backlash against the AI boom, with public sentiment souring amid concerns about job displacement, misinformation, and the concentration of power in the hands of a few tech giants. The article notes that tech leaders are beginning to worry about the public’s “underwhelming enthusiasm” for their plans to remake the world with AI, a stark contrast to the widespread excitement that accompanied the dot-com boom.

A new report from Morgan Stanley warns that the AI revolution is creating a “reindustrialization renaissance” that benefits machines far more than humans. The report argues that the massive capital expenditures required for the AI build-out are driving a new investment cycle, but the benefits are flowing to the owners of capital and technology, not to the average worker. The report paints a sobering picture of a future where AI-driven productivity gains exacerbate inequality and leave the labor market transformed, and not for the better.

Google DeepMind CEO Demis Hassabis has sounded the alarm on a potential “choke point” for the AI industry: a global shortage of high-end memory chips. In a recent interview, Hassabis warned that the entire supply chain for memory is constrained, which could slow the pace of AI research and development. The warning comes as the AI industry is consuming an ever-increasing amount of computational resources, raising questions about the long-term sustainability of the current AI boom.

In a major move to bring generative AI to the enterprise, Snowflake has committed $200 million to embed OpenAI’s GPT-5.2 model directly into its data cloud platform. The deal will give Snowflake’s 12,600+ customers direct access to OpenAI’s latest technology, allowing them to build and deploy AI-powered applications on top of their existing data infrastructure. The partnership is a significant win for both companies and a clear sign that the race to bring generative AI to the enterprise is heating up.

The AI industry is flexing its political muscle, with a new report from The New York Times revealing that AI companies and their executives spent at least $83 million on federal elections last year. The spending spree is designed to influence the ongoing debate over AI regulation, with the industry pushing for a light-touch approach that would allow for continued innovation. As the 2026 midterm elections approach, the AI industry is poised to become a major political force, with its financial contributions shaping the future of AI policy.

Keep learning with these upcoming free virtual events from the All Things AI community.

March 3 | How Small Orgs and Non-Profits are Getting Value out of AI — Real-world AI adoption strategies for small organizations and nonprofits, including ready-to-adapt prompts and process maps you can bring back to your team.

March 10 | The Path to Becoming AI-First: An Operator’s Playbook — This session explores what it really means to become AI-first: starting with process, increasing leverage, and learning how to manage digital employees alongside human employees.

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 📚 AIOS - This is an evolving project. I started with a 14-day free AI email course to get smart on AI. But the next evolution will be a ChatGPT Super-user Course and a course on How to Build AI Agents.

This New York Times article provides a compelling overview of the growing public backlash against the AI boom. It’s a must-read for anyone who wants to understand the shifting public sentiment around AI and the challenges that lie ahead for the industry. If you only do one thing, make it understanding that the AI boom is no longer a story of unbridled optimism, but one of growing conflict and consequence.