A major tech industry group made up of Anthropic’s major backers, Amazon and Nvidia, expressed concern Wednesday over the Pentagon’s decision to declare the artificial intelligence company a supply chain risk, as other investors scramble to contain the fallout from the institute’s dispute with the Pentagon.
The Information Technology Industry Council, whose members include Nvidia, Amazon, Apple and OpenAI, said in a letter dated Wednesday that it is “concerned by recent reports regarding the Department of the Army considering imposing supply chain risk designations in response to procurement disputes.” The names of humans are not written in the letter.
Technical rivalry:
Antropic and the U.S. Department of Defense have been in a dispute for months over how the military can use their technology on the battlefield.
The clash is widely seen as a referendum on how much control AI companies can have over their technologies and systems that they hope will transform education, public services and other aspects of society.
The Department of Defense is calling on AI companies to rescind red lines in favor of complying with the Full Lawful Use Clause.
However, Anthropic has refused to lift the ban on autonomous weapons and Claude AI to enhance US mass surveillance.
Anthropic was the first among its AI companies to handle sensitive information through a supply agreement through cloud provider Amazon.
New deal between OpenAI and the Department of Defense:
OpenAI reached its own confidential agreement with the Department of Defense on Friday, saying Anthropic should not be considered a risk to the department.
“Our red line was the same as Anthropic’s red line: no domestic surveillance, no use of AI in autonomous weapons at this time,” Connie LaRossa, who works on national security policy at OpenAI, said Wednesday during a panel discussion at the Aspen Digital Conference in Northern California.
“We are indeed working to remove the safe risk designation from Anthropic, which should not be applied to comparable companies in the U.S. industry that use such critical tools.”
Funding risks:
Investors taking a stance on discussions with the Pentagon are focused on helping Anthropic avoid being designated a “supply chain risk” by the U.S. government, which, if carried out, could seriously hurt the company’s fast-growing sales to corporate customers.
Products like Anthropic’s chatbot Claude and coding assistant Claude Code are in high demand.
Claude became the most downloaded free app on the Apple App Store on Monday, surpassing OpenAI’s ChatGPT.
Defense Secretary Pete Hegseth said the risk designation would require all government contractors to stop using Anthropic’s technology in any part of their operations.
Meanwhile, Anthropic said Friday it will challenge the supply chain risk designation in court.
Still, some investors worry the fight could scare off potential customers at a critical time for startups.
Human:
Anthropic has raised tens of billions of dollars on high expectations for enterprise sales, which account for about 80% of Anthropic’s revenue, the company said.
The success of future stock sales, including a widely anticipated initial public offering, will depend on Anthropic’s continued growth in operating revenues. Anthropic is in the process of allowing employees to sell shares to investors, and the company previously said it had not yet decided on an IPO.
Anthropic’s revenue run rate, or projected annual revenue based on current data, is about $19 billion, up from $14 billion just a few weeks ago.
Investor pressure also came after President Trump’s order on Friday to sell Anthropic within the next six months, with several U.S. government agencies beginning to end use of Anthropic’s technology and the State Department switching to rival OpenAI.
