Anthropic Stock fallout: anthropic stock removed from government use

President Donald Trump has directed every federal agency to stop using technology from AI developer Anthropic, a move that has sent attention to anthropic stock and forced a six-month government phase-out. Trump wrote that "We don't need it, we don't want it, and will not do business with them again!"

Anthropic Stock: government ban effects

The president said Anthropic's tools will be phased out of all government work over the next six months, and he demanded cooperation during that transition. He also berated the company in a social media post, writing that Anthropic should "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. "

White House and Pentagon standoff

The move follows a public standoff between Anthropic's CEO Dario Amodei and Defence Secretary Pete Hegseth after Anthropic refused demands to give the US military unfettered access to its AI tools. Hegseth said he has deemed Anthropic a "supply chain risk, " a label that would, he said, prohibit any business working with the military from "any commercial activity with Anthropic. " The defence secretary also said the designation would be made "immediately. "

Company response and legal pushback

Anthropic said it "will challenge any supply chain risk designation in court" and that it had yet to hear anything directly from the White House or the military "on the status of our negotiations. " The company argued that such a designation "would both be legally unsound and set a dangerous precedent for any American company that negotiates with the government. " Anthropic also warned that "No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons. " The phrase Department of War is a secondary name the president has given to the defence department.

OpenAI deal with Department of Defense

In the wake of the dispute, OpenAI's CEO Sam Altman said his company has reached a deal with the Department of Defense after Anthropic voiced ethical concerns. Altman said the Defense Department demonstrated its "deep respect for safety" and that the Pentagon agreed OpenAI's technology would not be used for "domestic mass surveillance" or for "autonomous weapon systems, " and that humans would take "responsibility for the use of force. " Altman added, "We remain committed to serve all of humanity as best we can, " and said "the world is a complicated, messy, and sometimes dangerous place. " He shared that statement on social media late on Friday.

Ethical concerns and global reactions

Anthropic had grown concerned about the government potentially using its tools, like Claude, in what the company described as "mass surveillance" and "fully autonomous weapons. " The Pentagon and Hegseth had insisted Anthropic agree to "any lawful use" of its tools. Anthropic also said it was refusing to remove safeguards that prevented its technology from being used for US domestic mass surveillance or to programme autonomous weapons. Anthropic's Claude software has been linked in reporting to US military operations, including a claim that Claude aided in an abduction of Venezuelan President Nicolas Maduro in January.

Human rights advocates have voiced concerns about unregulated military use of AI, citing examples that include alleged uses by the Israeli army in its war on Gaza. Israeli forces have reportedly used AI systems named "Lavender, " "The Gospel, " and "Where's Daddy?" to process mass surveillance data and to generate lists of Palestinian people to kill.

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. The company had told officials that, if the Department of Defense chose to stop using its tools, it would "work to enable a smooth transition to another provider. " Prior to the president's decision, Anthropic had received support for its stance against the government.

Separately, the president has moved to integrate supercomputers and data assets to create an "AI experimentation platform, " and has signed a bill described as giving Congress more licence to block AI exports to China and other US political adversaries. The drop in confidence comes amid stalling growth for cloud computing software as OpenAI investments are questioned. Observers note that AI is advancing in rapid and unpredictable ways but that there is no joint framework to keep it in check, experts say.

The dispute has produced a short, intense sequence: Anthropic's refusal to accede to military demands; days of back-and-forth between Dario Amodei and Pete Hegseth; the defence secretary declaring a supply chain risk; the president ordering agencies to stop using Anthropic; OpenAI announcing a Pentagon deal; and Anthropic preparing legal challenges while warning of civil liberties risks. The immediate commercial and regulatory consequences for anthropic stock and for companies that contract both with Anthropic and the military remain unfolding, with only companies that also contract with the military likely to be affected by the prohibition on military-linked work.