We have a lot to talk about today because it has been a very crazy 48-hour period in the AI industry, and this dispute between the Pentagon and Anthropic and now OpenAI sort of came out of nowhere at the 11th hour and is now involved. It has been truly an insane day and a half in my life. How has it been for you?
Well, let me put it this way, listeners. Kev, imagine you get engaged and then one week later your fiancé is declared a supply chain risk. So yeah, it's been a really, really crazy few hours over here as well.
Does this mean you have to call off the engagement?
Never. It's going to take a lot more than Pete Hegseth to break up this love.
And just because we are going to talk about Anthropic and OpenAI and all of this today, we should make our AI disclosures. Mine is that I work for the New York Times, which is suing OpenAI, Microsoft, and Perplexity over alleged copyright violations.
Yes. And if you missed the other big breaking Anthropic story from over the past week, the man that I am now engaged to works there.
Where should we start, Casey?
Yeah. Well, look, I think if you're tuning in, maybe you've heard the biggest headlines, but I think it's worth hitting you with maybe just a few key bullet points. One is that in this story that we've been covering over the past couple of episodes, it has come to the point of crisis where Anthropic said it had two red lines that it would not cross. The Pentagon said that it was going to move to declare the company a supply chain risk. And then somehow within 24 hours of that happening, Sam Altman and OpenAI swooped in and signed a deal that they say will observe those safeguards. And so it was just a truly chaotic 24 hours and we should dig into it.
Yes. And none of this has been happening through like normal diplomatic channels. Like basically, as far as I can tell, the entirety of this conflict has been contained in like a handful of posts on X and a handful of blog posts and some stuff that has been leaking out from either side. So, I have been making calls for the last two days to the people who are involved in this situation trying to get some information and I've gotten a little bit and I'll happily share that with you. But I would say confusion reigns. Like no one, even the people who are directly involved in this situation, are confused about the details here. And so I think we should also just say upfront that like there is still a lot that is unknown about what's going on right now.
Absolutely. Maybe to start, Kevin, we could go back to a part of the story that I think is pretty well known, which is just sort of what happened between Anthropic and the Pentagon, particularly in those final hours where the Pentagon finally said, 'Hey, this isn't going to work. We're not going to give you what you want.' And time ran out and they did not come to an agreement.
Yeah. This escalation started on Thursday, February 26th when basically there was a day left until this deadline that the Pentagon had given Anthropic and Dario Amodei, the CEO of Anthropic, put out a statement on Anthropic's website basically saying we are not going to compromise no matter what on these two exceptions that we want: mass domestic surveillance and fully autonomous weapons. He explained why they weren't going to compromise on those. And then he said in the line that a lot of people have been quoting that quote, 'These threats do not change our position. We cannot in good conscience accede to their request.' Basically, we have been trying to work out a deal while preserving these exceptions that are very important to us, but we have not been able to do so.
And probably worth saying, Kevin, that I think a reason that quote stood out so much was that I cannot remember any tech leader invoking conscience as a reason not to do something since Trump has been reelected. So, it felt like a shift in tone for the whole discussion around tech and power and just something we have not seen from Silicon Valley in a while.
Yes. And what I understand from talking with folks close to the situation is that even after this post from Dario Amodei, there were discussions happening between the Pentagon and people from Anthropic. They were trying to work out the contours of a deal. There was some sort of willingness to at least change some of the language around these exceptions.
Yeah. While these discussions are happening in the back channels between the officials at the Pentagon and the people at Anthropic, President Trump posts a statement on Truth Social late Friday afternoon just before this deadline that the Pentagon had given Anthropic. He said that quote, 'The United States of America will never allow a radical leftw...'
He also said that he was directing every federal agency in the United States government to immediately cease all use of Anthropic's technology with a six-month phase-out period basically for federal agencies to switch from using Claude to using other models. One thing the president did not mention is this idea of declaring Anthropic a supply chain risk. Right? This is something that we talked about on the last show. Basically, this is a much stricter designation, something that we don't think has ever been applied to a major American company before. It's usually used for Chinese chip suppliers or things like Kaspersky Lab. But Trump did not say that he was going to designate the company a risk to the supply chain. And so I think some folks at Anthropic and elsewhere thought, okay, this is like a deal that we can live with. We are going to, you know, lose our government contracts, but we're not going to be declared essentially like an enemy of the state.
And more than that, Kevin, he also did not invoke the Defense Production Act, right, which like to me was the true worst-case scenario here where the United States government would effectively have nationalized or partly nationalized Anthropic and forced it to make a version of Claude that did its bidding. So, when I saw the Truth Social post, my initial thought was like, 'Okay, maybe they're just going to walk away from this whole debacle and try to save some face.'
Yes, it did look like that. And then a little over an hour after Trump's Truth Social post, Pete Hegseth, the defense secretary, posted his own take on the matter on X in which he was directing the department to designate Anthropic a supply chain risk. He said, quote, 'Effective immediately, no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic.' So, this was a pretty severe escalation. And the people who thought, 'Okay, maybe Anthropic is going to, you know, get away here with not being declared a supply chain risk,' thought maybe they're not after all.
Yeah. Now, at the moment of this recording, so far, the only evidence that we have that the Pentagon plans to declare Anthropic a supply chain risk is this social media post, right? Like my understanding is that Anthropic has not been informed of any new proceeding against the company, Anthropic says they would fight it in court. So, while this may happen and we should talk about what it would mean if it does, for the moment, it also appears like it could just be a threat.
