Pentagon Issues Friday Deadline to AI Company Amid Cold War-Era Law Threat

Defense Secretary Pete Hegseth has given AI company Anthropic until Friday to allow unrestricted military access to its technology or face contract termination. The Pentagon is threatening to use a 1950 law called the Defense Production Act in an unprecedented way to force the company's compliance, which could lead to legal challenges.

Defense Secretary Pete Hegseth delivered a Friday deadline to artificial intelligence company Anthropic this week: allow unlimited military access to your technology or lose your federal contract.

Trump administration defense leaders have also threatened to classify Anthropic, creator of the Claude AI chatbot, as a supply chain threat — or potentially use a Korean War-era statute known as the Defense Production Act to grant military forces broader authority over the company’s products, regardless of corporate approval.

Legal scholars indicate that applying the legislation in this manner would be uncharted territory and might trigger court battles. The government’s push to essentially coerce Anthropic highlights broader tensions surrounding artificial intelligence’s function in national security matters.

The Defense Production Act grants federal authorities extensive power to compel private enterprises to fulfill national defense requirements.

President Harry S. Truman enacted the legislation in 1950 during supply and equipment concerns throughout the Korean conflict. Throughout its multi-decade existence, officials have activated the law’s authorities not just during wartime but also for domestic emergency readiness and recovery following terrorist incidents and natural catastrophes.

One section of the statute enables the president to mandate that companies prioritize government contracts and orders considered essential for national defense, aiming to ensure private sector production meets wartime or emergency needs. Additional sections provide presidential authority to offer loans and other incentives to boost critical goods production, plus authorize government establishment of voluntary partnerships with private industry.

“One of the government’s most powerful and adaptable industrial policy tools,” described Joel Dodge, an attorney and director of industrial policy and economic security at the Vanderbilt Policy Accelerator.

Among its artificial intelligence competitors, Anthropic remains the sole company refusing to provide its technology to a new U.S. military internal system. Chief Executive Dario Amodei has consistently expressed ethical objections regarding unrestricted government AI usage, including risks from completely autonomous weaponized drones and AI-enhanced mass monitoring that could track opposition movements.

According to sources familiar with the situation and a senior Pentagon official, the Defense Department is exploring DPA activation to expand military authority over Anthropic’s products without company consent. This could involve compelling Anthropic to modify its system for Pentagon requirements without built-in safety measures, or eliminating specific ethical limitations from contractual language.

Legal experts including Dodge characterize both approaches as “without precedent under the history of the DPA.”

“It’s a powerful law,” Dodge explained. “(But) it has never been used to compel a company to produce a product that it’s deemed unsafe, or to dictate its terms of service.”

During his initial presidency, Trump and former President Joe Biden both activated the DPA to increase supplies for fighting the COVID-19 pandemic. Throughout 2022’s national infant formula crisis, Biden employed the law to accelerate formula production and authorize international supply flights.

Biden also utilized the DPA in a 2023 executive directive on AI, particularly requiring companies to share safety testing results and additional data with the government. Trump revoked this order upon beginning his second term.

Years earlier, both President Bill Clinton and George W. Bush administrations invoked the DPA to ensure electricity and natural gas suppliers maintained service to California utilities during an energy emergency. Officials also applied the law following Hurricane Maria’s 2017 Puerto Rico impact to prioritize contracts for food, bottled water, temporary housing and electrical system repairs.

The DPA needs periodic reauthorization to continue operating, which can broaden or refine the law’s scope. Congressional records show its next expiration scheduled for September 30 this year. Depending on how the Defense Department’s reported demands develop, Anthropic could become a primary concern for legislators.

Should the Defense Department employ the DPA provision targeting government contract prioritization and production ordering — which the Anthropic situation suggests it will — companies can resist if the requested product isn’t something they currently manufacture, according to Dodge and other experts, or if they consider the terms unreasonable. However, the government may attempt to override such objections, notes Charlie Bullock, senior research fellow at the Institute for Law & AI.

“If neither side backs down, it seems realistic that there would be litigation between Anthropic and the government,” Bullock stated.

Some observers have highlighted contradictions between the Pentagon’s warning about potentially designating Anthropic as a supply chain threat while simultaneously suggesting its products are so crucial to national defense that DPA invocation is necessary — two claims that appear contradictory.

“There are a lot of forces that I think the administration’s counting on that would lead Anthropic to just give in on Friday and agree with its terms,” Dodge said.

Regarding potential future litigation over a possible DPA order, Dodge doesn’t anticipate government victory because “it seems very out of bounds under the text of the law.”

However, if the administration succeeds, or Anthropic simply accepts new terms, that could unleash “a Pandora’s box of what the government could do to assert power and control over private companies,” he added.