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TechTank Host
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Josie Stewart
Welcome to the Tech Tank Podcast. I'm today's guest host, Josie Stewart, a senior research and communications assistant in the center for Technology Innovation at the brookings Institution. On February 24, Defense Secretary Pete Hegseth issued the anthropic CEO an ultimatum. By the end of the week, Anthropic had to give the Department of Defense unrestricted use of its AI models or the Pentagon would sever ties with the company. Anthropic declined the request, which led to Hexseth designating the company as a supply chain risk. The situation didn't end there. Soon after the talks with anthropic fell apart. OpenAI entered its own contract with the DoD. Anthropic also returned to talks with the US government, only for them to fizzle out again. But more importantly, the development has brought debates about limitations for the use of AI to center stage, raising questions not only about the role the technology plays in national security and military operations, but also who controls AI systems and, more broadly, how they are used within the federal government. I'm joined today by two of my Brookings colleagues, Stephanie Pell and Valerie Wirtschafter. Stephanie is an expert in cyber and national security and a fellow at the Brookings center for Technology Innovation. Her work encompasses topics like surveillance, cyber ethics, and cybersecurity law. Valerie is a fellow in the Foreign Policy Program in the Artificial Intelligence and Emerging Technology Initiative at Brookings. Her work focuses on democratic resilience art, artificial intelligence technology, and the information space. She is also the author of a forthcoming Brookings report on AI use within the federal government. Valerie and Stephanie, thanks so much for being here today.
Valerie Wirtschafter
Thank you so much for having us.
Stephanie Pell
Thank you, Josie. Good to be with you.
Josie Stewart
Great. I want to start us a little bit closer to the beginning of this whole saga when Hegseth gave Anthropic the ultimatum as reports were coming out about the negotiations. What were your initial reactions, given your areas of expertise? And Stephanie, we can start with you.
Stephanie Pell
I would say that broadly speaking, my first reaction was that this is a terrible way to make public policy. You have two significant issues, the use of AI in domestic surveillance and in autonomous weapons systems that are developing and potentially being decided, at least in the short run, through a fight between Dario Amade, the CEO of Anthropic, and the Department of War, formerly known as the Department of Defense. Just to lay out a little more background, the Secretary of War, Pete Hegseth issued a memo in January instituting new contracting returns requiring all lawful use of relevant technology. Previous restrictions that had been negotiated by contract. In Anthropic's case, restrictions on the use of Claude in lethal lethal autonomous warfare and mass domestic surveillance would no longer be permitted and new contracts with the all lawful use language would be required. Again, the fact that these issues were playing out in a clash between two very powerful authorities struck me as not the best of ways to go about making public policy.
Valerie Wirtschafter
Yeah.
Josie Stewart
And Valerie.
Valerie Wirtschafter
Yeah, I mean the immediate reaction was like it was very clear to me
Josie Stewart
that this was obviously about the politics
Valerie Wirtschafter
of AI or the perception within the White House that Anthropic was maybe a little more risk minded or Biden administration coded than its competitors. David Sachs for months had been and he's the White House AI and crypto czar had been accusing Anthropic of being woke trying to implement regulatory capture based on fear mongering. Anthropic CEO didn't attend the inauguration and I believe other tech companies CEOs did and that stood out. Anthropic had been quite vocal about its opposition to state preemption of AI regulations and also had been donating to PACs that opposed federal efforts to quash state AI regulations. So it was definitely the politics were front and center for me there. And then, you know, my other reaction was really that the, this could do some serious damage to Anthropic's business. But also from a federal government adoption perspective, it would be, I think, pretty detrimental in terms of building confidence in how the government is using AI. You know, the administration kind of had itself in a bind, a little bit from the public, a little bit of a back down and you look weak, push forward and suddenly you're advocating for domestic surveillance and autonomous weapons usage. And I don't think that really bodes well for an administration that's put so much effort into embedding into the federal government. And it doesn't really look good for voters who are already, I think, and I think this is kind of really important, extremely skeptical about AI that has gone up since 2021, since after ChatGPT launched. Something like 50% of the public is more concerned than excited about AI usage generally.
Josie Stewart
Yeah. So as you both pointed out, problems with the contract worsened when Anthropic made clear that they wanted language that prevented the Pentagon from using its technology for autonomous weapons and mass surveillance of Americans. Let's start with the first of these, which kind of gets into what you were just talking about. Valerie. You know, what concerns did Anthropic and other external audiences express about the use of AI for autonomous weapons?
Valerie Wirtschafter
Yeah, so, I mean, Anthropic's position was that it just, you know, that was one of its lines, was that it wouldn't use the application for lethal autonomous weapons. That's not to say that they didn't want it used in military usage. Claude had already been part of intelligence analysis or operations planning, all these types of capabilities. Reportedly for the raid in Venezuela that captured Nicolas Maduro in early January. There are still reports that it's being used or has been used in the current conflict in Iran. So it wasn't about necessarily the military usage. It was the fact that Anthropic objected to the fact that Claude was not reliable enough to operate, to make decisions about who to target without human involvement.
Josie Stewart
And then what about the mass surveillance part, Stephanie, can you explain what laws enable AI to be used for this and what concerns this raises?
Stephanie Pell
So again, the term that Dario Amade uses is mass domestic surveillance. And that term can mean different things to different people. So for some level setting, it would be fair to say that the intelligence community, which includes the nsa, a component of dow, has broad authorities to engage in the collection of foreign intelligence information. And there are a variety of legal authorities, Executive Order 123 3, the Foreign Intelligence Surveillance act and the Fourth Amendment, that govern the intelligence community and DoD's ability to engage in the collection of foreign intelligence information. Now, generally speaking, these authorities provide significant limitation on the intelligence communities and DoD's ability to collect information about U.S. persons. U.S. persons are defined under the law as a United States citizen or alien admitted for permanent residence in the United States and any corporation, partnership or other organization or organized under the laws of the United States. But these authorities currently don't prohibit the government from purchasing commercially available information from data brokers that does contain information about US Person. So among other things, this commercially available information can include location data and the use of AI to analyze this kind of information in conjunction with other kinds of information that that may be gathered raises significant privacy concerns. And although commercially available information may be anonymized, it is possible to de anonymize and identify individuals, including U.S. persons and in doing so expose very sensitive information and allow for the construction of so called patterns of life. So again, the term mass domestic surveillance doesn't have a particular meaning in the law and people may look at different forms of Surveillance and place that label on it. As best as I can tell from sort of piecing together various reports over the last couple of weeks, Anthropic CEO was extremely concerned about the use of AI to analyze commercially available information and other kinds of information in unclassified systems. He, again, according to reporting in the New York Times, he did not seem to have the same problems with information collected, let's say, pursuant to the Foreign Intelligence Surveillance act, that would be contained in classified systems.
Josie Stewart
Yeah. And let's turn to Anthropic being labeled as a supply chain risk, which is normally a designation reserved for foreign companies. What do you make of this reaction from Hegseth, and how might this impact Anthropic if. Valerie, you want to start?
Valerie Wirtschafter
Yeah. So actually, I think first, Hegseth threatened both the Defense Production act and a supply chain risk, which is, I think Anthropic pointed this out first, but others have pointed it out as well, is like, this is just a contradiction. Either this is a fundamentally important technology that the Defense Production act will compel Anthropic to provide the technology, or it is a risk to the supply chain. So it's kind of ironic that they were both kind of being thrown around at this point. But I think ultimately the Pentagon settled on this supply chain risk at first. Hegseth said something, I think, in a tweet about how all contractors had to cease commercial relations, all commercial relations with Anthropic. But that was, I think, way beyond the power that he had to be able to compel change from the private sector. Now, I think it has to do with military contracts and the direct fulfillment for contractors who are working directly with the military. They can't use Anthropic as part of what they provide to the military through those contracts. You know, it's less menacing than the original threat, which was beyond Secretary Hegseth's power, but I think it could still be quite devastating to Anthropic's business. Those contracts were worth quite a bit. And then, you know, there are a lot of other companies that Anthropic works with as well that are, you know, I think, more hesitant now, especially in light of some of the uncertainty here.
Josie Stewart
Yeah. Stephanie, what are you thinking about this? And also should note that Anthropic is challenging this. And so how do you expect this might play out in court?
Stephanie Pell
Sure. So, like Valerie, there was some bit of surprise on my part here. Among other things, it was quite interesting that Secretary Hegseth was picking a fight as the US Was on the brink of going to war with Iran. I mean, one would presume that Hegseth knew what the US Intentions were in that regard when it was picking this fight with a leading AI company. I also think that it's fair to say that by declaring Anthropic a supply chain risk, Dow is trying to sanction it, essentially punish it for, among other things, exercising its rights to engage in contract negotiations and for exercising its First Amendment rights. We should keep in mind here that Anthropic has at least heretofore been a partner with the Department of War. Anthropic has stated in a pleading it filed that Claude is reportedly the Department's most widely deployed and used Frontier AI model and the only one currently being used on classified systems. So how this will play out in court? Josie, as you referenced, Anthropic filed a complaint against the Department of War Secretary Hegseth and a host of other federal government agencies and officials seeking declaratory and injunctive relief. That was based on a notice that anthropic received on March 4, which in its pleading states that the notice indicated the Department of War had determined that the use of Anthropic's products in the Department's covered systems present a supply chain risk and that exercising the Authority granted under 10 USC Section 3252 against anthropic is, quote, necessary to protect national security. The secretarial letter pronounces that this determination covers all Anthropic products and services, including any that become available for procurement, and it asserts that less intrusive measures are not reasonably available to mitigate the risks that Anthropic's products and services supposedly pose to national security. So one of the primary statutes here at issue again is 10 USC section 3252, which is an authority that allows the government to designate a vendor as a supply chain risk and in doing so exclude it from government contracts and it restrict its participation in the supply chains of other contractors doing business with the government. Now, apparently this authority has never been used against a US Company before, and there is no case law interpreting the statute. I would recommend our listeners look over to Lawfare, where my colleagues Alan Rosenstein and Michael Andreas make a compelling case in a piece entitled the Pentagon's Anthropic Designation, which won't survive first contact with the legal system. That Anthropic will prevail in its challenge for a number of reasons, including that the designation exceeds the statutory authority granted to the government and that the designation is nothing more than a pretext for Punishment.
Josie Stewart
Yeah. So even if following that piece, if it is successfully challenged, what are the broader implications for AI developers seeking to do business with the government? I mean, Valerie, you hinted at what kind of precedent this might set for companies who are trying to ensure safeguards are in place for their models, but who are also trying to do business with the government and have seen this fallout play out.
Valerie Wirtschafter
Yeah. So, I mean, I see three pathways. None of them are great for AI development or really even if you think more broadly, the diffusion of AI developed in the US around the world. Right. Like that's been a stated objective of this administration is to export the AI stack. And what does it mean if the federal government can sort of invalidate policies of companies? So, yeah, I mean, chilling on government adoption, companies who invested a lot. I mean, in the complaint, Anthropic talks about all the adaptations that they made to their models to embed them into classified systems to be useful in these contexts. Companies invest in that, especially when they're bidding on government contracts. So is that worth it from a business perspective? That's something that I think companies are going to have to weigh, especially if their whole business could be threatened if they disagree on some terms for a contract. I think international corporations, foreign governments who are maybe thinking about using US built AI might double down on some of their efforts to build their own stacks. Maybe they can't trust the US companies, especially to abide by their own laws. I think companies also who are seeking government contracts, are they going to capitulate? Are they going to put in place policies that are weaker, potentially, maybe agreeing to things when the tools aren't quite there yet? What happens if there is a failure? Potentially? I think all of these things are pretty challenging from a government adoption perspective, but also a diffusion perspective as well.
Stephanie Pell
Yeah.
Josie Stewart
Stephanie, any additional thoughts on that front?
Stephanie Pell
I want to agree with Valerie that I think this all has a potential, broadly, for a real chilling effect when you bully companies or threaten them from exercising their First Amendment rights and their rights to engage in contract negotiations. That's going to make them make policy decisions that are perhaps not very good policy decisions, both for national security and for the rule of law. So I think ultimately this kind of activity on the part of government serves to undermine the rule of law, which is never a good thing.
Josie Stewart
Yeah. And even outside of the federal government, what I know, Valerie, you referenced earlier how the Trump administration has really prioritized AI diffusion development. What effect might this have on the general public, who, as you mentioned, is feeling maybe less good about AI as development? Continues. The story really dominated the news cycle and clearly had ripple effects. I mean, we saw the downloads of Claude increase after anthropic refused the DoD's ultimatum. How might this impact people's perceptions and trust of AI?
Valerie Wirtschafter
Yeah, I mean, AI has such a big PR problem that stories like this, I do not think help build confidence in federal adoption of AI systems. This, I don't think helps at all. I do think, you know, as Stephanie kind of alluded to, we're now at war in the Middle east. And a story like this, even though it did blow up quite a bit, it I think could have dominated headlines even further had it not been for that conflict. So, you know, while this is really confidence diminishing, I think it could have been way worse. But we did see some movement from consumers, people who were following this story closely. And it was, it was quite a story and will still, I think, continue to be something that people follow. But OpenAI had negotiated a deal similarly with the DoD. I guess they agreed to terms that were pretty similar to what Anthropic wanted. Ultimately, it's kind of unclear what OpenAI's terms were. Some people have argued that they were quite a bit softer. But after news of that announcement, Anthropic CLAUDE downloads shot up immensely and OpenAI faced quite a bit of backlash. Sam Altman, the CEO of OpenAI, said that the timing of his announcement looked opportunistic and sloppy. I think were his words. Maybe that wasn't the intent, but that's certainly, I think, how it played out publicly. So we are seeing this sort of public backlash as well here.
Josie Stewart
Yeah. Stephanie, what are your thoughts, especially given mass surveillance, something that obviously would impact everyday people. What are you kind of thinking about how AI might be implemented in the federal government, following what people are seeing play out here?
Stephanie Pell
Well, again, you know, I come back to the fact that, you know, mass domestic surveillance is a term that people will apply maybe in different ways. It doesn't have a fixed meaning in the law. I mean, I think for a whole lot of reasons. I'm going to go back to the Edward de Snowden disclosures. There is always, at least among some part of the public, an underlying concern with growing government surveillance capabilities and how they will be used. So when an issue like this is raised in a high profile form, fight among the CEO of a leading AI company and the Secretary of War and the term mass domestic surveillance is raised, I think it causes concern. And then the work to do is to try and parse under current authorities of law what that really means and forge a path for Congress to come in and regulate.
Josie Stewart
Yeah. So I want to follow up on exactly what you just said. How do we proceed from here? You know, the US does not have a national framework for AI. And how, Stephanie, do you expect this might influence legislators to seek to ensure safeguards both on that front and generally around its use within the government?
Stephanie Pell
So however this particular case resolves itself, and we're all just going to have to stay tuned for that, it should nevertheless serve as a clarion call for Congress to address the use of AI in surveillance and in weapons systems. As a matter of public policy. We don't want these issues decided. When two powerful entities get into a fight for many reasons, that is a lose, lose situation. It circumvents a necessary deliberative process by a branch of government, Congress, that should be weighing in on these policy decisions. And it undermines national security by placing the Department of War at odds with a leading AI company that has an important role to play in our national defense, especially when, rightly or wrongly, the US Is currently engaging in an armed conflict. And again, as I noted before, it undermines the rule of law when companies are bullied and punished for exercising their contractual and First Amendment rights.
Josie Stewart
Yeah. Valerie, what are your thoughts on what legislators can do from here? I know you've talked a lot about the report that you have coming out on DOGE and AI use within the federal government. And we're seeing now these really high risk settings come to the forefront of the conversation. What might protections look like or what might action look like on this front?
Valerie Wirtschafter
Just on the government adoption side, this type of blacklisting, I think, really hobbles federal government from being able to use the best tools, which is, of course, I think, the goal of Congress and the executive branch. The Trump administration had the AI action plan, and a key pillar in that was to leverage AI to deliver the highly responsive government American people expect and deserve. And now civil servants don't have access to the best tools. I've looked at some of these political bias questions, and Claude was actually better than some of its competitors, at least in its more recent models, at sort of deflecting from political questions. And so this idea of political bias in LLMs is a huge thing. But, you know, anthropics models were actually making quite a bit of progress in declining to answer things that were overtly politicized. And so I think turning off these systems is going to be hard, But I know it's already happening. I've heard it's already happening. And they really work quite well, these tools, when they work in concert with each other. And now we've lost a tool for our federal government employees to be able to use with other models or for coding, which Claude really excels at. So I think that that is a huge challenge, is that we're undermining the mission that this government is trying to advance and that Congress is trying to advance as well. On the governance side, this is effectively governance by the executive, which shouldn't be the case, using executive power to legislate how AI companies define risk and measure risk and deploy. But I hope it does spur some action to actually have those conversations at the place where they should be happening. I'm not totally optimistic that they will. We've been waiting for quite some time at this point. You know, options are pretty limited. But I do see sort of two welcome signs. There is widespread consensus, I think, across the political spectrum from former national security professionals, tech policy leaders, business, civil society, that the administration got this one wrong. There was an open letter that was signed by some retired generals, civil liberty organizations, tech policy leaders, every political persuasion. And I think that bipartisan united front is super important. And you know, that kind of pressure is really valuable. The other side of the coin, of course, is the business imperative. You know, whether OpenAI intended for what happened to happen. You know, that sort of like murkiness around what happened there with OpenAI's users and their contract vis a vis the Pentagon and how it was similar or not to anthropics. You know, I think that consumers are a little bit speaking with their wallets. I think if companies can stand together on some of these issues as well, that I think is really critical, but I don't know if we'll see that. But certainly, you know, on the consumer side of the coin, especially as AI is in this space where there are huge contracts and huge deals that are being made but profits are lagging, I think that's another important lever to be pulled as well.
Josie Stewart
Well, while this plays out, I know we will be watching closely as you both are, but I appreciate you both sharing your insights with us today and want to thank you for joining me today.
Valerie Wirtschafter
Thanks so much.
Stephanie Pell
Thank you, Josie.
Josie Stewart
For our listeners, please explore more in depth content on tech policy issues at TechTank on the Brookings website, accessible at brookings.edu. this concludes another insightful episode of the TechTank podcast where we make bits of into palatable bites. Until next time, thank you for listening
TechTank Host
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Episode Title: Does the Anthropic–Pentagon feud mean the end of responsible AI?
Date: March 23, 2026
Host: Josie Stewart (with expert guests Stephanie Pell and Valerie Wirtschafter)
Produced by: Brookings Institution
In this episode, the TechTank podcast explores the high-profile dispute between Anthropic, an AI company, and the US Department of Defense (DoD), after Defense Secretary Pete Hegseth demanded unrestricted access to Anthropic’s AI models. The ensuing conflict, legal action, and fallout raise urgent questions about responsible AI use in government, the risks of AI in surveillance and autonomous weapons, and the precedent this sets for future public-private partnerships in emerging technology.
Guests Stephanie Pell and Valerie Wirtschafter, both Brookings fellows with deep expertise in national security, AI policy, and technology governance, analyze the policy, legal, and societal implications of this standoff.
(00:26-03:10)
(03:10-05:42)
Autonomous Weapons (06:09-06:56)
Mass Surveillance (07:06-10:17)
(10:17-15:45)
(15:45-18:36)
(18:36-21:03)
(22:10-27:18)
| Timestamp | Segment/Topic | |-----------|------------------------------------------------| | 00:26 | Introduction and background of Anthropic-DoD feud | | 02:08 | Guests’ initial reactions and policy critique | | 05:42 | Anthropic’s objections: Autonomous weapons and surveillance | | 10:17 | Supply chain risk: Legal analysis and implications | | 15:45 | What this means for the federal government and private AI companies | | 18:36 | Public trust, PR issues, and consumer responses | | 22:10 | What Congress should do: Policy recommendations | | 24:01 | Federal tool loss, political bias, and future of AI governance | | 27:18 | Closing thoughts and episode wrap-up |
The Anthropic–Pentagon controversy illuminates the precarious balance between responsible innovation, national security demands, and democratic governance in AI deployment. As government and leading tech firms spar over contract terms for AI in surveillance and weaponization, the lack of clear legislative frameworks leaves critical decisions in the hands of a few powerful actors—undermining public trust, innovation potential, and the rule of law. Both guests warn of potential chilling effects and call on Congress to restore rigorous, democratic oversight to federal AI use.
For listeners interested in further analysis and solutions, check the upcoming Brookings report on federal government AI adoption by Valerie Wirtschafter and resources at Brookings.edu.