The Battle Over AI in Warfare

Summary

Podcast Summary: The Journal. — "The Battle Over AI in Warfare"
Date: March 10, 2026
Hosts: Jessica Mendoza, Ryan Knutson (episode hosted by Jessica Mendoza)
Guests: Keech Hagee (WSJ Reporter)

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Overview

This episode delves into the unprecedented dispute between the US Pentagon and leading AI company Anthropic, against the backdrop of recent US military operations in Iran powered by cutting-edge AI. The narrative unpacks the clash between government demands and the ethical boundaries set by AI developers, illustrating the wider implications for tech companies working with the defense sector, and raising urgent questions about the intersection of technology, law, and governance in the age of AI-driven warfare.

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Key Discussion Points & Insights

1. AI’s Role in Modern Warfare

• Speed & Precision in Iran Attacks: Recent US airstrikes on Iran were described as “the most lethal, most complex and most precise aerial operation in history,” thanks to large-scale AI deployment, specifically relying on Anthropic’s models ([00:10]).
• Government Vision: Defense Secretary Pete Hegseth pushed for an “AI-first warfighting force,” emphasizing Silicon Valley-style innovation in the military ([00:20], [04:07]).

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2. The Unprecedented Fallout with Anthropic

• Contract Termination: Hours before the strikes, President Trump directed that federal agencies sever ties with Anthropic, deeming the company a security threat and branding it “left wing nutjobs.” ([00:55])
• Anthropic’s Lawsuit: Anthropic responded by suing the administration over what it calls a values-based conflict concerning the application of AI in warfare ([00:55], [12:40]).

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3. Profiles in Contrast: Pentagon vs. Anthropic

• Pete Hegseth (Defense Secretary):
  • “Famously a former Fox News host…critic of wokeness and DEI in the military…brusque, take no prisoners style…”
    — Keech Hagee ([03:40], [04:07])
  • Hegseth views AI as a lever for modernizing the military and rejects ethical carve-outs from vendors.
• Dario Amodei (Anthropic CEO):
  • Portrayed as a “philosopher” and “lifelong vegetarian…writes in depth about AI safety. A scientist…loves to communicate in these long philosophical tracts,” seen twirling his curly hair when thinking ([04:23], [04:32]).
  • Committed to “public thinking through transparency” and prioritizing AI safety over business goals ([04:57], [05:11]).

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4. The Red Lines & Risks of AI in Defense

• Usage Agreement Dispute: The heart of the battle was the Pentagon’s insistence that Anthropic’s AI be contractually available for “all lawful scenarios,” while Anthropic refused to allow its tech for:
  • Autonomous weapons
  • Mass domestic surveillance ([06:27], [08:31])
• Anthropic’s Position:
  • “At the very heart are two issues…that it is not willing to have its technology be used for, that is autonomous weapons and mass domestic surveillance.” — Keech Hagee ([06:27])
  • Concerned that AI makes mass analysis of data possible in ways previously only restricted by technical means, not by law ([07:20]).
• Legal Landscape:
  • “The law has not caught up to the state of technology…a lot of what we think the government can’t do, it’s not because it’s illegal, it’s just because it can’t technologically do it.” — Keech Hagee ([07:20])

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5. Escalation and the Rivalry with OpenAI

• Anthropic’s Deadline: Pentagon threatened contract cancellation and a “supply chain risk” label if red lines were not dropped ([08:58]).
• OpenAI (Sam Altman) Steps In:
  • “What Sam Altman did was begin talking to the Pentagon…these threats that you are hurling right now at Anthropic…are very bad for the country and bad for the industry.” — Keech Hagee ([09:43])
• OpenAI’s Approach: Instead of explicit contractual red lines, OpenAI offered “technical safety layers” in their models ([11:08]).
  • “OpenAI tried to approach it technically…they would put a safety layer that would somehow make this impossible.” — Keech Hagee ([11:08])
• Industry Fallout:
  • OpenAI’s actions during Anthropic’s crisis period were seen as opportunistic, resulting in criticism and a public apology ([11:33]).
  • Dario Amodei called this approach “safety theater” in a leaked memo, critiquing reliance on technical safeguards alone ([11:53]).

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6. Consequences for Anthropic and the Industry

• Supply Chain Risk Designation:
  • “Secretary Hegseth was true to his word and did designate them a supply chain risk. It means…the government has determined that it’s not safe to use your technology…” — Keech Hagee ([12:40])
  • Typically reserved for foreign adversaries, this label threatens Anthropic’s contracts and business partners.
• Wide-reaching Impact:
  • Pentagon’s move affects “partners and investors, especially those who are also government contractors, including Lockheed Martin, Google and Microsoft.” ([13:01])

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7. Legal Battles & Broader Precedents

• Anthropic’s Lawsuit:
  • Challenges the administration’s actions as overreaching statutory authority, arguing that the battle is pivotal for all businesses in the sector ([16:46]).
• Community Support:
  • 37 AI researchers at OpenAI and Google file a brief backing Anthropic, underlining the widespread industry ramifications ([16:46]).
• White House Stance:
  • “President Trump will never allow a radical left woke company to jeopardize our national security…” — White House Spokeswoman ([16:46])

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8. What’s Next?

• Business Impact:
  • Anthropic faces a shrunken enterprise market, having “really limited a major section of their potential customer base by alienating the government to this extent.” — Keech Hagee ([17:37])
  • However, public support for their stance on civil liberties prompted a surge in app downloads and broader applause ([18:16]).
• Precedent & Vendor Chilling Effect:
  • “What this did is scare the living daylights out of every other potential vendor…far less likely that others will raise their voices and try to make red lines…” — Keech Hagee ([18:50])
• Legal & Policy Gaps:
  • Ongoing lack of adequate laws for AI and surveillance, pointing to urgent need for new regulatory clarity ([19:46], [19:54]).
• Open Questions: What will happen during the Pentagon’s transition away from Anthropic’s deeply integrated systems—especially amid active conflict? ([20:06])

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Notable Quotes & Memorable Moments

• Keech Hagee ([01:32]):
  “It’s completely unprecedented…a vendor to the US Government became this public punching bag in this way…I think it really shows us that AI is a different kind of technology…It asks new questions of our society that we just have not worked out yet.”
• Jessica Mendoza ([12:20]):
  “Amadei also said in that memo that the Pentagon is targeting Anthropic because it hasn’t, quote, given dictator style praise to President Trump.”
• Keech Hagee ([18:50]):
  “The Pentagon just made an example of Anthropic…far less likely that others will raise their voices and try to make red lines and try to push back, because the overwhelming force that came in the other direction was really something to behold.”
• Jessica Mendoza ([19:54]):
  “It’s not something that like individual companies can sort out one by one with the Pentagon or the Pentagon gets to dictate what is and isn’t legal.”
• Keech Hagee ([07:20]):
  “We’re learning that a lot of what we think the government can’t do, it’s not because it’s illegal, it’s just because it can’t technologically do it.”
• Dario Amodei via memo ([11:53]):
  Calls OpenAI’s approach “safety theater,” highlighting rifts in approaches to AI ethics and enforcement.

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Timestamps for Key Segments

• 00:05–00:45: Unveiling the AI-powered US operation in Iran and Anthropic’s surprise role
• 03:30–05:44: Introducing Secretary Pete Hegseth and Dario Amodei; clash of personalities and worldviews
• 06:07–08:44: Core dispute: Leftover from contract negotiations—Pentagon’s demands vs. Anthropic’s red lines
• 08:58–10:42: Pentagon’s escalating threats; Anthropic’s business risk
• 10:42–12:20: OpenAI’s opportunistic entry and differences in enforcing ethical boundaries
• 13:01–14:34: Broader consequences for partners and the industry
• 15:10–16:46: Anthropic’s rare “supply chain risk” designation; legal and reputational impact
• 17:37–19:54: Precedent set for vendors; need for regulatory reform
• 20:06–20:39: Open questions about Pentagon’s interim needs and future partnerships

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Conclusion

This episode underscores the rapidly intensifying battle over who sets the rules for AI in national security—a contest not just over contracts and software, but about transparency, civil liberties, and the future of governance as technology outruns law. The standoff between Anthropic and the Pentagon serves as a microcosm for broader, unresolved questions at the intersection of business interests, ethical boundaries, and government power.

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Produced by The Wall Street Journal and Spotify Studios.

(End of content summary. Advertisements and show promotion sections omitted.)

Transcript

[Jessica Mendoza]

The US Attacks on Iran have unfolded at unprecedented speed and precision.

[Narrator/Promotional Voice]

The Department of War launched Operation Epic Fury, the most lethal, most complex and most precise aerial operation in history.

[Jessica Mendoza]

That's thanks in part to a cutting edge weapon never before deployed on this scale, Artificial intelligence. Defense Secretary Pete Hegseth has stressed the creation of, quote, an AI first war fighting force. And the tech the Pentagon has relied on most heavily is Anthropics. But our colleague Keech Hagee says there's irony in the fact that the Pentagon has used Anthropic's clawed in Iran.

[Keech Hagee]

So literally hours before those strikes were ordered, the President directed the federal government to stop working with Anthropic.

[Jessica Mendoza]

President Trump also called Anthropic, quote, left wing nutjobs. The Trump administration is trying to cancel its contracts with Anthropic and to designate it as a security threat that no federal agency can do business with. Yesterday, Anthropic struck back, suing the administration. At the heart of the dispute, which has been going on for months, is a fight over values and how AI can be used in warfare. And you've been reporting on this saga right between the anthropic, the Pentagon. How would you characterize the drama here?

[Keech Hagee]

It's completely unprecedented. I've been asking people around in D.C. over the last week, have you ever seen anything like this where a vendor to the US Government became this public punching bag in this way and no one can think of an example. And I think it really shows us that AI is a different kind of technology. Right. It asks new questions of our society that we just have not worked out yet.

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica Mendoza. It's Tuesday, March 10th. Coming up on the show the battle over AI in Warfare.

[Narrator/Promotional Voice]

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[Jessica Mendoza]

Can you introduce us to the two men at the center of this fight? Secretary of Defense Pete Hegseth and Anthropic CEO Dario Amadei.

[Keech Hagee]

It would be hard to imagine two more different men. Pete Hegseth famously is a former Fox News host. He has sort of made his brand as being a critic of wokeness and DEI in the military for too long.

[Narrator/Promotional Voice]

We've promoted too many uniform leaders for the wrong reasons, based on their race, based on gender quotas, based on historic so called firsts.

[Keech Hagee]

He has this very sort of brusque, take no prisoners style. And Secretary Hegseth has made using AI and using the sort of innovation of Silicon Valley as a sort of a key touchstone of his strategy for the department.

[Jessica Mendoza]

Dario Amade on the other hand, is known for being more of a philosopher. He's a lifelong vegetarian who writes in depth about AI safety.

[Keech Hagee]

He's a scientist. He has this curly hair that he sort of twirls when he thinks. He loves to communicate in these long, and I mean long philosophical tracks.

[Narrator/Promotional Voice]

If you look at, you know, the situations I found myself in and the situations humanity has found themselves in, like there's so many times where it's, you know, very hard and there's this enormous suffering and yet there's also this incredible, you know, this incredible, this incredible inspiration

[Keech Hagee]

that kind of, you know, he also sort of believes in hashing out these things sort of in public. Right, let's have a. Like a public thinking through transparency. Exactly.

[Jessica Mendoza]

Amade co founded Anthropic with the aim of prioritizing AI safety over business goals. The company has written a moral constitution into its AI models.

[Keech Hagee]

So Anthropic was founded by a bunch of dissidents from OpenAI that broke off to create their own company in early 2021. So there is not a lot of love lost between these folks going back a while. And that has only become more pointed as they have become real rivals in the business realm.

[Jessica Mendoza]

One way to get ahead of the competition, scoring a contract with the government. In 2025, Anthropic's Claude became the first large language model cleared to work with classified material. But late last year, the Pentagon began discussing adding new language to its contract with Anthropic. Language that would allow the company's tech to be used for, quote, all lawful scenarios.

[Keech Hagee]

And this really came down to something called a usage agreement. Right. They didn't want anything in the Pentagon's usage agreement with the tech providers that tied their hands in any way. And it was really that usage agreement that was the sticking point between Anthropic and the Pentagon.

[Jessica Mendoza]

What is at the heart of that dispute, would you say?

[Keech Hagee]

At the very heart are two issues that Anthropic says are its red lines that it is not willing to have its technology be used for, that is autonomous weapons and mass domestic surveillance. And these are two things that Dario has written in his essays he thinks would be very problematic uses of the technology that his company's been developing and that work. The sticking points in the negotiations with the Pentagon, and ultimately it was the hill of mass domestic surveillance that Anthropic chose to die on there.

[Narrator/Promotional Voice]

We're worried that things may become possible with AI that weren't possible before. An example of this is something like taking data collected by private firms, having it bought by the government and analyzing it in mass via AI, that actually,

[Jessica Mendoza]

are those practices legal?

[Keech Hagee]

The issue is what this whole fight has shown is that the law has not caught up to the state of technology. So we're learning that a lot of what we think the government can't do, it's not because it's illegal, it's just because it can't technologically do it. Like for example, if we think about the Snowden revelations, right?

[Narrator/Promotional Voice]

Edward Snowden, the 29 year old CIA contractor responsible for what's being called one of the biggest intelligence leaks in U.S. history.

[Keech Hagee]

Among the things that were so controversial in those revelations were the call logs, right, between people. That was something the NSA had been collecting and it was a major revelation that, oh my gosh, every single call to and from is being collected by the government. But what we also learned is the government has no ability to actually look through that and make any sense of it, right? It's just too much data. Now with AI, all of a sudden, things like that might be legible in a way that they were not before. And I believe the folks at Anthropic believe we do not currently have the laws in place sufficiently to protect us against stuff like that.

[Jessica Mendoza]

And because of the questions around the legality of it all, Anthropic wanted its usage agreement with the Pentagon to specify in writing that its tech wouldn't be used for fully autonomous weapons or for mass domestic surveillance.

[Keech Hagee]

And the Pentagon said, who are you to tell us how to use your tech? And I think this was really about setting a precedent for the future, right? They just did not want this concept that the tech companies could tell them what to do to even be in the conversation.

[Jessica Mendoza]

The Pentagon gave Anthropic a deadline to come to a new agreement without Anthropic's red line exceptions. That deadline was Friday, February 27th. If Anthropic didn't agree, the Pentagon would cancel their $200 million contract. And the Pentagon didn't stop there. They also threatened to label the company as supply chain risk, which could limit Anthropic's ability to work with any companies that also work with the Defense Department. That could torpedo many of Anthropic's business prospects. As the deadline loomed, another AI company stepped in. OpenAI, the maker of ChatGPT and Anthropic's longtime rival and OpenAI CE. Sam Altman and Anthropic's Dario Amadeh haven't exactly been the best of friends.

[Keech Hagee]

There are a couple moments in the last couple of months that really crystallized their relationship. One of them was the super bowl ad that anthropic ran against OpenAI, which didn't say the word OpenAI, but it was very pointedly against the fact that OpenAI had announced they were going to do ads. And then, of course, there was this epic moment when they were in India together and everyone was joining hands and. And those two guys were on stage and they just would not hold hands. But I think that tells you everything about their relationship, right? It's gotten more and more tense. And so what Sam Altman did was begin talking to the Pentagon. And in fact, what Sam Altman said was, okay, let's talk about that. But also, these threats that you are hurling right now at Anthropic, to label them as supply chain risk, are very bad for the country and bad for the industry. So those are, like, not appropriate threats. Please don't do that. We can find another way.

[Jessica Mendoza]

On Friday, February 27, the same day as Anthropic's deadline, Sam Altman announced that OpenAI now had its own deal to work on classified material with the Pentagon. OpenAI actually says it has the same red lines as Anthropic. They don't want their models being used for mass surveillance or autonomous weapons. But rather than rely on the usage agreement to enforce those red lines, OpenAI said they'd build protections into the tech.

[Keech Hagee]

OpenAI tried to approach it technically, saying that they would build a safety layer that would make it so that the model just wouldn't be able to do bad things if you asked it to do them. So rather than have a usage agreement that said no domestic surveillance, they would put a safety layer that would somehow make this impossible.

[Jessica Mendoza]

What was the reaction to OpenAI's deal with the Pentagon?

[Keech Hagee]

The company definitely took some heat for it, for the timing seemed opportunistic and so much so that, you know, Sam Altman came out and kind of apologized for the timing, said it did look opportunistic and sloppy.

[Jessica Mendoza]

At Anthropic, Amadei wrote an internal memo addressing its rival's deal.

[Keech Hagee]

Dario Amadei called those things safety theater in his scathing memo. Sort of responding to this whole moment. They sort of think that that's not enough. They think that part of the problem is that, okay, maybe the laws right now don't allow mass domestic surveillance, but there's nothing to keep Secretary Hegseth from changing the laws or changing the interpretation of the laws in the future and they wanted something more ironclad.

[Jessica Mendoza]

Amade also said in that memo that the Pentagon is targeting Anthropic because it hasn't, quote, given dictator style praise to President Trump. After the memo leaked last week, Amade apologized for what he wrote in it. But the Pentagon had already officially designated Anthropic as a supply chain risk.

[Keech Hagee]

Secretary Hegseth was true to his word and did designate them a supply chain risk. It means that the government has determined that it's not safe to use your technology and that no entity in the Pentagon is allowed to use it. Pentagon's really, really big, so that's a lot of potential customers that you lo.

[Jessica Mendoza]

The administration said agencies would have six months to transition to other AI models. The move could have far reaching consequences for Anthropic partners and investors, especially those who are also government contractors, including Lockheed Martin, Google and Microsoft. What that could mean for the future of Anthropic's business is next.

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[Jessica Mendoza]

Anthropic is one of the first American companies that's ever been designated a supply chain risk. It's a label that's typically held for companies from countries that the US Considers foreign adversaries.

[Narrator/Promotional Voice]

It feels very punitive and inappropriate given the amount that we've done for US national security.

[Jessica Mendoza]

In an interview on cbs, Amade described the designation from the Department of War as retaliatory.

[Narrator/Promotional Voice]

I would have disagreed, but I would have respected them if they said, dow, we don't want to work with Anthropic. Our principles are not aligned with yours. We're going to go with one of the other models. But they've both extended that to parts of the government beyond the Dow and tried to punitively revoke our contracts beyond Dow.

[Jessica Mendoza]

An Anthropic spokesperson also said the company is committed to pursuing resolution and that the lawsuit, quote, does not change our long standing commitment to harnessing AI to protect our national security, but this is a necessary step to protect our business, our customers and our partners. How does the Pentagon justify the supply chain risk designation?

[Keech Hagee]

I think the Pentagon's view is that anytime you have ideology begin to affect how technology will be used in a national defense kind of setting, that that is a slippery slope and dangerous on its face. But a lot of legal experts and defense experts are really skeptical that this designation could hold up in court yesterday.

[Jessica Mendoza]

In its lawsuit against the Trump administration, Anthropic argued that the designation went beyond the administration's statutory authority. In its complaint, the company asked the court to declare the moves unlawful and said that the case is critical for other businesses that may disagree with the government. Shortly after Anthropic filed its lawsuit, 37 AI researchers at OpenAI and Google filed a brief urging the court to side with Anthropic, highlighting how the fight has rippled through Silicon Valley. A White House spokeswoman said, quote, president Trump will never allow a radical left woke company to jeopardize our national security by dictating how the greatest and most powerful military in the world operates. The Department of Defense declined to comment. So what could all of this mean for Anthropic's future business?

[Keech Hagee]

It's going to be, I think, harder than they thought for them to stick to their values and continue to grow. They have made the center of their strategy enterprise business. If you are an enterprise focused company, you really need to be able to work with the government. That's one of the biggest enterprises there is. So it does seem like it really limited a major section of their potential customer base by alienating the government to this extent.

[Jessica Mendoza]

Some companies like Microsoft and Google have said they'd continue working with Anthropic on commercial projects that don't involve the Pentagon. Is there any upside for Anthropic here to continue to sort of stand its ground?

[Keech Hagee]

No, I think there's been tremendous upside for Anthropic. They have kind of touched a nerve with consumers and the broader public on this idea that they're willing to stand their ground to defend civil liberties. They have seen their app downloads shoot to number one in the App Store and really gotten applause from all kinds of different directions from folks who appreciate them standing their ground.

[Jessica Mendoza]

What sort of precedent does this set when it comes to how companies work with the government and particularly the Department of Defense?

[Keech Hagee]

The Pentagon, I think this entire fight was about setting precedents. And we've heard that what this did is scare the living daylights out of every other potential vendor who is frightened of crossing the Pentagon. So the Pentagon just made an example of Anthropic. Right. And that means that it's far less likely that others will raise their voices and try to make red lines and try to push back, because the overwhelming force that came in the other direction was really something to behold. What this whole thing really shows is that we do need new laws. We do clearly need some way of sorting out this issue of mass domestic surveillance where the law has not caught up with the technology. And this is sort of forcing this to the fore maybe faster than we would otherwise have it.

[Jessica Mendoza]

Right. It's not something that like individual companies can sort out one by one with the Pentagon or the Pentagon gets to dictate what is and isn't legal.

[Keech Hagee]

Right. I mean, the issue is they're like all lawful uses. And Anthropic's basically saying, well, the law as currently written is insufficient. That's the problem.

[Jessica Mendoza]

What are you keeping an eye on next?

[Keech Hagee]

I'm very interested in this question of what's going to happen in the interim when the Pentagon has to use plaid because it's so integrated. And yet the, you know, the political fight has pretty much already happened, right? Like the guns have gone off, the memos have been sent, the insults have been hurled. I'm not sure there's any putting the toothpaste back in the tube. I'm really curious how this interim process is going to work while they try to get replacements like OpenAI up and

[Jessica Mendoza]

running, especially given that we're in the middle of a pretty big conflict now. It's not just hypothetical anymore.

[Keech Hagee]

Exactly.

[Jessica Mendoza]

That's all for today. Tuesday, March 10 the Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode from Dov Lieber, Daniel Michaels, Amrit Ramkumar and Marcus Weisgerber. Thanks for listening. See you tomorrow.

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