Anthropic CEO Dario Amodei is urgently negotiating with the Pentagon to salvage an AI contract after talks collapsed last week. The dispute centers on Anthropic's refusal to allow its technology for mass domestic surveillance, one of the company's red lines. The breakdown came after Under-Secretary Emil Michael accused Amodei of having a "God complex" and being a "liar."

Pete Hegseth threatened to designate Anthropic a supply chain risk, which would force military contractors to cut ties. The company's $200 million agreement with the defense department, awarded in July 2023, made it the first AI model used in classified settings and by national security agencies. The Pentagon pushed for AI companies to allow technology for any "lawful" purpose, which Anthropic resisted.

Amodei suggested Anthropic was frozen out because it hadn't offered "dictator-style praise to Trump," contrasting with OpenAI's Sam Altman. In a staff memo, Amodei claimed Pentagon messaging was "straight up lies" and accused officials of trying to confuse key issues. The negotiations now hinge on contract language preventing bulk data analysis, which Anthropic views as essential to its ethical boundaries.