US Defense Secretary Pete Hegseth has given Anthropic until Friday to agree to unrestricted military use of its AI technology or face being cut from the Pentagon supply chain. The ultimatum follows Anthropic's refusal to allow unfettered access to its models for classified military applications, including domestic surveillance and autonomous weapons systems.

During tense talks in Washington, Hegseth threatened to invoke the Defense Production Act, a Cold War-era measure that would compel Anthropic to provide its technology regardless of the company's consent. The defense secretary also warned of labeling the $380 billion start-up a supply chain risk, a designation typically reserved for companies linked to foreign adversaries.

The standoff highlights growing tensions between the Pentagon and leading AI labs over military applications. While Anthropic has advocated for tighter AI regulation and warned about technology risks, the Trump administration has pushed for a light-touch regulatory framework. The company's Claude tool has been the only AI model working on classified missions through its partnership with Palantir.

Hegseth is negotiating with other AI companies including Google, OpenAI, and Elon Musk's xAI to replace Anthropic in classified military systems. The dispute threatens to widen the fault line between the White House and one of America's leading AI labs, with Anthropic potentially taking legal action if the Defense Production Act is invoked.