The Trump administration’s plan to shut Anthropic out of the government could disrupt not just the AI giant’s bottom line, but the U.S. AI sector as a whole.
And while congressional Republicans are staying out of President Donald Trump’s feud with Anthropic, a fault line is forming as some say they don’t want America’s competitiveness in AI to suffer.
The Pentagon officially notified Anthropic it has been designated a supply-chain risk on Thursday, after a weeks-long standoff over the company’s refusal to give the Pentagon unfettered access to its AI models. Defense Secretary Pete Hegseth’s decision could force defense contractors, which include most of Big Tech, to cut some defense-related contracts with Anthropic.
This designation has traditionally been reserved for foreign companies suspected of espionage. Anthropic CEO Dario Amodei said the company would challenge the designation in the courts in a statement on Thursday. Amodei added that the Pentagon committed to resorting to the “least restrictive” measures necessary to protect the supply chain, and he expects Anthropic to be able to maintain its nondefense-related work with its business partners.
Trending
Sign Up for NOTUS’ Free Daily Newsletter
The designation is the largest regulation ever imposed on any American AI company. It could also undermine one of the longstanding guiding principles for Republican AI policy in Congress: The U.S. is in an existential race against China to dominate the global AI market, and any regulation that impedes its development is dangerous.
“As our adversaries continue to rapidly adopt the use of artificial intelligence, we cannot afford to fall behind,” Republican Rep. Rob Wittman, a member of the Armed Services Committee, wrote in a statement to NOTUS. “We have to continue to develop and lead in this space to strengthen our national security, protect servicemembers, and maintain a competitive edge.”
Like other Republicans who spoke to NOTUS for this story, Wittman did not directly weigh in on Hegseth’s position.
Rep. Brian Mast, chair of the House Committee on Foreign Affairs, said he would like the American government to use every tool possible in the race against China.
“We have amazing American companies and engineers, from Nvidia to Anthropic, and all the other companies have been doing this for a long time. I want all of them in our toolbox and not to lose any capability. I don’t think there’s an advantage for us [in the race against China],” Rep. Mast told NOTUS.
The Information Technology Industry Council, an industry group representing technology giants like Google, Nvidia and Amazon, pushed back on Wednesday against the Pentagon’s plan to blacklist an American company over a contracting dispute.
“We are concerned by recent reports regarding the Department of War’s consideration of imposing a supply chain risk designation in response to a procurement dispute,” the Information Technology Industry Council wrote in the letterreported by multiple outlets.
“Contract disputes should be resolved through continued negotiation between the parties,” the group added. “Emergency authorities such as supply chain risk designations exist for genuine emergencies and are typically reserved for entities that have been designated as foreign adversaries.”
The Computer & Communications Industry Association, an industry group representing major technology companies like Meta, Uber and Cloudflare, asked the Pentagon to “refine” its approach to this dispute.
“The recent designation of a major domestic AI firm as a ‘supply chain risk’ has sent a ripple of uncertainty through the broader industry. We are concerned that designating any one American company as a supply chain risk will inevitably lead to unintended consequences that could very well undermine the Administration’s broader goals to ensure American leadership,” The Computer & Communications Industry Association wrote in aletter on Wednesday.
Republican senators, who have traditionally been major proponents of light-touch regulation for AI industries, have refrained from weighing in on the Pentagon’s designation, directly claiming they are still waiting to learn more about the dispute.
“AI is here to stay and it is not going away. We have to be on top of it and we’re gonna do everything we can to continue to develop the industry here within the United States,” Sen Mike Rounds, a member of the Armed Services Committee and a supporter of efforts to block states from regulating AI, told NOTUS. “I have not had a full briefing yet, I’ve been kind of tied up with other briefings lately. So until I get that briefing, I won’t make comments specifically on that issue.”
Author
