Following the Trump administration's decision on Friday to blacklist Anthropic and designate its technology a supply chain risk, defense tech companies are telling employees to stop using Claude, and to switch to other artificial intelligence models and assistants.
Harstrick told CNBC in an email that 10 of his firm's portfolio companies that work with the Department of Defense, "have backed off of their use of Claude for defense use cases and are in active processes to replace the service with another one."
Meanwhile, defense contractors like Lockheed Martin are expected to remove Anthropic's technology from their supply chains, Reuters reported late Tuesday.
It's a sudden reversal for Anthropic, which gets about 80% of its revenue from enterprise customers, CEO Dario Amodei told CNBC in January.
The company entered the DoD's ecosystem in late 2024 through a partnership with software and services provider Palantir. Months after that agreement, Claude became the first major model deployed in the government's classified networks through a $200 million contract with the DoD. The model's popularity continued to soar across the business world, particularly in the area of coding assistants.
Defense Secretary Pete Hegseth declared on X that any contractor or supplier doing business with the U.S. military is barred from commercial activity with Anthropic.
Anthropic can still appeal through the legal system, but has yet to act because nothing official has happened — it's mostly been limited to social media posts.
Anthropic said in a blog post on Friday, citing a federal statute enacted by Congress, that Hegseth lacks the authority to restrict companies that work with Anthropic from doing business with the government.
Should the supply chain risk designation be made official, it would only apply to companies' use of Claude as part of defense contracts and "cannot affect how contractors use Claude to serve other customers," the company wrote.
Multiple defense tech execs, who asked not to be named because of the sensitivity of the matter, said they're preemptively moving their workforce off of Claude.
One defense company executive said they told employees last week to start switching out Claude for other models, including some open-source options, a process that could take a week or two. That was in preparation for Friday's deadline as both sides refused to budge.
The CEO of another defense tech company said this week that employees were directed on Monday to stop using Claude until they're given further guidance. The company has to assume a ban will go into effect, the person said.
C3 AI Chairman and former CEO Tom Siebel counts the DoD as a customer and has a partnership with consulting firm Booz Allen Hamilton. Siebel said in an interview that he doesn't see a "need to mitigate" Claude at this time, "until it gets litigated."
A partner at a defense-focused venture firm said his portfolio companies have limited exposure to Claude and are mostly users of OpenAI's technology.
Posted by John3262005
2 Comments
it’s the same playbook they used with law firms. the legal threats are technically empty, but they create a chilling effect on partners/clients
… for the grand crime of saying they won’t participate in mass surveillance or making full autonomous weapons. Lol.