The OpenAI rival has options in its showdown with the Pentagon.

Secretary of Defense Pete Hegseth said the company that owns the AI assistant Claude would be punished unless it drops all ethical guidelines.

The Pentagon may decide to officially designate Anthropic as a "supply chain risk" to push them out of government, sources say.

Anthropic CEO Dario Amodei says the artificial intelligence company “cannot in good conscience accede” to the Pentagon’s demands to allow wider use of its technology.

Earlier this week, Defense Secretary Pete Hegseth gave Anthropic a deadline of 5:01 p.m. ET on Friday to agree to the removal of all safeguards, threatening to boot Claude from U.S. military systems or designate the company as a “supply chain risk,” a label used for adversaries of the U.S. that’s never been applied to an American company before.

Tech lawyers and AI policymakers warn that the Pentagon’s plans to compel Anthropic to abandon its ethical red lines are contradictory and could chill partnerships between the government and Silicon Valley.

Defense chief Pete Hegseth has threatened to force the company to lift guardrails against greater military use of AI.

The Department of Defense gave the AI company a deadline of Friday to allow the Pentagon to use its AI as it sees fit or face steep penalties.