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In just over a week, negotiations over the Pentagon\u2019s use of Anthropic\u2019s Claude technology fell through, the Trump administration designated Anthropic a supply-chain risk<\/a>, and the AI company said it would fight that designation in court.<\/p>\n OpenAI, meanwhile, quickly announced a deal of its own, prompting backlash that saw users uninstalling ChatGPT<\/a> and pushing Anthropic\u2019s Claude to the top of the App Store charts<\/a>. And at least one OpenAI executive has quit<\/a> over concerns that the announcement was rushed without appropriate guardrails in place.<\/p>\n On the latest episode of TechCrunch\u2019s Equity podcast<\/a>, Kirsten Korosec, Sean O\u2019Kane, and I discussed what this means for other startups seeking to work with the federal government, especially the Pentagon, as Kirsten wondered, \u201cAre we going to see a changing of the tune a little bit?\u201d<\/p>\n Sean pointed out that this is an unusual situation in a number of ways, in part because OpenAI and Claude make products that \u201cno one can shut up about.\u201d And crucially, this is a dispute over \u201chow their technologies are being used or not being used to kill people\u201d so it\u2019s naturally going to draw more scrutiny.<\/p>\n Still, Kirsten argued, this is a situation that should \u201cgive any startup pause.\u201d<\/p>\n Read a preview of our conversation, edited for length and clarity, below.<\/p>\n Kirsten:<\/strong> I\u2019m wondering if other startups are starting to look at what\u2019s happened with the federal government, specifically the Pentagon and Anthropic, that debate and wrestling match, and [take] pause about whether they want to be going after federal dollars. Are we going to see a changing of the tune a little bit?<\/p>\n Techcrunch event<\/p>\n \n\t\t\t\t\t\t\t\t\tSan Francisco, CA<\/span> Sean:<\/strong> I wonder about that, too. I think no, to some extent, in the near term, if only because when you really try to think about all the different companies, whether they\u2019re startups or even more established Fortune 500s that do work with the government and in particular with the Department of Defense or the Pentagon, [for] a lot of them, that work flies under the radar.<\/p>\n General Motors makes defense vehicles for the Army and has done [that] for a very long time and has worked on all electric versions of those vehicles and autonomous versions. There\u2019s stuff like that that goes on all the time and it just never really hits the zeitgeist. I think the problem that OpenAI and Anthropic ran into within the last week is like, these are companies that make products that a ton of people use \u2014 and also more importantly, [that] no one can shut up about.<\/p>\n So there\u2019s just such a spotlight on them, that naturally highlights their involvement to a level that I think most of the other companies that are contracting with the federal government \u2014 and, in particular, any of the war-fighting elements of the federal government \u2014 don\u2019t necessarily have to deal with.<\/p>\n The only caveat I\u2019ll add to that is a lot of the heat around this discussion between Anthropic and OpenAI and the Pentagon is very specifically about how their technologies are being used or not being used to kill people, or in parts of the missions that are killing people. It\u2019s not just the attention that\u2019s on them and the familiarity we have with their brands, there is an extra element there that I feel is more abstract when you\u2019re thinking about General Motors as a defense contractor or whatever.<\/p>\n I don\u2019t think we\u2019re going to see, like, Applied Intuition or any of these other companies that have been framing themselves as dual use back off much, just because I don\u2019t see the spotlight on it and there\u2019s just not the sort of shared understanding of what that impact might be.<\/p>\n Anthony:<\/strong> This story is so unique and specific to these companies and personalities in a lot of ways. I mean, there have been a lot of really interesting thought pieces<\/a> about: What is the role of technology in government? [Of] AI in government? And I think those are all good and worthwhile questions to ask and explore.<\/p>\n I think also, though, that this is a very curious lens through which to examine some of those things because Anthropic and OpenAI are not actually that different in a lot of ways or the stances they\u2019re taking. It\u2019s not<\/em> like one company is saying, \u201cHey, I don\u2019t want to work with the government\u201d and one is saying, \u201cYes, I do.\u201d Or one is saying, \u201cYou can do whatever you want.\u201d and [the other is] saying, \u201cNo, I want to have restrictions.\u201d Both of them, at least publicly, are saying, \u201cWe want restrictions on how our AI gets used.\u201d It just seems like Anthropic is digging in their heels a lot more about: You cannot change the terms in this way.<\/p>\n And then on top of that, there also just seems to be a personality layer where, the CEO of Anthropic and, Emil Michael \u2014 who a lot of TechCrunch readers might remember from his Uber days<\/a>, and is now [chief technology officer for the Department of Defense]. Apparently, they just really don\u2019t like each other. Reportedly<\/a>.<\/p>\n Sean:<\/strong> Yes, there\u2019s a very big \u201cgirls are fighting\u201d element here that we should not overlook.<\/p>\n Kirsten:<\/strong> Yeah, a little bit. There is, but the implications are a little bit stronger than that.\u00a0 Again, to pull back a little bit, what we\u2019re talking about here is the Pentagon and Anthropic coming into a dispute in which Anthropic appears to have lost, although I should say they are still very much being used by the military. They are considered a crucial technology, but OpenAI has kind of stepped in, and this is evolving and will likely change by the time this episode comes out.<\/p>\n The blowback has been interesting for OpenAI, where we\u2019ve seen a lot of uninstalls of ChatGPT I think surged 295%<\/a> after OpenAI locked in the deal with the Department of Defense.<\/p>\n To me, all of this is noise to the really critical and dangerous thing, which is that the Pentagon was seeking to change existing terms on an existing contract. And that is really important and should give any startup pause because the political machine that\u2019s happening right now, particularly with the DoD, appears to be different. This isn\u2019t normal. Contracts take forever to get baked in at the government level and the fact that they\u2019re seeking to change those terms is a problem.<\/p>\n<\/div>\n
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\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026<\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n