United States Secretary of Defense Pete Hegseth directed the Pentagon to designate Anthropic as a “supply-chain risk” on Friday, sending shockwaves through Silicon Valley and leaving many companies scrambling to understand whether they can keep using one of the industry’s most popular AI models.

“Effective immediately, no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic,” Hegseth wrote in a social media post.

The designation comes after weeks of tense negotiations between the Pentagon and Anthropic over how the US military could use the startup’s AI models. In a blog post this week, Anthropic argued its contracts with the Pentagon should not allow for its technology to be used for mass domestic surveillance of Americans or fully autonomous weapons. The Pentagon asked that Anthropic agree to let the US military apply its AI to “all lawful uses” with no specific exceptions.

A supply chain risk designation allows the Pentagon to restrict or exclude certain vendors from defense contracts if they are deemed to pose security vulnerabilities, such as risks related to foreign ownership, control, or influence. It is intended to protect sensitive military systems and data from potential compromise.

Anthropic responded in another blog post on Friday evening, saying it would “challenge any supply chain risk designation in court,” and that such a designation would “set a dangerous precedent for any American company that negotiates with the government.”

Anthropic added that it hadn’t received any direct communication from the Department of Defense or the White House regarding negotiations over the use of its AI models.

“Secretary Hegseth has implied this designation would restrict anyone who does business with the military from doing business with Anthropic. The Secretary does not have the statutory authority to back up this statement,” the company wrote.

The Pentagon declined to comment.

“This is the most shocking, damaging, and over-reaching thing I have ever seen the United States government do,” says Dean Ball, a senior fellow at the Foundation for American Innovation and the former senior policy advisor for AI at the White House. “We have essentially just sanctioned an American company. If you are an American, you should be thinking about whether or not you should live here 10 years from now.”

People across Silicon Valley chimed in on social media expressing similar shock and dismay. “The people running this administration are impulsive and vindictive. I believe this is sufficient to explain their behavior,” Paul Graham, founder of the startup accelerator Y Combinator said.

Boaz Barak, an OpenAI researcher, said in a post that “kneecapping one of our leading AI companies is right about the worst own goal we can do. I hope very much that cooler heads prevail and this announcement is reversed.”

Meanwhile, OpenAI CEO Sam Altman announced on Friday night that the company reached an agreement with the Department of Defense to deploy its AI models in classified environments, seemingly with carveouts. “Two of our most important safety principles are prohibitions on domestic mass surveillance and human responsibility for the use of force, including for autonomous weapon systems,” said Altman. “The DoW agrees with these principles, reflects them in law and policy, and we put them into our agreement.”

Confused Customers

In its Friday blog post, Anthropic said a supply chain risk designation, under the authority 10 USC 3252, only applies to Department of Defense contracts directly with suppliers, and doesn’t cover how contractors use its Claude AI software to serve other customers.

Three experts in federal contracts say it’s impossible at this point to determine which Anthropic customers, if any, must now cut ties with the company. Hegseth’s announcement “is not mired in any law we can divine right now,” says Alex Major, a partner at the law firm McCarter & English, which works with tech companies.

During a summer internship at MIT Lincoln Laboratory, Ivy Mahncke, an undergraduate student of robotics engineering at Olin College of Engineering, took a hands-on approach to testing algorithms for underwater navigation. She first discovered her love for working with underwater robotics as an intern at the Woods Hole Oceanographic Institution in 2024. Drawn by the chance to tackle new problems and cutting-edge algorithm development, Mahncke began an internship with Lincoln Laboratory’s Advanced Undersea Systems and Technology Group in 2025. 

Mahncke spent the summer developing and troubleshooting an algorithm that would help a human diver and robotic vehicle collaboratively navigate underwater. The lack of traditional localization aids — such as the Global Positioning System, or GPS — in an underwater environment posed challenges for navigation that Mahncke and her mentors sought to overcome. Her work in the laboratory culminated in field tests of the algorithm on an operational underwater vehicle. Accompanying group staff to field test sites in the Atlantic Ocean, Charles River, and Lake Superior, Mahncke had the opportunity see her software in action in the real world.

“One of the lead engineers on the project had split off to go do other work. And she said, ‘Here’s my laptop. Here are the things that you need to do. I trust you to go do them.’ And so I got to be out on the water as not just an extra pair of hands, but as one of the lead field testers,” Mahncke says. “I really felt that my supervisors saw me as the future generation of engineers, either at Lincoln Lab or just in the broader industry.”

Says Madeline Miller, Mahncke’s internship supervisor: “Ivy’s internship coincided with a rigorous series of field tests at the end of an ambitious program. We figuratively threw her right in the water, and she not only floated, but played an integral part in our program’s ability to hit several reach goals.”

Lincoln Laboratory’s summer research program runs from mid-May to August. Applications are now open. 

Video by Tim Briggs/MIT Lincoln Laboratory | 2 minutes, 59 seconds

The snow is melting, the days are getting longer, and I can almost smell the springtime ahead. Soon, we’ll be cruising around town on ebikes and electric scooters instead of burning fossil fuels. For now, the weather hasn’t quite caught up, which is great for markdowns. Many of the best electric scooters are still seeing significant discounts. If you’ve been thinking about buying one, now’s the best time: prices are low, and sunny commuting days are just ahead.

Gear editor Julian Chokkattu has spent five years testing more than 45 electric scooters. These are his top picks that are also on sale right now.

Apollo Go for $849 ($450 Off)

This is Gear editor Julian Chokkattu’s favorite scooter. The riding experience is powerful and smooth, thanks to its dual 350-watt motors and solid front and rear suspensions. The speed maxes out at 28 miles per hour (mph), which doesn’t make it the fastest scooter on the market, but it has a good range. (Chokkattu is a very tall man and was able to travel 15 miles on a single charge at 15 mph.) Other Apollo features he appreciates: turn signals, a dot display, a bell, along with a headlight and an LED strip for extra visibility.

Apollo Phantom 2.0 for $2099 ($900 Off)

The Apollo Phantom 2.0 maxes out at 44 mph, with plenty of power from its dual 1,750-watt motors. It’s a gorgeous scooter, designed with 11-inch self-healing tubeless tires and a dual-spring suspension system for a smooth riding experience. But with great power comes great weight. At 102 pounds, the Phantom 2.0 is the heaviest electric scooter Chokkattu has tested, so I would only recommend this purchase if you don’t live in a walkup and/or have a garage.

More Discounted Electric Scooters