OpenAI reached an agreement late Friday with the Pentagon to deploy its artificial intelligence models on classified military networks.

The announcement came hours after President Donald Trump directed all federal agencies to cease using Anthropic's AI tools and Defense Secretary Pete Hegseth labeled the company a "supply-chain risk to national security." This designation, typically reserved for entities tied to foreign adversaries, requires Defense Department contractors to certify they do not use Anthropic products.

Anthropic's standoff with the Pentagon stemmed from months of negotiations over a contract worth up to $200 million, the first to integrate a commercial AI model into classified workflows through partner Palantir. The company refused Pentagon demands for unrestricted access to its Claude model for "all lawful purposes," insisting on safeguards against domestic mass surveillance of Americans and fully autonomous weapons. Talks collapsed ahead of a Friday 5:01 p.m. deadline, prompting Anthropic CEO Dario Amodei to state the firm would rather forgo the deal than compromise its principles.

OpenAI CEO Sam Altman detailed the new arrangement in a post on X, emphasizing shared safety principles. "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," Altman wrote. "The DoD agrees with these principles, reflects them in law and policy, and we put them into our agreement."

Altman added that OpenAI would implement technical safeguards and deploy engineers to the Pentagon to ensure compliance. He urged the Defense Department to extend these terms to all AI companies to de-escalate tensions. Hegseth reposted Altman's announcement, while Pentagon Under Secretary Emil Michael praised OpenAI as a "reliable and steady partner."

The Pentagon accepted safeguards similar to Anthropic's requests but criticized the rival's stance as overly restrictive. Anthropic plans to challenge its designation in court. Neither side disclosed the OpenAI deal's financial terms.

This episode highlights growing tensions between AI firms and the military over ethical boundaries as the U.S. seeks to integrate advanced technologies for national defense.