Iran War Spotlights the Pentagon’s AI Strategy

0:03Katrina Manson:Every small business owner has that one moment that could have broken them, but remarkably, it didn't. Hi, I'm Ben Walter, CEO of Chase for Business, and on Season 3 of The Unshakeables, my co-host Kathleen Griffith and I are bringing you more incredible stories of overcoming the impossible. We're really proud to share that The Unshakeables is nominated for Best Branded Podcast at the 2026 iHeart Podcast Awards. Listen to The Unshakeables wherever you get your podcasts and learn more at chase.com slash podcast. JPMorgan Chase Bank and a member FDIC. Copyright 2026, JPMorgan Chase & Company. The thing about AI for business, it may not automatically fit the way your business works.

0:45Katrina Manson:At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions. slash repetitive tasks and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions.

1:36Katrina Manson:The Cincinnati Insurance Companies. Let them make your bad day better. Find an agent at CINFIN.com. Bloomberg Audio Studios. Podcasts. Radio. News. The Iran war showed little signs of de-escalating this week, with Israeli forces targeting nuclear development sites in Iran, the U.S. attacking Iranian mine-laying vessels in the Strait of Hormuz, and Iranian drones striking Dubai International Airport. President Trump and Iran's new supreme leader each vowed Thursday to keep up their respective military campaigns amid mounting oil prices. Every day we lose about 20 % of global oil supplies.

2:18David Gura:We are just shy of$100 a barrel on Brent now.

2:21Katrina Manson:In a post on Truth Social, Trump wrote that preventing Iran from threatening the Middle East and having nuclear weapons was far more important to him than the cost of oil. Iran's new supreme leader, Ayatollah Mushtabah Khamenei, said Iran would continue its blockade of the Strait of Hormuz, adding, that he'd consider opening other fronts if the war continues. But the war has already expanded to an important new front, how it's being waged with AI-enabled weaponry. In just the first 24 hours of the Iran war, the U.S. hit more than 1 ,000 targets, according to the commander of U.S. forces. That is double the scale of the assault that opened the Iraq war in 2003.

3:00David Gura:The decision to wage a campaign like this is intimately linked to how remotely the U.S. can pursue this war.

3:09Katrina Manson:That's Bloomberg National Security and tech reporter Katrina Manson.

3:12David Gura:It's clearly really important for Donald Trump not to send U.S. troops in on the ground. So conducting an air war with the help of AI suddenly becomes critical to his own pursuit of a war.

3:28Katrina Manson:The U.S.'s first strikes on Iran came hours after the Pentagon severed its contract with Anthropic, an AI company that had been working directly with the U.S. military. The Pentagon has formally notified Anthropic that it's deemed the artificial intelligence company and its products a supply chain risk to the United States. The Pentagon has said it needs the ability to use Claude for, quote, all lawful purposes. Anthropic, which is best known for its clawed AI tool, wanted assurances from the U.S. government that its technology would not make lethal decisions on its own or help to conduct mass surveillance on Americans.

4:04Katrina Manson:Anthropic's ouster, and a move by its rival, OpenAI, to start working with the Department of Defense, have struck a nerve. Some Americans are applauding Anthropic's decision. Clawed went down last week because of unprecedented demand. It's the latest turn in a long-simmering debate over how the U.S. military works with Silicon Valley companies and how those tech titans contribute to the development of AI weapon systems. Katrina took a deep dive into that story, and it's a big part of her forthcoming book on the U.S. military and AI.

4:35David Gura:AI may be good for scale, it may be good for speed, but is it as good for accuracy and saving lives as these claims have been made in the past? We don't know yet.

4:51Katrina Manson:I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, as Anthropic and the Pentagon feud, how is the U.S. integrating AI into its warfighting machine? How is AI-enabled weaponry being regulated? And is the tech as good as it needs to be with so many lives at risk?

5:12Katrina Manson:About five years ago, Dario Amadei and his sister left their jobs at OpenAI to found Anthropic, an AI company meant to enforce strong safety guardrails. Since then, Anthropic has achieved mainstream success with Claude. It's even managed to partner with the U.S. government. But that all changed at the start of the year. Bloomberg senior editor Mike Shepard has been following the saga closely. The Pentagon began reviewing how it wanted to roll out artificial intelligence across the armed forces. And in January, they put out an order from Defense Secretary Pete Hegseth saying that they needed to accelerate adoption across the Defense Department, which he refers to as the Department of War.

5:58Katrina Manson:He even put up posters around the building saying the government wants you to use AI. As part of it, they included language that said they did not want to be bound by any usage restrictions that might come from an AI provider of any stripe. They didn't single out Anthropic. But Anthropic is not only one of the leading AI developers and providers in the world, they are one that has stood out for what many see as its safety first stance and its adherence to principles of trying to develop AI with a mind toward avoiding some of the worst case scenarios. Now, for its part, Anthropic has expressed continued interest in working with the military so long as the Pentagon of military officials abide by those usage restrictions.

6:48Katrina Manson:And the two that have really been a red line for the company concern the use of its AI technology for mass surveillance of Americans domestically, and then also fully autonomous weapons deployment. They, as the developers of the technology, insist that they don't have full confidence that it's ready for those uses safely. Katrina, you have a book coming out later this month on the Pentagon's efforts to integrate AI into warfare. I'm curious, when that initiative started, when did the Pentagon begin looking into this in earnest?

7:21David Gura:The Pentagon likes to say it's been developing AI for 60 years, but the real project that I think we can set the timer by is Project Maven, which started in 2017. And it was an effort that really spoke to America's concern about falling behind China. The US began to realize it was using old tech and that this new age of warfare was coming that would require robots, autonomy, and AI. And Project Maven was this effort to experiment with AI. At the time, the cutting edge was computer vision, things that could identify objects on a video feed taken by drones and process that quicker. But the people I spoke to also explained to me that all along they imagined that this would help with targeting.

8:06Katrina Manson:You write about the software that comes out of Project Maven, Maven Smart System, which is made by Palantir and incorporated technology from Amazon and Microsoft and others. Is this something the Defense Department thought they could do in-house or was it always something that they needed the cooperation of private industry?

8:23David Gura:It's a real core point that obviously the Pentagon is still struggling with. For this very advanced tech, this recognition that has been happening over the past 10 years that warfare is going to be what some call software defined, they need commercial companies. And so when Project Maven happened, for the first time, really, they were going outside the traditional primes, as they're known, the traditional defense contractors, and looking at companies like Google, Microsoft and Amazon, but other tiny startups as well, who were just beginning to experiment with fascinating algorithms that could detect images on wedding cakes and then reapplying that for the tools of war.

9:04David Gura:And that transition was incredibly uncomfortable, clunky, difficult. And it backfired at one point rather spectacularly when in 2018, Google workers discovered that their company was working on Project Maven and they feared that their tech and their traditions for them could be subverted into what they ended up calling in a protest letter, the business of war. And the parallel with Anthropic today isn't quite the same. The CEO of Anthropic all along has said he believes in national security work more than any other AI lab. Anthropic has lent into classified work and the classified cloud is where Pentagon does its fighting.

9:42David Gura:So they've been involved with lethal operations in some way for more than a year. What I think is different is he had these red lines, and as he is trying to uphold them, tech workers and other companies are really paying note now.

9:59Katrina Manson:Katrina, ethics are so central to this program, and I'm curious how defense officials addressed those ethics of ceding life or death decision-making to machines, to artificial intelligence.

10:11David Gura:They would argue, I think very current now to the operations that are using AI tools against Iran, that humans are still making the decisions. But in a very interesting presentation by the commander of US forces just this week, they've made clear that they've hit 5 ,500 targets. That speed is exactly why they want AI and that scope. and the Pentagon has had to work very hard thinking through precision. The claim, of course, is that US weapons are the most precise in the world. But where you decide to put them, that is where America has had problems. And the scale at which it's shooting at areas where we know civilians are present because CENTCOM is warning civilians to stay home, telling them to stay away from ports, there is a margin of error.

11:05David Gura:There's a decision to accept or not accept a certain amount of collateral damage. They haven't made public what margin they set on that collateral damage. But these are key ethical decisions. And the targeting process is a multi-stage effort where people feed in and eventually a commander makes a decision to sign off. But as you involve AI, that process speeds up. The decision making time is reduced and fears for things like automation bias or the algorithms themselves going wrong, hallucinating or drifting. Algorithms tend to naturally get worse over time. All of that has really yet to be worked out.

11:45David Gura:Now, the US has got a policy for that. It's a directive. Some people, to me, frame it more as a process than a rule. But it does say that there needs to be human judgment over the appropriate use of force. Well, that's supervision. That's not necessarily making a decision. And so I think from all the people I've spoken to, that role, that human role is reducing. And CENTCOM has been particularly proud this week, the commander, to say that AI is helping them reduce operations, decisions from what used to be days and hours to seconds.

12:21Katrina Manson:After the break, how good is this technology, really? We hear about one test where things went awry, and we dig into how lawmakers are responding.

12:54Katrina Manson:So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public, you just type in a prompt and their AI screens thousands of stocks and build a one of a kind index. You can even backtest it against the S &P 500. Then you can invest in a few clicks. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. And paid for by Public Holdings.

13:30Katrina Manson:Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. Being a small business owner isn't just a career. It's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go.

14:03Katrina Manson:Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices.

14:38Katrina Manson:Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026.

14:44David Gura:JPMorgan Chase and Company.

14:46Katrina Manson:Deadlines move, plans change, and sometimes opportunities pop up out of nowhere. When you need branded gear fast, 4imprint is ready to deliver. 4imprint offers hundreds of promotional products in their 24-hour category. Everything from custom apparel, bags, and drinkware to writing tools, trade show staples, and high-tech gear. At 4imprint, they're focused on getting the details right, printing your logo with precision, packing your order with care, and shipping it out fast. and it's backed by their 360 degree guarantee. That's 4imprint's promise your order will show up right on time just the way you planned it.

15:22Katrina Manson:That's what it means to be 4imprint certain. So if you're prepping for a last minute event or jumping on a big opportunity, you don't have to settle or scramble. With 4imprint, fast, reliable service and peace of mind are built right in. Check out their full 24-hour selection at 4imprint.com. 4imprint, 4certain.

15:47Katrina Manson:Proponents of AI-enabled weapons say the technology can improve decision-making on the battlefield and put fewer troops at risk, which could save lives. Its promise of speed makes it imperative to national security experts, who see it as essential in the widening AI arms race with China. But Bloomberg's Katrina Manson points out it also comes with risks.

16:08David Gura:AI is this fundamentally unpredictable black box technology. So it's brilliant at bringing a lot of data to bear. It just might be the wrong data, and it might be organized in the wrong way. And if you're not giving enough time to checking, or if you don't understand where it can make mistakes, and you put it in too critical a place in your own system, you've made yourself incredibly fallible. Now, from the US perspective, that brings a couple of problems. One is you may end up killing civilians, which is against US policy, certainly deliberate targeting. Inadvertent targeting under the rule of law has to be proportionate.

16:46David Gura:But the second thing is you can also hurt your own troops and allied troops. And the US has a history of grappling with what are called friendly fire incidents. and AI was meant to help clear up this kind of Klaus Wittsian idea of the fog of war. One of the ways they've integrated AI into the battlefield picture is through the system that emerges from Project Maven called Maven Smart System. For most of us, it's a really basic idea. It's essentially just a digital map. It's Google Maps for war. It's really hard for the military to create that because they have data in all sorts of places. They haven't labelled their data.

17:22David Gura:They have spent the last 10 years really getting their equipment, their tech, their connectivity up to scale where something like this could work. But then integrating AI into it is really down to what checks they make for it. The algorithms themselves, I found cases where the quality of the algorithm, the ability of the algorithm to detect what it's meant to be identifying can change if the weather changes, if you move an algorithm from a hot area to a green area, picking up something as simple as a truck or a tank and distinguishing between a man or a woman or a child, which is really critical to those life and death decisions and the rules under which the US military operates, really isn't at the stage that you can give that over to algorithms.

18:06David Gura:So the risk is if they are not sufficiently tire kicking their own algorithms when it comes to computer vision, or when it comes to using LLMs and chatbots to speed up their processes and analyse data, you could be going in the wrong direction for quite some time before you notice it.

18:25Katrina Manson:Katrina, I wonder if you could tell us a story of what happens when this technology doesn't work as it's intended to. And you write about a test that took place back in June of 2025. Maybe you could just walk us through what happened then and what lessons we can draw from how that unintended result could portend difficulties down the road.

18:39David Gura:The teams behind Maven had made computer vision. And then this was the next iteration. This is for a program called Replicator. So it would be to identify a target and then the drone could go after the target and then select it, identify it and explode. And developing automatic target recognition is one thing that relies on creating algorithms that can find things. The other is this swarming technology coordinating between drones. Of course, they were testing this. It's expected to fail. That's why they do it in test conditions. and the aim was to deliver multiple thousands of drones by a certain date.

19:18David Gura:And two months before that date, there was a test in California of some drone boats. And in this one experiment, the drone was towed out to sea before it was to be switched into autonomy mode. That in itself was meant to be a safety measure. What happened was, inadvertently, a command was sent from the dock to the drone boat. And when the drone boat was activated into autonomy mode without anyone realising it, it started trying to get away from the captain who was towing it. The boat started accelerating, decelerating multiple times between zero and six knots at pace, semicircling action. The rope goes taut and the captain is capsized.