273 | AI’s civil-war: Anthropic vs OpenAI vs Dept-of-War showdown, Anthropic revenue doubles since January 1st, GPT-5.4 & Gemini 3.1 released, Perplexity Computer launches, and more pivotal AI news for the week ending on March 6, 2026

0:00Isar Meitis:Hello and welcome to a weekend news episode of the Leveraging AI podcast, the podcast that shares practical, ethical ways to leverage AI to improve efficiency, grow your business and advance your career. This is Isar Meitis, your host, and we have a lot of interesting things to talk about. The biggest one will be continuing a story that we started last week with the relationship between OpenAI, Anthropic, Trump, the Department of War and many other participants. While I did report on this last week, I recorded the episode on Friday afternoon as the things were evolving. I didn't have the full context of what was going on.

0:37Isar Meitis:And there's a lot that happened since that has significant, I think, implications on how AI is evolving in the world and the impact it has on everything. So we're going to dive into that and going to spend a lot in analyzing that situation. We have several model releases, including two models from OpenAI. and we have a lot of rapid fire items to cover as well. So let's get started. So for those of you who missed the news about Anthropic and OpenAI and the Department of War, the quick recap is that Anthropic refused to change the terms of their agreement with the government to allow the government to use it for what the government calls any lawful use.

1:19Isar Meitis:Anthropic was insisting that their technology is not going to be used for surveillance against Americans and not for completely autonomous weapons. Secretary Hegseth, who is in charge of Department of War, warned them that if they do not comply, he will ban them or basically define them as a supply chain risk, which is something that is designated for adversaries who risk national security. And both him and President Trump decided that because Anthropic would not comply, they would be designated as such. very shortly after they signed a very similar deal with OpenAI and with XAI. And as a result of that, there's been a massive shift in public opinion against OpenAI and towards Anthropic.

2:06That's, on a nutshell, what happened. But I do want to deep dive into a lot of the components and the specific quotes and what was said and what will happen and where are we now and what are the implications I think this has on a much broader scale. and what you need to be thinking about on this topic. So first of all, let's go back to July of 2025. The Pentagon then awarded a$200 million contract to Anthropic and Google and OpenAI to develop agentic AI solutions for defense use. And they were the only company that was allowed to run under the classified environment together with a partnership with Palantir Technologies.

2:45Now, in December of 2025, the Department of Defense that was rebranded the Department of War struck a deal with Google to build a Gemini-powered internal LLM that will be called GenAI.mil. And at the same time, Defense Secretary Pete Hagseth was pushing for military AI, and I'm quoting, without ideological constraints that limit lawful military applications. And he declared publicly, and I'm quoting again, Again, the future of American warfare is here and it spells AI. Now, on January 9th, Hegseth issues a memorandum that outlines the Pentagon AI strategy calling for U.S. to become, and I'm quoting again, AI first fighting force.

3:33The memo signaled that the Pentagon would only contract with AI companies willing to allow the government to use it for, and I'm quoting again, any lawful use. And it called for all the AI suppliers to completely strip any safety guardrails against use in mass surveillance and autonomous weapons, which was under their terms of their agreement with Amthropic, which that's what they requested when they agreed to be a part of this contract. Now, he gave a deadline of the end of February for contractors to comply with this request. Now, on January 3rd, Special Forces conducted Operation Resolve, where it was raiding Caracas to capture the Venezuelan President Nicolas Maduro.

4:17And reports later on by the Wall Street Journal and Axios revealed that Anthropic-Claude model was used in the preparation and the execution of this operation. So Anthropic is already built into and weaved into the most critical operations of U.S. military, both on the preparation side as well on the execution side of such operations. Now, in mid-February, Anthropic was holding its ground, basically saying it is not going to cave and they will not allow their models to be used for surveillance against American citizens and or using it for completely autonomous weapons. and a senior administration official told Axios, and I'm quoting, any company that would jeopardize the operational success of our warfighters in the field is one we need to reevaluate our partnership with going forward.

5:07At that time, the Pentagon already started accelerating talks with OpenAI to fill the potential gap if Anthropic will not comply with the new demands from the secretary. Now, at that time, separately, hundreds of employees from Google and OpenAI signed an open letter urging their leaders to stand in solidarity with Anthropic and refuse the Pentagon's demands. Now, on February 23rd, Secretary Hegseth hosted Dario Amadei, the CEO of Anthropic, at the Pentagon in what later people said was a very tense meeting. Hegseth presented Amadei with an ultimatum, basically to lift the guardrails, allow the government to use again, for all lawful uses by February 27th, or be designated a supply chain risk.

5:53For those of you who don't know what that means, it is something that the US government can use in order to define an adversary company that it has done before for companies like Huawei, so it's a Chinese chip manufacturer, preventing any government agency or any supplier to the government from using those chips because it presents a risk to national security. This is very clearly not the case with Anthropic because they have already been used in a classified environment in theater while conducting a military operation. So obviously they're not a risk to the military, and yet that was a threat that Secretary Hegseth has used in this particular conversation.

6:34On the 24th of February, XAI signed a formal deal with the Pentagon to use Grok in classified systems, having accepted the all lawful purposes standards that Anthropic has refused to sign. Now, defense officials at the same time acknowledge that it will be very hard to pull out Claude from the classified systems because it's already very deeply connected in multiple places, and they said it's going to be a very difficult process. Now, on Thursday, February 26, so a day before the ultimatum expires. And after the Pentagon delivered what described as the final offer, Anthropic CEO Dario Amede publicly stated the company could not, and I'm quoting, in good conscience, accept the terms.

7:19Now, they also gave the reasons, and the reasons were that the current AI models are not reliable enough for fully autonomous weapons, and that mass domestic surveillance violates fundamental rights given to US people by the Constitution. Now, at the same evening, OpenAI's CEO, Sam Altman, sent an internal memo to staff saying OpenAI shared the same red lines as Anthropic and was beginning its own negotiation with the Pentagon for a deal with them as well, with the exclusions for domestic surveillance and autonomous weapons without human approval. So in the internal memo that Sam Altman sent to his employees, he shared that they're going to align with Anthropic on these red lines.

8:06Isar Meitis:On the 27th, when the ultimatum expired, both the president and Secretary Hegseth issued different statements about the current situation. President Trump in On Truth Social wrote the following, The left-wing nutjobs at Anthropic have made a disastrous mistake trying to strong-arm the Department of War and force them to obey their terms of service instead of our constitution. Therefore, I'm directing every federal agency in the United States government to immediately seize all use of Anthropic technology. We don't want it and we will not do business with them again. He then continued to say that Anthropic needs to support the government for a six-month phase-out phase.

8:50Isar Meitis:And if they somehow fail to support the government, he will use his entire force in order to take action against them. Shortly after, Secretary Hegseth issued his own statement saying, and I'm quoting, in conjunction with the President's directive for the federal government to seize all use of Anthropic technology, I'm directing the Department of War to designate Anthropic a supply chain risk to national security, effective immediately. No contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic. Now, I don't want to get into politics at all, but I have serious issues with several different aspects of this.

9:33Isar Meitis:Some of them I will touch in the end. But the first one that I want to address right now, both these statements that are official statements of the government related to a agreement with a U.S. company, instead of being discussed in closed doors, as they should, have been released on Truth Social and on X. Like this is not a letter going to Anthropic. This is not a phone call. This is a formal announcement of very severe actions that the government is taking that is decided by two specific individuals that are sharing it on social media. So now let's continue. Just a few hours later, still on the 27th, late on Friday night, OpenAI CEO Sam Altman posted on X announcing that OpenAI had reached a deal with the Department of War to deploy its models on their classified networks, basically taking the position that Anthropic was in.

10:29Isar Meitis:And in addition, following Trump's statement, Secretary of War Pete Hegseth has issued his own statement on X saying the following, and I will read most of it because it is critical so you guys understand the exact details. This week, Anthropic delivered a masterclass in arrogance and betrayal, as well as a textbook case on how not to do business with the United States government or the Pentagon. Our position has never wavered and will never waver. The Department of War must have full, unrestricted access to Anthropics models for every lawful purpose in defense of the Republic. I'm going to skip a section and then he continues.

11:08Isar Meitis:The terms of service of Anthropics' defective altruism will never outweigh the safety, the readiness, or the lives of American troops on the battlefield. Their true objective is unmistakable to seize veto power over the operational decisions of the United States military. That is unacceptable. Now, I'm going to pause here for a second and say Anthropic has given full access to its models to the U.S. government that has been used in military actions, including in Iran. We're going to get to that in a second because they believe that this is the right thing to do. and because they believe that the U.S.

11:44military can benefit from that, the only thing they have sanctioned is the use of these models against U.S. citizens and completely autonomous weapons because they think the models are not there yet from a capability. So they definitely did not request any veto power on operational decisions. And then he continues towards the end, in conjunction with the president's directive for the federal government to seize all use of anthropic technology, I am directing the Department of War to designate Anthropic supply chain risk to national security. Effective immediately. No contractor supplier that does business with the United States military may conduct any commercial activity with Anthropic.

12:23Anthropic will continue to provide Department of War its services for a period of no more than six months to allow for a seamless transition to a better and more patriotic service. And then he ends with, American warfighters will never be held hostage by the ideological whims of big tech. This decision is final. So before I continue with what happened next, I want to say one thing, and I don't want to dive into politics at all, and I'm trying to stay as objective as possible here in describing to you what actually happened. The biggest issue that I want to address in this immediate section is that this is a legal

13:02Isar Meitis:contractual arrangement between a US-based company that is worldly renowned and successful and the US government. This kind of agreement or outcome might be acceptable, but it should not take place on Truth Social and X. It should take place in a formal letter, in a closed room, in a phone call, something like this, but not on social media. I think this is a horrible way to conduct any kind of business relationship between any organizations, whether military, government, or civilian. But now let's continue. So just hours after these two announcements, OpenAI Sam Altman posted on X announcing that OpenAI has reached a deal with the Department of War to deploy its models on their classified network, basically taking the place of Anthropic in that role.

13:56Now, the news that OpenAI deal announced just hours after Anthropic was banned generated an immediate and significant public backlash against OpenAI. Sensor Tower data showed that Chachapiti app uninstalled spiked 295 % on Saturday, immediately after the announcements on Friday night. Meanwhile, downloads to the Anthropic Claude app rose 37 % on Friday and 51 % on Saturday, ended up with Claude being the number one downloaded free app in the United States, overtaking OpenAI, while OpenAI is being uninstalled significantly faster than it did before. Also, protesters surrounded OpenAI San Francisco headquarters and created a lot of chalk messages on sidewalks stating on what they think about the situation, which led Sam Altman to hold an extended ask me anything session on X, admitting that the deal has been definitely rushed and that the optics don't look good.

14:56And then in the beginning of the following week, March 2nd and 3rd, Monday and Tuesday, Sam acknowledged the following. We were genuinely trying to deescalate things to avoid

15:06Isar Meitis:a much worse outcome, but I think it just looked opportunistic and sloppy. No shit. On my day, night, Altman unveiled a reworked agreement with the Pentagon, adding explicit language stating the AI systems shall not be intentionally used for domestic surveillance of US persons and nationals, that it's not going to be used for autonomous weapons either. Now, while all of this is happening, I want to remind you that the US military forces are conducting military strikes on Iran, and it has been shared that Anthropics Claude has been a key tool for the U.S. Central Command to successfully deploy such strikes, both in the planning phase as well as the execution phase of this military action.

15:54Isar Meitis:So again, while all of this is happening, while the U.S. President and the U.S. Secretary of Defense or Secretary of War or whatever his title is right now, are banning the use of Anthropic, the actual U.S. military is using it actively at war in order to gain a benefit in that arena. Shortly after the initial OpenAI suggesting that they're going to change the terms of their agreement, OpenAI has also temporarily paused the deployment of its AI technology to the NSA and the Department of War, according to an expose by OpenAI researcher Noam Brown. This decision to pause the deployment was done to make time for the democratic process to address the potential surveillance and loopholes identified in the original agreement language, particularly concerning how AI could enable legal surveillance.

16:49Isar Meitis:Now, on March 4th, the information has reported that an internal memo, Dario Amadei, has basically exploded on both OpenAI's actions as well as the government. And he wrote a very long and detailed memo, and I'm going to put the link in the show notes for you to be able to read it. And I'm going to read a few sections out of that because I think it's important for you to understand at least Amadei's opinion on the current situation. So he starts with, I want to be very clear on the messaging that is coming from OpenAI and the mandatious nature of it. This is an example of who they really are, and I want to make sure everything sees it as is.

17:27Isar Meitis:And then he says they don't really have access to the final agreement, but then he says, we do know the following, and I'm quoting again. Sam's description and the Department of War description gives a strong impression that how their contract works is that the model is made available without any legal restrictions, and in quotation marks, all lawful use, but that there is a safety layer, which I think amounts to model refusals that prevents the model from completing certain tasks or engaging in certain applications. Safety layer could mean something that partners such as Palantir, which is Anthropics business partner for this kind of work, try to offer to us during these negotiations, which is that they, on their end, offered us some kind of a classifier or machine learning system or software layer that claims to allow some applications and not others.

18:22There's also some suggestion of open AI employees looking over the usage of the model to prevent bad applications. Our general sense is that these kinds of approaches, while they don't have zero efficiency, are, in the context of military applications, maybe 20 real and 80 % safety theater. The basic issue is that whether the model is conducting applications like mass surveillance or fully autonomous weapon depends substantially on their wider context. A model doesn't know if there is a human in the loop in the broad situation it is in for autonomous weapons. And it doesn't know the provenance of the data it is analyzing.

19:07So doesn't know if this is a US domestic data versus foreign, doesn't know if it's enterprise data given by customers with consent or data bought in sketchier ways, et cetera. We also know, those in safeguards know painfully well, that refusals aren't reliable and jailbreaks are common, often as easy as just misinforming the model about the data it is analyzing. An important discussion here that makes it much harder for the safeguards problem is that while it is reliably easy, for example, to determine if a model is being used to conduct cyber attacks from inputs and outputs, it is very hard to determine the nature and the context of the cyber attacks.

19:49And I'm skipping a section and then he's saying that refusals aren't reliable and jailbreaks are common, often as easy as misinforming the model about the data it is analyzing. So that is addressing one aspect of the safety layer. He goes back to a second aspect of the safety layer. This kind of safety layer stuff that Palantir offered us and presumably offered OpenAI is even worse. Our sense was that it was almost entirely a safety theater and that Palantir assumes that our problem was you have some unhappy employees, you need to offer them something that placates them or makes what is happening invisible to them.

20:29And that's the service we provide. Then he addresses the third component of potential safety cover, which is finally the idea of having Anthropic or OpenAI employees monitor the deployments is something that came up in discussions with Anthropic a few months ago when we were expanding our classified AUP, which is acceptance use policy of our own accord. we were very clear that this is possible in only small fraction of cases. So I'll skip the rest. Basically, that doesn't work as well.

20:57Isar Meitis:Then he's talking about some specific language that OpenAI presumably may be trying to put into their account. But he's saying we actually attempted to include some of the same safeguards as OpenAI in our contract, in addition to the acceptable use policy, which we consider the more important thing. And the Department of War rejected them with us. We have evidence of this in the chain of emails, blah, blah, blah. So basically, the Department of War is allowing OpenAI to get terms that were rejected when Anthropic requested similar terms. He's saying we have evidence in the email chain of the contract negotiations, and I'm writing this with a lot to do, but I might get someone to follow up with the actual language.

21:40Isar Meitis:Thus, it is false that OpenAI terms were offered to us and we rejected them. Then he's talking about the fact that because all they're granting the government is lawful action and because spying against U.S. citizens is illegal, then there shouldn't be a problem. But then he's adding the following, and I'm quoting again, it is, however, completely false. As we explained in our statement yesterday, the Department of War does have domestic surveillance authorities that are not of great concern in a pre-AI world, but take on a different meaning in a post-AI world. And then he adds for specific language, notably near the end of the negotiation, the Department of War offered to accept our current terms if we deleted a specific phrase about analysis of bulk acquired data, which was the single line in the contract that exactly matched this scenario we were most worried about.

22:34We found that very suspicious. And then he's adding as far as autonomous weapons, that while it is currently the law that humans have to be in the loop for firing a weapon, it's a Biden administration law, this can be changed at will by Pete Hegseth, and hence it's not a real constraint. Then he goes to Sam Altman's approach, and he's basically saying that Sam Altman in his statements is trying to make it look as if he has, but in reality, he's working against them behind the scenes, conspiring with the Department of War to take their place while trashing Anthropic, while trying to make it look like he's the good guy and trying to de-escalate the situation, which is the exact word that Sam Altman has actually used.

23:14But then he goes further and he says the following, the real reason Department of War and Trump admin do not like us is that we haven't donated to Trump, while OpenAI slash Greg Rockman have donated a lot. We haven't given dictator-style praise to Trump while Sam has. We have supported AI regulation, which is against their agenda. We've told the truth about a number of AI policy issues like job displacement, and we actually held our red lines with integrity rather than colluding with them to produce safety theater for the benefit of employees, which I absolutely swear to you is what literally everyone at the Department of War, Palantir, and our political consultants, etc., assumed was the problem we were trying to solve.

24:05Sam is now, with the help of the Department of War, trying to spin this as if we were unreasonable, we didn't engage in a good way, we were less flexible, etc. I want people to recognize this as the gaslighting it is. Now, this was actually an internal memo. And yes, it was leaked. And yes, Dario needs to know that something like this will get leaked, especially in the current way of things.

24:28Isar Meitis:But that was released by Dario Amadei, which obviously did not make him a good friend of the government more than he already is. for while all this is happening, Anthropic is supposed to go public this year. Anthropic has some very serious investors like Amazon and NVIDIA and Iconic and some really big firms with really deep pockets and really serious connections in the government. Additionally, the Information Technology Industry Council, an industry group whose members include Amazon, NVIDIA, Apple, OpenAI sent a formal letter to the defense secretary, Pete Hegseth, expressing deep concern over the Pentagon's use of the supply chain designation risk in response to a standard procurement dispute.

25:09Isar Meitis:So apparently right now, Anthropic is back in the negotiation table with the government. Now, can this be resolved somehow after the previous statements that were said? I'm not sure. So let's talk a little bit about the aftermath of what's happening right now. And then I'm going to tell you what I think about the entire situation. So while all of this is happening, as I mentioned, there has been a big backlash against OpenAI, millions of people, basically started following different hashtags against OpenAI, as well as a lot of people has started moving to Anthropic. Now, Anthropic was in a positive swing before that.

25:42Isar Meitis:I told you that I've spent 95 % of my time right now on the Anthropic platform and 5 % divided by the rest of the platforms combined, including OpenAI as one of them. And I'm not the only one. So that has been the sense around for a while now. Well, we just learned that Anthropic has hit a 19 billion ARR rate by the end of February. This is up 36 % in the past two weeks. We're talking about billions of dollars in revenue that gets added in a couple of weeks of time. Shortly after that announcement, OpenAI released their numbers saying they're currently at a 25 billion ARR rate. but it's very obvious that the gap is closing and it is closing very, very fast.

26:30Isar Meitis:So Anthropic went to 19 billion from about half that at the end of 2025, while OpenAI have seen a 17 % growth since the end of last year. So at this rate, Anthropic will pass them very, very quickly in revenue, despite the fact they raised significantly less money and has significantly less resources and employees. So now I want to summarize my thoughts on the issue and then we'll dive into lots of interesting rapid fire like new models and so on. There are several distinct aspects of this that require analysis and requires attention and I'm going to describe the issues. I'm going to tell you what I think about them and then I want you to think about it on your own and what you think about each and every one of these aspects.

27:13Isar Meitis:So number one is can a supplier to the government and specifically to the Department of War, decide how the government can use their products or services? I believe the answer is very simple. The answer is no. The U.S. government can define its needs and a contractor can decide whether it wants to work under these circumstances or not. And based on my understanding of the situation, the Anthropic original agreement had the specific terms and limitations on terms of use, and this is what Anthropic signed up for. Then the government decided to change these terms afterwards, and it is perfectly fine.

27:52Isar Meitis:Any agreement could be renegotiated, whether between the government or even between two business entities. But if one side decides to change the term, the other sides can decide whether they want to agree to the new terms or not. I'm certain that similar situations happened numerous times before with the government and ended up quietly by the company walking away from the government contract, which is perfectly fine. Meaning if one side decides to change the terms, the other side can decide not to continue under the new terms. This sounds and makes perfect sense to me. And this is, again, probably happened numerous times.