President Donald Trump and Secretary of Defense Pete Hegseth, pictured in January, are turning a contract dispute into an unconstitutional government action.

President Donald Trump and Secretary of Defense Pete Hegseth have badly abused their authority in an effort to punish AI company Anthropic for not capitulating to their demands. It is one thing for the government to decline to contract with a company based on a disagreement over terms. It is something quite different — and illegal and unconstitutional — for the government to use its enormous power to retaliate against a company because of disagreement in a contract dispute.

The dispute arose in the context of renegotiations between the Defense Department and San Francisco-based Anthropic over a $200 million contract for the use of the artificial intelligence tool, Claude. Anthropic had licensed Claude to the Defense Department in June 2024 with its normal authorized use policies, which reflected the state of Claude’s reliability and principles for its safe use. 

In January, however, the Trump administration announced that AI companies must eliminate their negotiated and accepted use policies in favor of the Defense Department’s new mandate, which said it could use AI tools for “any lawful purpose.” Anthropic agreed to make some adjustments in its use policies, but insisted throughout the negotiations that it would license Claude to the federal government only with the agreement that it could not be used for mass surveillance of........

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