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This could kill Anthropic. The designation says any contractor, supplier, or partner doing business with the US military can’t conduct any commercial activity

This could kill Anthropic. The designation says any contractor, supplier, or partner doing business with the US military can’t conduct any commercial activity with Anthropic. Well, AWS has JWCC. Microsoft has Azure Government. Google has DoD contracts. If that language is enforced broadly, then Claude gets kicked off Bedrock, Vertex, and potentially Azure… which is where all the enterprise revenue lives. Claude cannot survive on $200/mo individual powerusers. The math just doesn’t math.

robertjpayne 8mo ago
This will likely go to court, again as Dario has stated this is blatant retaliation as no US company has ever been designated a supply chain risk and they continue to operate on classified systems for 6 more months.
- roxolotl 8mo ago
  Yea strong odds this goes to court, the DoD’s clearly inconsistent logic is ridiculed by a judge, the designation is dropped, and everyone quietly goes about their way with the DoD continuing to use Claude according to the existing terms of the contract.
  - chasd00 8mo ago
    Sure, after a decade of litigation, meanwhile Anthropic goes bankrupt.
thewebguyd 8mo ago
Not entirely true. The designation only applies to projects that touch the federal government, or software developed specifically for the federal government. Contractors can still use Claude internally in their business, so long as it is not used in government work directly. A complete ban would be adding Anthropic to the NDAA, which requires congress. The DoD designation allows the DoD to make contractors certify that Anthropic is not used in the fulfillment of the government work.
- alephnerd 8mo ago
  > Contractors can still use Claude internally in their business, so long as it is not used in government work directly. I work in the enterprise SaaS and cybersecurity industry. There is no way to guarantee that amongst any FedRAMP vendor (which is almost every cybersecurity and enterprise SaaS or on their roadmap). Almost all FedRAMP products I've built, launched, sold, or funded were the same build as the commerical offering, but with siloed data and network access. This means the entire security and enterprise SaaS industry will have to shift away from Anthropic unless the DPA is invoked and management is changed. More likely, I think the DoD/DoW and their vendors will force Anthropic to retrain a sovereign model specifically for the US Gov. Edit: Can't reply > This is the core assertion that is not clear nor absolute. If Walmart can forcibly add verbiage banning AWS from it's vendors and suppliers, the US government absolutely can. At least with Walmart they will accept a segmented environment using GCP+Azure+OCI. Retraining a foundational model to be Gov compliant is a project that would cost billions. By declaring Anthropic a supply chain risk, it will now be contractually added by everyone becuase no GRC team will allow Anthropic anywhere in a company that even remotely touches FedRAMP and it will be forcibly added into contracts. No one can guarantee that your codebase was not touched by Claude or a product using Claude in the background, so this will be added contractually.
  - tomrod 8mo ago
    > This means the entire security and enterprise SaaS industry will have to shift away from Anthropic unless the DPA is invoked and management is changed. This is the core assertion that is not clear nor absolute.
  - hyperpape 8mo ago
    > If Walmart can forcibly add verbiage banning AWS from it's vendors and suppliers, the US government absolutely can. You can add new language to new contracts. That is not what this is.
    - alephnerd 8mo ago
      FedRAMP contracts require all inputs being FedRAMP compliant and a vetted BOM. Anthropic is no longer FedRAMP high and because it is declared a supply chain risk now all our FedRAMP contracts are at risk and any company who has FedRAMP customers is at risk too.
cobolcomesback 8mo ago
None of the hyper scalers are going to stop offering Claude. All of the big 3 have invested billions of dollars into Anthropic, and have tens (if not hundreds) of billions more tied up in funding deals with them. Amazon and Google are two of the largest shareholders of Anthropic. Anthropic is going to be fine. The DoD is going to walk this back and pretend it never happened to save face.
- alephnerd 8mo ago
  GovCloud revenue is in the tens of billions of dollars. Bedrock less so. Almost every FedRAMP product uses the same codebase for Fed and non-Fed, and this would force most FedRAMP vendors to blackball Anthropic.
  - cobolcomesback 8mo ago
    The JWCC, which is larger than GovCloud, was only $9b, split across three companies, over ten years. It’s peanuts compared to the investments that the hyperscalers have with Anthropic.
    - alephnerd 8mo ago
      JWCC is not the only project. Vendors like Crowdstrike also rely on hyperscalers to serve their products to federal customers, and the codebase is shared. This announcement has made Anthropic toxic in the entire dependency chain because it means years of efforts and tens to hundreds of millions of dollars rearchitecting entire platforms and renegotiating contracts. The entire cybersecurity industry has a TAM of $208 BILLION [0] [0] - https://www.bccresearch.com/market-research/information-technology/cyber-security-techs-markets-report.html https://www.bccresearch.com/market-research/information-tech...
      - cobolcomesback 8mo ago
        > because it means years of efforts and tens to hundreds of millions of dollars rearchitecting entire platforms and renegotiating contracts. This is exactly why this announcement has not made Anthropic toxic. The entire industry knows how ridiculous this move is from Hegseth, and it’s going to be rolled back next week once the adults get back from their weekend.
stephencoyner 8mo ago
I’m sure most of their revenue is large enterprise customers who serve government with their products - this looks very bad
- aveao 8mo ago
  That's what hegseth says, but the law doesn't really say that AFAICT.
mcintyre1994 8mo ago
From what I’ve heard the actual restriction is just on using Claude for stuff they’re doing for the Pentagon. They’ll keep using Claude for everything else and be less effective when they work for the government, and that’s fine because everyone else working for the government will have the same handicap.
mkoubaa 8mo ago
No, Anthropic could easily call their bluff.
monknomo 8mo ago
It is narrower than that by law, though not by their proclamation. That label forbids contractors on DoD contracts for billing DoD for Anthropic, or including Anthropic as part of their DoD solution. So - AWS can keep claude on bedrock, but can't provide claude to the DoD under its DoD contracts
hirvi74 8mo ago
> This could kill Anthropic I am both dumb and without access to Claude, thus I must ask: My fellow smart HN'ers, what kind of impacts would this likely have on the economy? Has a lot of money and resources not been pumped into Anthropic (albeit likely less than OpenAI)? I imagine such a decision would not be the ROI that many investors expected.
crooked-v 8mo ago
There's going to be a TRO against the attempt by like 9 AM Monday, and the bad faith from the government couldn't be more obvious. All it's really going to do is cost them some extremely expensive lawyer time.

robertjpayne 8mo ago

This will likely go to court, again as Dario has stated this is blatant retaliation as no US company has ever been designated a supply chain risk and they continue to operate on classified systems for 6 more months.

roxolotl 8mo ago
Yea strong odds this goes to court, the DoD’s clearly inconsistent logic is ridiculed by a judge, the designation is dropped, and everyone quietly goes about their way with the DoD continuing to use Claude according to the existing terms of the contract.
- chasd00 8mo ago
  Sure, after a decade of litigation, meanwhile Anthropic goes bankrupt.

thewebguyd 8mo ago

Not entirely true. The designation only applies to projects that touch the federal government, or software developed specifically for the federal government. Contractors can still use Claude internally in their business, so long as it is not used in government work directly. A complete ban would be adding Anthropic to the NDAA, which requires congress. The DoD designation allows the DoD to make contractors certify that Anthropic is not used in the fulfillment of the government work.

alephnerd 8mo ago
> Contractors can still use Claude internally in their business, so long as it is not used in government work directly. I work in the enterprise SaaS and cybersecurity industry. There is no way to guarantee that amongst any FedRAMP vendor (which is almost every cybersecurity and enterprise SaaS or on their roadmap). Almost all FedRAMP products I've built, launched, sold, or funded were the same build as the commerical offering, but with siloed data and network access. This means the entire security and enterprise SaaS industry will have to shift away from Anthropic unless the DPA is invoked and management is changed. More likely, I think the DoD/DoW and their vendors will force Anthropic to retrain a sovereign model specifically for the US Gov. Edit: Can't reply > This is the core assertion that is not clear nor absolute. If Walmart can forcibly add verbiage banning AWS from it's vendors and suppliers, the US government absolutely can. At least with Walmart they will accept a segmented environment using GCP+Azure+OCI. Retraining a foundational model to be Gov compliant is a project that would cost billions. By declaring Anthropic a supply chain risk, it will now be contractually added by everyone becuase no GRC team will allow Anthropic anywhere in a company that even remotely touches FedRAMP and it will be forcibly added into contracts. No one can guarantee that your codebase was not touched by Claude or a product using Claude in the background, so this will be added contractually.
- tomrod 8mo ago
  > This means the entire security and enterprise SaaS industry will have to shift away from Anthropic unless the DPA is invoked and management is changed. This is the core assertion that is not clear nor absolute.
- hyperpape 8mo ago
  > If Walmart can forcibly add verbiage banning AWS from it's vendors and suppliers, the US government absolutely can. You can add new language to new contracts. That is not what this is.
  - alephnerd 8mo ago
    FedRAMP contracts require all inputs being FedRAMP compliant and a vetted BOM. Anthropic is no longer FedRAMP high and because it is declared a supply chain risk now all our FedRAMP contracts are at risk and any company who has FedRAMP customers is at risk too.

cobolcomesback 8mo ago

None of the hyper scalers are going to stop offering Claude. All of the big 3 have invested billions of dollars into Anthropic, and have tens (if not hundreds) of billions more tied up in funding deals with them. Amazon and Google are two of the largest shareholders of Anthropic. Anthropic is going to be fine. The DoD is going to walk this back and pretend it never happened to save face.

alephnerd 8mo ago
GovCloud revenue is in the tens of billions of dollars. Bedrock less so. Almost every FedRAMP product uses the same codebase for Fed and non-Fed, and this would force most FedRAMP vendors to blackball Anthropic.
- cobolcomesback 8mo ago
  The JWCC, which is larger than GovCloud, was only $9b, split across three companies, over ten years. It’s peanuts compared to the investments that the hyperscalers have with Anthropic.
  - alephnerd 8mo ago
    JWCC is not the only project. Vendors like Crowdstrike also rely on hyperscalers to serve their products to federal customers, and the codebase is shared. This announcement has made Anthropic toxic in the entire dependency chain because it means years of efforts and tens to hundreds of millions of dollars rearchitecting entire platforms and renegotiating contracts. The entire cybersecurity industry has a TAM of $208 BILLION [0] [0] - https://www.bccresearch.com/market-research/information-technology/cyber-security-techs-markets-report.html https://www.bccresearch.com/market-research/information-tech...
    - cobolcomesback 8mo ago
      > because it means years of efforts and tens to hundreds of millions of dollars rearchitecting entire platforms and renegotiating contracts. This is exactly why this announcement has not made Anthropic toxic. The entire industry knows how ridiculous this move is from Hegseth, and it’s going to be rolled back next week once the adults get back from their weekend.

stephencoyner 8mo ago

I’m sure most of their revenue is large enterprise customers who serve government with their products - this looks very bad

aveao 8mo ago
That's what hegseth says, but the law doesn't really say that AFAICT.

mcintyre1994 8mo ago

From what I’ve heard the actual restriction is just on using Claude for stuff they’re doing for the Pentagon. They’ll keep using Claude for everything else and be less effective when they work for the government, and that’s fine because everyone else working for the government will have the same handicap.

mkoubaa 8mo ago

No, Anthropic could easily call their bluff.

monknomo 8mo ago

It is narrower than that by law, though not by their proclamation. That label forbids contractors on DoD contracts for billing DoD for Anthropic, or including Anthropic as part of their DoD solution. So - AWS can keep claude on bedrock, but can't provide claude to the DoD under its DoD contracts

hirvi74 8mo ago

> This could kill Anthropic I am both dumb and without access to Claude, thus I must ask: My fellow smart HN'ers, what kind of impacts would this likely have on the economy? Has a lot of money and resources not been pumped into Anthropic (albeit likely less than OpenAI)? I imagine such a decision would not be the ROI that many investors expected.

crooked-v 8mo ago

There's going to be a TRO against the attempt by like 9 AM Monday, and the bad faith from the government couldn't be more obvious. All it's really going to do is cost them some extremely expensive lawyer time.