What rights do AI companies have in government contracts?

The Anthropic-Pentagon dispute has drawn significant public attention and an equally large amount of misinformation. After Defense Secretary Pete Hegseth gave Anthropic an ultimatum to allow unrestricted use of its AI models “for all lawful purposes” and the company refused, President Trump directed federal agencies to stop using Anthropic’s products and Hegseth designated the firm a “supply chain risk.”

Hours later, OpenAI announced its own Pentagon deal, claiming it included the same two restrictions Anthropic had been fighting for (no mass domestic surveillance, no fully autonomous weapons) while simultaneously agreeing to the “any lawful use” standard Anthropic rejected.

The public reaction has been chaotic, but most of the commentary, from both sides, reflects a fundamental misunderstanding of how the government buys AI. Commentators are debating whether AI companies should be able to restrict the government’s use of their technology, as if this were a novel question. It is ...