Our Agreement with the Department of War

If my read is correct: I personally agree with the DoD that Anthropic's demands were not something any military should agree to. However, as you say, the DoD's reaction to Anthropic's terms is wildly inappropriate and materially harmed our military by forcing all private companies to re-evaluate whether selling to the military is a good idea going forward.

The DoD likely spends somewhere on the order of ~$100M/year with Google; but Google owns a 14% stake in Anthropic, who spends at least that much if not more on training and inference. All-in-all, that relationship is worth on the order of ~$10B+. If Google is put into the position of having to decide between servicing DoD contracts or maintaining Anthropic as an investee and customer, its not trivially obvious that they'd pick the DoD unless forced to with behind-the-scenes threats and the DPA. Amazon is in a similar situation; its only Microsoft that has contracts large enough with the DoD where their decision is obvious. Hegseth's decision leaves the DoD, our military, and our defense materially weaker by both refusing federal access to state of the art technology, and creating a schism in the broader tech ecosystem where many players will now refuse to engage with the government.

Either party could have walked away from negotiations if they were unhappy with the terms. Alternatively: the DoD should have agreed to Anthropic's red lines, then constrained/compartmentalized their usage of Anthropic's technology to a clearly limited and non-combat capacity until re-negotiation and expansion of the deal could happen. Instead, we get where we're at, which is not good.

IMO: I know a lot of people are scared of a fascist-like future for the US, but personally I'm more fearful of a different outcome. Our government and military has lost all of its capacity to manufacture and innovate. Its been conceded to private industry, and its at the point where private industry has grown so large that companies can seriously say "ok, we won't work with you, bye" and it just be, like, fine for their bottom line. The US cannot grow federal spending and cannot find a reasonable path to taxing or otherwise slowing down the rise of private industry. We're not headed into fascism (though there are elements of that in the current admin): We're headed into Snow Crash. The military is just a thin coordination layer of operators piecing together technology from OpenAI, Boeing, Anduril, Raytheon. Public governments everywhere are being out-competed by private industry, and in some countries it feels like industry tolerates the government, because it still has some decreasing semblance of authority, but especially in the US that semblance of authority has been on a downward trend for years. Google's revenue was 7% of the US Federal Government's revenue last year. That's fucking insane. What happens when we get to the point where Federal debt becomes unserviceable? When Google or Apple or Microsoft hit 10%, or 15%? Our government loses its ability to actually function effectively; and private industry will be there to fill the void.

But, as I've said, I tend to agree with both Anthropic and the Administration's positions. What was wrong here is that rather than just terminating the contract, the Administration went nuclear.