Maintaining its solidarity alongside Anthropic, Microsoft has said it will continue embedding artificial intelligence technology from Anthropic in its products for customers, barring the US Department of War.
The decision comes after the federal agency informed Anthropic that it intended to designate the company as a supply-chain risk. Anthropic responded by saying it will move to court.
The standoff follows mounting tensions between the AI developer and US defence authorities. Last week, US President Donald Trump urged federal agencies to stop using Anthropic’s technology. Secretary of War Pete Hegseth later said the company would be allowed to continue providing services to the Pentagon for up to six months.
Despite the escalating dispute, Anthropic’s models have recently been used in US military operations. CNBC confirmed that the company’s technology played a role in US airstrikes on Iran in recent days.
Negotiations between Anthropic and the Department of War broke down last week after disagreements over the use of AI for mass domestic surveillance and fully autonomous weapons systems.
Soon after those talks collapsed, Anthropic rival OpenAI announced that the Pentagon had agreed to run its models for classified workloads—a development that highlighted the intensifying competition among AI providers for defence contracts.
Against that backdrop, Microsoft has become the first major technology company to publicly confirm it will continue working with Anthropic following the Pentagon’s decision.
Several defence technology firms have already begun distancing themselves from the startup. Some companies have reportedly instructed employees to stop using Anthropic’s Claude models and shift to alternative AI systems.
Microsoft, however, said its legal team had reviewed the designation and determined that Anthropic’s tools could remain available for most users.
“Our lawyers have studied the designation and have concluded that Anthropic products, including Claude, can remain available to our customers—other than the Department of War—through platforms such as M365, GitHub and Microsoft’s AI Foundry, and that we can continue to work with Anthropic on non-defence related projects,” a Microsoft spokesperson said in an email.
Microsoft provides technology infrastructure and software services to a wide range of U.S. government agencies. Its Microsoft 365 productivity suite is widely used within the Department of War itself.
The company has also been expanding the number of AI models available within its ecosystem. In September, Microsoft said it would integrate Anthropic’s generative AI models into the Microsoft 365 Copilot add-on, allowing users to access them alongside models developed by OpenAI.
Anthropic’s Claude models have become particularly popular among software engineers for drafting and reviewing source code. They are available through GitHub Copilot, Microsoft’s AI-powered coding assistant, where they compete directly with OpenAI’s Codex models.
Microsoft chief executive Satya Nadella originally sought to build a close partnership with OpenAI, backing the ChatGPT maker with substantial investment and cloud infrastructure.
In recent months, however, Nadella has broadened the company’s AI strategy by making models from multiple developers available within Microsoft products.
“Model choice!” Nadella wrote in an October post on X while demonstrating how users could toggle between Anthropic and OpenAI models inside Microsoft 365 Copilot.
The partnership between Microsoft and Anthropic is also financially significant. In November, Microsoft said Anthropic had committed to spending $30 billion on Azure cloud services, while Microsoft agreed to invest up to $5 billion in the startup.
Those figures, however, remain smaller than Microsoft’s relationship with OpenAI. As of October, Microsoft held a $135 billion stake in OpenAI’s public benefit corporation, while OpenAI had committed to spend $250 billion on Azure infrastructure.
The Pentagon’s decision to move away from Anthropic could therefore reshape the competitive dynamics of the AI sector, particularly in the lucrative defence and government technology market.
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