Anthropic is rejecting the Pentagon’s latest offer to change their contract, saying the changes do not satisfy the company’s concerns that AI could be used for mass surveillance or in fully autonomous weapons.

AI safety and research company Anthropic has told the Pentagon it will not agree to their demands to drop critical safety precautions and grant the U.S. military full access to their AI capabilities.

Anthropic said Thursday that “virtually no progress” had been made in the company’s talks with the Pentagon over the terms of use for its AI models ahead of a Friday afternoon deadline. The

The Pentagon's top technology official told CBS News the military has offered compromises to Anthropic, amid a feud over whether its powerful AI technology will be restricted — but Anthropic called the offer inadequate.

Defense chief Pete Hegseth has threatened to force the company to lift guardrails against greater military use of AI.

American AI company Anthropic has until 5:01 pm ET to give in to the Pentagon’s demands or face being labeled a “supply chain risk,” a type of designation usually reserved for companies thought to be extensions of foreign adversaries.

Defense Secretary Pete Hegseth gave Anthropic until Friday at 5 p.m. to grant the military unresticted use of its AI technology.

As well as designating Anthropic as a supply chain risk, the government could also cancel its contract or invoke a Cold War-era law called the Defense Production Act to give the military more sweeping authority to use its products, even if the company doesn’t approve.