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The Pentagon officially informed Anthropic leadership Thursday that the company and its products are deemed a supply chain risk “effective immediately,” a senior Pentagon official told The Hill.

Anthropic has said it will sue the Defense Department over the designation, which could prevent the start-up from doing business with the U.S. government.

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The U.S. military has formally designated artificial intelligence firm Anthropic a supply chain risk, sources told CBS News, a sweeping move that could cut it off from military contracts.

OpenAI also said the deal was adjusted to clarify that the Pentagon won’t use its technology at any of its intelligence agencies.