Washington has a new Anthropic problem

Driving the news: The White House is inching toward welcoming Anthropic back into the government fold after months of animosity and legal battles with the Pentagon because its most advanced models are too powerful to ignore.

The big picture: The Trump administration's goal on AI has been to be as hands-off and pro-innovation as possible. But as models get more powerful, that stance is breaking down.

• Washington is stepping in, shaping policy around who gets access to the most advanced systems and how they're deployed, driven by growing urgency over what the technology can do.

Flashback: The standoff started earlier this year when talks broke down over how the Pentagon could use Anthropic's AI in classified settings.

• That led to public spats, lawsuits, new deals struck with other frontier AI companies, and the unprecedented move to label Anthropic as a supply chain risk, a designation usually reserved for foreign adversaries.
• The White House at one point considered an executive order meant to weed out Anthropic from government systems entirely, as Axios previously reported.

Yes, but: The government couldn't ice Anthropic out for long.

• That realization sank in as its powerful model Mythos rolled out and agencies — despite the Pentagon spat — started testing it along with other AI companies' most advanced cyber models.
• As the Pentagon and Anthropic continued to battle in court, the White House kicked off a thaw with the company.

What they're saying: "When you're regulating by contract, it's basically creating a huge amount of power in the agency that's negotiated that contract and then becomes effectively the de facto policy of the administration," Jessica Tillipman, associate dean for government procurement law studies at George Washington University, told Axios.

• "When other agencies don't like that decision, that's when you start to see these carve-outs because they don't want to be bound by what was effectively a failed negotiation by the Pentagon."

Responding to a Wall Street Journal report that said the government opposed Anthropic's plans to expand access to Mythos to more companies due to a lack of compute, an Anthropic spokesperson said in a statement:

• "We are working closely with the US government to quickly advance shared priorities, including cybersecurity and America's lead in the AI race."
• "Compute is not a constraint ... and we are engaged in collaborative conversations with the government on bringing additional parties in. We appreciate the administration's continued partnership as cyber capabilities advance."

The White House is mulling an executive action that could address both government use of advanced AI systems and carve a path forward in its dispute with Anthropic, Axios scooped earlier this week.

• Talks are in flux, per sources familiar with meetings with the White House this week, and no draft guidance addressing these issues is final.
• Tech and cyber companies, along with trade groups, have been participating in meetings broadly touching on these topics.

What we're watching: It's unclear whether any executive action will resolve the standoff with the Pentagon, which hasn't dropped its disdain for the company.

• Defense Secretary Pete Hegseth on Thursday said Anthropic is "run by an ideological lunatic who shouldn't have a sole decision-making over what we do" during testimony on Capitol Hill.

Maria Curi contributed to this report.