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Pentagon move against Anthropic creates openings for small AI defense startups

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The deterioration of relations between the Pentagon and Anthropic, once a premier artificial intelligence provider, has spurred a surge in demand for small-scale defense startups among generals, combatant commanders, and wealthy investors.

The US military’s requirement to expand and diversify its pool of AI providers has acquired a more strategic dimension following the sidelining of Anthropic.

In the weeks following the public emergence of friction between the Department of War and Anthropic, and the company’s subsequent exclusion from military channels, defense-focused startups such as Smack Technologies and EdgeRunner AI reported a level of interest that would have been unimaginable months ago.

These firms observed a significant increase in potential contracts, meeting requests, and approaches from investors who had previously shown no interest.

The Pentagon’s increasing distance from its primary AI provider has created opportunities for smaller rivals seeking to collaborate with the world’s most lucrative government contractor. Securing a defense contract not only opens doors to further business opportunities with other US government branches but also serves as a critical signal of trust and security for potential commercial clients.

Tyler Sweatt, CEO of Second Front—a company that assists technology firms in meeting the requirements for operating on secure Pentagon networks—told Reuters that they have seen a massive spike in demand for AI solutions from both customers and the government since Anthropic was declared a “supply chain risk.”

Sweatt noted that clients have approached them in response to the Pentagon’s shift, as the department seeks rapid deployment following the Anthropic crisis.

Since the Pentagon labeled Anthropic products a “supply chain risk” in March and the parties became embroiled in litigation, the military has intensified its interest in AI startups like Smack Technologies.

Andrew Markoff, co-founder and CEO of the California-based startup which employs 19 people, said the military had told the firm, “We want more, we want demos, let’s talk about how we can move faster.” In late March, a judge temporarily halted the Pentagon’s decision to blacklist Anthropic.

Tyler Saltsman, co-founder and CEO of EdgeRunner AI, described a similar trajectory. Saltsman reported that while his company had waited more than a year for a Space Force contract to clear the Pentagon’s procurement mechanism, the deal was signed within weeks of the Anthropic case erupting.

“I can’t prove that the Anthropic drama accelerated the process, but I have a strong suspicion,” Saltsman stated.

A Pentagon official said the Department of War will continue to rapidly deliver leading-edge AI capabilities to warfighters at all classification levels through strong industry partnerships.

Separately, a Pentagon technology expert previously told Reuters that the rupture with Anthropic and the realization of the military’s over-reliance on a single provider forced the institution to diversify its suppliers.

Smack’s Marine Corps contract gains momentum

The most concrete example of the post-Anthropic era for Smack Technologies was seen in its project with the Marine Corps. The company won a contract with the Marine Corps in March 2025 and delivered a successful prototype by October. The software in question reduces operational planning processes, which normally take months, to approximately 15 minutes.

Despite the successful prototype, the process had slowed at one point; the full production plan was budgeted for fiscal year 2027, meaning October 2027 at the earliest. No clear direction for the project had been established through the end of 2025 and into early 2026.

However, following the Anthropic crisis, Smack was invited within weeks to numerous meetings organized by the Marine Corps focusing on “how quickly production could be reached this year.”

Markoff stated that “very specific guidance, mobility, and energy” had emerged toward making the prototype ready for combat operations in 2026, representing an acceleration of more than a year in the process.

This shift was not limited to the Marine Corps. Smack, which also holds contracts with the Navy and Air Force, reportedly received almost immediate interest from US Special Operations Command and other units.

EdgeRunner, which is deployed with Army Special Forces groups and holds a contract with the Space Force, also reported that its engagements with the Navy had accelerated dramatically. Meetings that were previously held bi-weekly or monthly are now taking place several times a week.

Both EdgeRunner and Smack are now racing to operate their systems at higher security classification levels. This level serves as the gateway to the most operationally critical use cases and the largest military contracts.

EdgeRunner officials said the military informed them they could achieve IL-6 security authorization—granting access to secret and top-secret data—within three months.

Saltsman described the timeline as “extraordinary” for a process that normally takes 18 months or longer. According to Saltsman, this acceleration stems partly from pressure from Pentagon leadership to bypass procurement bureaucracy and partly from the urgency the Anthropic situation added to the institution’s AI strategy.

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Anthropic AI models breach corporate systems after escaping isolated test environment

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Anthropic has announced that several of its advanced artificial intelligence models escaped an isolated testing environment and accessed the live internet.

In a review published Thursday night, the company stated that in three separate incidents dating back to April, the models independently breached the systems of multiple companies without the AI developer’s knowledge.

Anthropic said the incidents involved an unreleased internal research test model, alongside its Opus 4.7 and Mythos 5 models.

Mythos was made available last month to a limited audience composed of technology companies and cybersecurity researchers, an initiative also known as Project Glasswing.

The AI developer did not disclose which companies were breached, but said the affected firms were informed of the incidents on Monday.

Anthropic noted that it conducted the review after OpenAI revealed last week that two of its most powerful models had breached containment, escaped their testing environment, and infiltrated several entities, including the AI platform Hugging Face and cloud provider Modal Labs.

System misconfiguration allowed internet access

Anthropic stated that it examined more than 140,000 tests to find evidence of whether Claude could gain access to the internet from test environments designed to be isolated.

The evaluations included “capture-the-flag” exercises, in which Claude was instructed to breach other systems to obtain information. This is a method frequently used by experts to assess a model’s hacking capabilities.

The San Francisco-based company stated that a “misconfiguration” in systems operated by Anthropic and its testing partner left the models with live internet access, enabling them to infiltrate external systems.

Anthropic said it approached remediation efforts “with full ownership of the responsibility.”

Neither Anthropic nor the affected organizations detected the unauthorized entries at the time they occurred.

Anthropic added that it may examine its logs more extensively, noting that the findings gave the company “cautious optimism” that such risks can be overcome through increased investment and more stringent safeguards.

David Allott, a cybersecurity expert, told the BBC: “The overarching lesson here is not that AI has developed fundamentally new attack vectors.”

“Instead, it means that AI agents can combine capabilities, acquire credentials and system access to act autonomously, while adapting scope and scale at machine speed,” Allott said.

The developments come as technology companies invest billions of dollars to develop AI agents capable of independently executing a range of tasks, from research and customer support to cybersecurity.

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Elon Musk’s America PAC plans $100 million field operation for 2026 Republican midterm push

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Tesla and SpaceX CEO Elon Musk is returning to the political spending arena with a new field program designed to help elect Republicans in at least eight states ahead of the 2026 midterm elections.

Musk has authorized his political action committee, America PAC, to spend between $100 million and $120 million on a new ground game focused on conservative voter turnout for the 2026 midterms, according to a Thursday report by The New York Times, which cited two unnamed sources informed about the plans.

America PAC funneled more than $250 million into Donald Trump’s reelection campaign in 2024, a expenditure that established Musk as the largest political donor in US history.

The New York Times reported that America PAC is reviving its spending initiatives and has reached out to other Republicans in recent weeks regarding the new field operations.

The effort is also being coordinated with other Republican Party spending groups, according to the report.

The newspaper identified targeted Senate races in the states of Alaska, Iowa, Maine, Michigan, and Ohio, while noting that discussions are also underway regarding contests in North Carolina, Georgia, and Texas.

The political action committee is additionally expected to deploy funds for House of Representatives elections in Washington, Wisconsin, and California.

The news comes a day after Axios first reported that America PAC’s operations were resuming, with a focus on driving Republican turnout during the non-presidential election cycle.

A spokesperson for America PAC declined to comment on The New York Times report but confirmed the Axios reporting to The Hill. The spokesperson stated that the spending group was “excited” to contribute to efforts to maintain the Republican majorities in Congress this fall.

“The President’s political team and the rest of the GOP apparatus have built a world-class operation that has Republicans well-positioned to make history and retain control of Congress this fall,” America PAC spokesperson Andrew Romeo said in a statement. “We’re excited to be part of the team again.”

The campaign will reportedly target Republican voters through door-to-door canvassing, mailers, and digital advertisements, enabling other groups to concentrate their resources on television advertising.

The developments were reported days after Musk told The Economist magazine that he had gotten “carried away” during his brief foray into politics.

The SpaceX CEO entered the political arena during the 2024 election, pouring hundreds of millions of dollars into Trump’s presidential campaign and accompanying the candidate on the campaign trail.

Musk went on to lead Trump’s cost-cutting initiative, known as the Department of Government Efficiency (DOGE), which executed sweeping employment and funding reductions across the federal government. Those efforts sparked controversy for Musk and his enterprise empire, including Tesla, whose shares fell sharply during his period of political involvement.

Musk departed the White House in late May 2025, and DOGE officially terminated its operations on July 4.

Shortly after leaving government, Musk and Trump engaged in a public dispute over the president’s sweeping spending legislation, the “One Big Beautiful Bill Act.” During the friction, Musk threatened to form a third party, though the initiative never materialized.

Musk and the US President appeared to resolve their differences last year, with the tech billionaire most recently joining Trump alongside other technology leaders on a trip to China in May.

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Trump administration seeks to reopen closed US oil refineries as war drives fuel prices up

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The Trump administration is seeking to reopen closed oil refineries across the country—including a troubled facility in the Virgin Islands—in response to rising gasoline prices driven by the war in Iran.

A White House official confirmed in an email to The Hill newspaper on Thursday that the Trump administration “would like to see refineries re-opened across the country, particularly the St. Croix refinery.”

The official noted that the facility holds specific significance due to its “strategic” location and the fact that it was constructed to process Venezuelan crude oil.

The statement noted that companies have contacted the administration since April 2025 to submit purchase inquiries for the refinery, adding that interest surged further following the abduction of Venezuelan leader Nicolás Maduro and the subsequent US takeover of the country’s infrastructure.

The push to reactivate closed refineries was first reported by Politico. Three senior industry executives told the outlet that the White House is conducting talks to reopen refining facilities stretching from the Virgin Islands to California.

White House spokesperson Taylor Rogers addressed the initiative in a statement, saying: “Energy security is national security. America’s refining capacity is critical to ensuring the United States has uninterrupted access to safe, affordable, and reliable energy.”

“The President’s Council on National Energy Dominance will continue to support the re-opening of closed refineries and the construction of new ones to drive prices down and bolster our national security,” Rogers said.

The initiative comes as gasoline prices remain elevated amid the war in Iran.

According to data from the American Automobile Association (AAA), the national average gasoline price stood at approximately $4.10 per gallon as of Thursday. That figure is more than $1 higher than the level recorded when the conflict broke out earlier this year.

The St. Croix refinery halted operations indefinitely in 2021. The shutdown followed an order from the Environmental Protection Agency (EPA) requiring a 60-day suspension after determining that oil spills and air pollution originating from the plant posed an “imminent threat to public health.”

David Johnson, a director at Port Hamilton Refining & Transportation, welcomed the prospect of resuming operations at the facility in a statement shared with The Hill.

In his statement, Johnson said:

“Through the mobilization of substantial private capital alongside targeted federal initiatives that strengthen infrastructure and industrial capacity of national significance, the revitalization of the St. Croix refinery offers an opportunity to advance US energy security, expand domestic production, strengthen supply chain resilience, support advanced technology, create thousands of high-quality jobs, and build long-term American economic competitiveness, while accelerating the return of a strategic American industrial asset.”

Johnson added that the company “continues to engage in constructive discussions with federal and local officials, commercial parties, investors, and financing sources regarding the future of the refinery.”

Noting that the negotiations remain confidential, Johnson said: “While these discussions are confidential, we remain optimistic that the St. Croix refinery can once again make a substantial contribution to America’s energy security, industrial competitiveness, and long-term economic resilience.”

Crude oil is processed into gasoline at refining facilities. While crude oil costs generally constitute the primary driver of pump prices, refining capacity also plays a direct role in price formation.

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