U.S. President Donald Trump on Friday directed the government to stop working with Anthropic, and the Pentagon said it would declare the startup a supply-chain risk, dealing a major blow to the artificial intelligence lab after a showdown about technology guardrails. Anthropic said it would challenge any risk designation in court.

Soon after, rival OpenAI, which is backed by Microsoft MSFT.O, Amazon AMZN.O, SoftBank 9984.T and others, announced its own deal late on Friday.

"We think our agreement has more guardrails than any previous agreement for classified AI deployments, including Anthropic's," OpenAI said on Saturday.

The AI firm said that the contract with the Department of Defense, which the Trump administration has renamed the Department of War, enforces three red lines: OpenAI technology cannot be used for mass domestic surveillance, to direct autonomous weapons systems, or for any high-stakes automated decisions.

"In our agreement, we protect our red lines through a more expansive, multi-layered approach. We retain full discretion over our safety stack, we deploy via cloud, cleared OpenAI personnel are in the loop, and we have strong contractual protections," OpenAI said.

The Pentagon signed agreements worth up to $200 million each with major AI labs in the past year, including Anthropic, OpenAI and Google. The Pentagon is seeking to preserve all flexibility in defense and not be limited by warnings from the technology's creators against powering weapons with unreliable AI.

OpenAI cautioned that any breach of its contract by the U.S. government could trigger a termination, though it added, "We don't expect that to happen."

The company also said rival Anthropic should not be labeled a “supply-chain risk,” noting, "We have made our position on this clear to the government."