Anthropic insists its technology should not be used for the mass surveillance of US citizens or deployed in fully autonomous weapons systems, while the Pentagon says it operates within the law and that contracted suppliers cannot set terms on how their products are employed.

"I am directing EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic's technology. We don't need it, we don't want it, and will not do business with them again!" Trump said in a post on his Truth Social platform.

"There will be a Six Month phase out period for Agencies like the Department of War who are using Anthropic's products, at various levels," the US president said, referring to the Department of Defense.

"Anthropic better get their act together, and be helpful during this phase out period, or I will use the Full Power of the Presidency to make them comply, with major civil and criminal consequences to follow," Trump added.

Anthropic did not immediately reply to a request for comment.

The Pentagon had said Anthropic must agree to comply with its demand by 5:01 pm (22:01 GMT) Friday or face compulsion under the Defense Production Act.

The Cold War-era law, last invoked during the Covid pandemic, grants the federal government sweeping powers to direct private industry toward national security priorities.

The Pentagon also threatened to designate Anthropic a supply chain risk -- a label typically reserved for companies from adversary nations -- which could severely damage its ability to work with the US government and harm its broader reputation.

- 'Stand together' -

Amid the dispute, Anthropic chief executive Dario Amodei said Thursday that "these threats do not change our position: we cannot in good conscience accede to their request."

The conflict has drawn a show of solidarity from others in the industry, with hundreds of employees from AI giants Google DeepMind and OpenAI urging their companies to rally behind Anthropic in an open letter titled "We Will Not Be Divided."

"We hope our leaders will put aside their differences and stand together to continue to refuse the Department of War's current demands for permission to use our models for domestic mass surveillance and autonomously killing people without human oversight," the letter said.

"They're trying to divide each company with fear that the other will give in. That strategy only works if none of us know where the others stand," it added.

OpenAI CEO Sam Altman told employees Thursday that he too was seeking an agreement with the Pentagon that would include red lines similar to Anthropic's, and that he hoped to help broker a resolution.

"We have long believed that AI should not be used for mass surveillance or autonomous lethal weapons, and that humans should remain in the loop for high-stakes automated decisions," he wrote in a memo to employees, according to US media.

Industry representatives in Washington had pressed hard for a negotiated outcome to the Anthropic-Pentagon dispute, warning that the confrontation risks damaging the AI sector as a whole.

"Decisions about military AI cannot be settled through ad hoc standoffs between the Pentagon and individual firms," said Daniel Castro, vice president of the Information Technology and Innovation Foundation.

"If certain AI capabilities are deemed essential for national defense, those expectations should be debated openly and written into law."