Step 1.5 is also the one being ignored by 95% of comments here: the leverage the Pentagon is using is the lucrative contract Anthropic signed with them. The only threat here is Anthropic sucking up less money from the DoD.

the article lists three things, two of which are concerning beyond just losing some money. Granted, I have no idea how realistic the later two are.

    These consequences are generally understood to be some mix of :
    
    canceling the contract
    
    using the Defense Production Act, a law which lets the Pentagon force companies to do things, to force Anthropic to agree.
    
    the nuclear option, designating Anthropic a “supply chain risk”. This would ban US companies that use Anthropic products from doing business with the military2. Since many companies do some business with the government, this would lock Anthropic out of large parts of the corporate world and be potentially fatal to their business3. The “supply chain risk” designation has previously only been used for foreign companies like Huawei that we think are using their connections to spy on or implant malware in American infrastructure. Using it as a bargaining chip to threaten a domestic company in contract negotiations is unprecedented.

It's been amazing watching them cosplay ethicality while twisting themselves into knots attempting to justify selling their service to Satan.

Who could have predicted that Satan would turn around and screw them, outside of everyone ever. Maybe they should have asked a person instead of Claude.

Exactly - step 2 should be sign $200MM contract with party obviously and extremely interested in mass surveillance and autonomous warfighting capabilities.

Then comes the shock.