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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: AI in full focus this morning. The standoff between Anthropic

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Speaker 2: and the Pentagon over military safeguards is ramping up. The

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Speaker 2: tech giant facing a deadline today to accept conditions or

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Speaker 2: be blacklisted. The Anthropic CEO Dario Emodi saying in a statement,

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Speaker 2: quote these threats do not change our position. We cannot

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Speaker 2: in good conscience to see to their request. The US

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Speaker 2: Undersecretary of Defense and Mil Michael, responding to the statement,

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Speaker 2: calling Emodi a liar with a God complex. The under

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Speaker 2: Secretary joins US now for more. Under Secretary Michael, Welcome

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Speaker 2: to the program, Sir. Calling someone a liar is pretty

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Speaker 2: strong language. What's he like about?

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Speaker 1: Well, what happened is we've been negotiating in good faith

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Speaker 1: on the Department of Warside for about three months, and

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Speaker 1: we're working pretty diligently, and we sent over a proposal

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Speaker 1: that we thought made a lot of concessions to the

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Speaker 1: language that Anthropic wanted, and then, you know, without any notice,

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Speaker 1: they published an article where we thought we were getting close,

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Speaker 1: saying that they were breaking off talks well before the deadline,

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Speaker 1: which is generally not good partner oriented practice. If you

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Speaker 1: will so mail.

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Speaker 2: This is what they're asking for as far as we understand,

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Speaker 2: and let me share this with the audience. It doesn't

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Speaker 2: want its technology use for surveillments of US citizens or

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Speaker 2: for autonomous lethal strikes without a human in the loop.

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Speaker 2: That's the ask. What were the concessions.

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Speaker 1: Yeah, the concessions are pretty simple. We agreed in writing

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Speaker 1: to ensure that the Department of was following all laws

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Speaker 1: and regulations, including the National Security Act of nineteen forty seven,

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Speaker 1: the PIZ Act, and all other applicable laws and regulations,

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Speaker 1: because mass surveillance of Americans is already illegal, so we

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Speaker 1: were offering to put all of that language and affirm

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Speaker 1: that we were following all laws in the contract. When

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Speaker 1: it comes to autonomous weapons, similarly, we said we'll follow

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Speaker 1: all laws, including a DoD Directive that's been in place

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Speaker 1: for years that governs how we would use any such weapons.

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Speaker 1: And then we affirmed that there would be human oversight

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Speaker 1: over all kinds of every kind of part of the

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Speaker 1: development process or engagement process or use about Thomas weapons.

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Speaker 1: And he didn't like the word I guess as appropriate

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Speaker 1: at the end of that sentence, But we believe we've

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Speaker 1: we conceded to all their substantive demands. So it was

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Speaker 1: surprising that out of nowhere they'd cut off negotiations.

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Speaker 3: So it appears that your differences are actually minor. Would

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Speaker 3: that be accurate?

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Speaker 1: Yeah, That's what was surprising is usually if your differences

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Speaker 1: are minor, you get in a room, you try to

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Speaker 1: hash them out, and instead, without any notice, you know,

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Speaker 1: publishes something about his conscience and then doesn't engage. And

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Speaker 1: it was difficult to understand why because we were working

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Speaker 1: pretty diligently on this, and we were at the final

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Speaker 1: stages of few words here or there where we agreed

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Speaker 1: to what they wanted so in substance. So it was

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Speaker 1: very surprising given that we negotiate with hundreds of technology

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Speaker 1: companies and this is the only one we've ever had

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Speaker 1: that behavior from.

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Speaker 3: Are you still weighing using the Defense Production Act to

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Speaker 3: compel Anthropic to basically have to use its product or potential?

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Speaker 3: You're weighing still making it a supply chain risk, which

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Speaker 3: we heard from anthropics say that this is almost contradictory proposals.

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Speaker 1: They're two different things, and I think depending on how

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Speaker 1: today goes. At five o'clock, the Secretary of warpete Hexeth

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Speaker 1: gets to make the decision on how to reply. I've

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Speaker 1: maintained my openness to continue dialogue through that deadline. But

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Speaker 1: they've seem to have launched sort of a pr campaign

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Speaker 1: that was planned well before these negotiations sort of restarted

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Speaker 1: on Tuesday. So I don't know. Their behavior is frankly unpredictable.

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Speaker 1: I'm not sure what to expect.

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Speaker 3: So do you plan them having more talks today or

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Speaker 3: is a decision just need to be made by today.

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Speaker 1: I offered more talks if so long as they're in

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Speaker 1: good faith. We're always open to talks. And we set

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Speaker 1: a deadline, and we meant the deadline, and up until

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Speaker 1: that deadline, I'm open to more talks and I told

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Speaker 1: them so.

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Speaker 3: So what does happen at five to ZHO one today?

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Speaker 3: If there's no agreement between the DoD and Anthropic.

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Speaker 1: That's up Secretary Hegseeth. We have some courses of action

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Speaker 1: that he's considering. And ultimately this comes down to the

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Speaker 1: war fighter, right. It comes down to for any AI

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Speaker 1: system we might use, are we using it to protect

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Speaker 1: our war fighters in the right way? Are we using

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Speaker 1: it to sort of give them the best tools to

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Speaker 1: be efficient and to be lethal when they have to

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Speaker 1: be lethal, and that's the primary thing in Secretary hess head,

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Speaker 1: and we told them that Ultimately, at the end of

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Speaker 1: the day, we fall all the law, all laws, but

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Speaker 1: we can't let any one company stand between us and

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Speaker 1: the war fighter because they don't make the rules. Congress

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Speaker 1: makes the roles, the presidents signed them, We execute them,

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Speaker 1: and we do so safely.

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Speaker 3: Well, speaking of the President, has he weighed in on

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Speaker 3: this specifically? Has there been discussions with him? And Secretary

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Speaker 3: Hegseth and yourself as well?

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Speaker 1: This has all been internal to the Department of War

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Speaker 1: so far, okay?

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Speaker 3: And then when it comes to potentially the other AI

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Speaker 3: negotiations underway, What is going on right now with XAI

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Speaker 3: and to get grock on classified networks.

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Speaker 1: Well, we I think the smart approach when I came

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Speaker 1: in at the Department of War about nine months ago

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Speaker 1: and looked at what we were using AI for, and

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Speaker 1: it was some pretty minimal use cases. And given the

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Speaker 1: power of the technology, the potential power to do good

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Speaker 1: for the US military both from an efficiency standpoint and

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Speaker 1: a strength standpoint, I wanted to make sure we have

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Speaker 1: a lot of options. So we went around and we've

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Speaker 1: launched Google for unclassified networks, We've signed XAI for classified

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Speaker 1: and non classified networks, and we want to continue to

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Speaker 1: provide options to all of our components here at DOOW,

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Speaker 1: and that's what we'll continue to do. And it's just

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Speaker 1: smart to have more than one option so that we

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Speaker 1: can see the strengths and weaknesses of each model and

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Speaker 1: learn from them as the AI revolution begins here.

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Speaker 3: Under Secretary Michael is lethal autonomy really so critical for

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Speaker 3: future national security?

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Speaker 1: It is. I mean, if you think about it from

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Speaker 1: a defense standpoint, whether it's a drone swarm that's coming

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Speaker 1: out a military base, whether it's a hybersonic missile coming

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Speaker 1: out the United States, where the reaction time against the

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Speaker 1: sort of how many weapons are coming at you you

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Speaker 1: want to take them, be able to take them down

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Speaker 1: potentially faster than a human could alone. If that's how

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Speaker 1: it's done. And we're learning from the Russian Ukraine War

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Speaker 1: with the drone swarms and so on, and with the

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Speaker 1: new weapons that have been developed all over the world

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Speaker 1: that change the name of war, the game of warfare,

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Speaker 1: that we've got to respond and defend ourselves in any

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Speaker 1: way we can. The question is do you have a

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Speaker 1: human on a loop to make sure that we're monitoring

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Speaker 1: these systems? And that's what we proposed in writing in language,

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Speaker 1: that we always have human oversight over these things, but

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Speaker 1: they're necessary given what's happening in the world.

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Speaker 2: Clearly, the technology these companies are producing is tremendously powerful. Yeah,

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Speaker 2: you believe this individual is both a liar and has

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Speaker 2: a god complex. How concerned should the American public be

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Speaker 2: about individuals like this running companies like this if that's

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Speaker 2: what you believe this person is.

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Speaker 1: Yeah, I think there's some concern that you know, when

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Speaker 1: you have leaders of some of these companies talking about

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Speaker 1: unemploying seventy million Americans, the lawsuits they're under for scraping

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Speaker 1: content from content publishers and having billion dollar lawsuits against

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Speaker 1: them using that content to make profits. And then really

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Speaker 1: what's concerning is making their own policies that sort of

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Speaker 1: and could sit on top of democratic policies that are

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Speaker 1: voted on by the people, passed by Congress, signed by

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Speaker 1: the President. You do have to worry about are they

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Speaker 1: taking it too far? Are they trying to do and

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Speaker 1: impose their own views on the American people in an

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Speaker 1: undemocratic way, so, I think those things are going to

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Speaker 1: be things we're grappling with in society for the next

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Speaker 1: several years as these companies get bigger and bigger.

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Speaker 2: We're looking forward to having a conversation with you, sir.

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Speaker 2: Thanks for making time for us this morning. Meil Mark there,

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Speaker 2: the under Secretary of Defense,