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National

Tech Policy

Elon Musk's artificial intelligence company xAI has signed an agreement to allow the military to use its model, Grok, in classified systems, a Defense official confirmed to Axios.

Why it matters: Up to now, Anthropic's Claude has been the only model available in the systems on which the military's most sensitive intelligence work, weapons development and battlefield operations take place. But the Pentagon is threatening Anthropic in a dispute over safeguards and may soon need a replacement. 

Anthropic has refused the Pentagon's demand that they make Claude available for "all lawful purposes," insisting in particular on blocking its use for the mass surveillance of Americans and the development of fully autonomous weapons.

xAI agreed to that "all lawful use" standard, as Axios previously reported. The New York Times first reported that a deal had been signed. xAI did not respond to requests for comment.

It's not clear whether xAI will be able to fully replace Anthropic, or how long that process would take. Claude was used in the Maduro raid, for example, through Anthropic's partnership with Palantir.

Driving the news: Defense Secretary Pete Hegseth will host Anthropic CEO Dario Amodei for what sources expect to be a tense meeting at the Pentagon on Tuesday.

A Defense official said Hegseth would effectively be presenting Amodei with an ultimatum. The Pentagon is threatening to brand Anthropic a "supply chain risk," among other potential penalties, if it won't agree to lift all safeguards.

Defense officials admit that offloading and replacing Claude would be a very difficult process.

State of play: Grok, Google's Gemini and OpenAI's ChatGPT are all available in the military's unclassified systems, and Google and OpenAI have also been in talks to move over into the classified space.

The Pentagon has moved to speed up those negotiations as it prepares to potentially sever its relationship with Anthropic. 

One source said the Pentagon had "reached out to OpenAI to reignite talks with a new sense of urgency," though the parties were still "not close to getting a deal" due to the complex issues at play. A second source confirmed the Pentagon's outreach had been accelerating.

The intrigue: The NYT reported that Google was "close" to a deal to allow classified use of Gemini, while OpenAI was "not close."

The Defense official disputed the characterization of Google as much closer than OpenAI to a deal, saying talks were ongoing with both and the department believes both will sign agreements.

However, administration officials insist both Google and OpenAI will have to agree to the "all lawful purposes" criteria. 

One of the sources said it was not clear if OpenAI would agree to that standard, but "we're talking."

Go deeper: Pentagon-Anthropic battle pushes other AI labs into major dilemma

Pentagon-Anthropic battle pushes other AI labs into major dilemma

Musk's xAI and Pentagon reach deal to use Grok in classified systems

As Anthropic and the Pentagon fight, Elon Musk is moving in.

Elon Musk with President Trump at a SpaceX launch in 2024. Photo: Brandon Bell/Getty Images)

Artificial Intelligence

Big Tech

Elon Musk

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

2024 will be an election year like no other, as President Biden seeks re-election amid economic uncertainty, two wars and questions about his age. His likely foe, former President Trump, faces felony charges and vows revenge on his political enemies. Meanwhile, Americans generally are dissatisfied with those choices and are divided over immigration, race, education and more.

Politics & Policy

Latest news on Wall Street, Corporate America and financial regulation.

Business

Codebook

Axios Codebook

Cybersecurity companies aren't likely to face the same dramatic, AI-induced apocalypse that's hit the software industry over the last month, analysts say.

Why it matters: Investors are panicking and security executives are now on the defensive. But insiders don't see this as a total identity crisis for the industry. 

Driving the news: Anthropic on Friday announced its new Claude Code Security product, which can automatically scan codebases for vulnerabilities and suggest patches. The news caused shares of several major cyber companies to tumble. 

"The Global X Cybersecurity ETF fell 4.9% and closed at its lowest since November 2023" on Friday, according to Bloomberg. 

As of Monday, CrowdStrike shares have fallen 11%. Cloudflare took a 9.6% dive. Identity management company SailPoint slid about 8%. 

Reality check: Claude Code Security will directly compete with other code-security companies, but won't disrupt most companies' core businesses.

Corporations require a layered approach to defend against and detect cyberattacks. 

Claude Code Security can help make sure that the "vibe coding" projects employees are launching are written in a more secure way — but it can't detect when an intruder is lurking on a network or when an employee has clicked on a phishing link.

What they're saying: Over the weekend, CrowdStrike CEO George Kurtz wrote on LinkedIn that "AI is powerful. It's transformative. And it absolutely makes security better. But AI doesn't eliminate the need for security. It increases it." 

Before Anthropic's announcement, Palo Alto Networks CEO Nikesh Arora told analysts in an earnings call last week that he's "confused why the market is treating AI as a threat to at least cybersecurity," noting that customers are eager to strengthen their defenses as AI helps attackers get faster. 

Between the lines: Most cybersecurity investors and analysts see the stock tumble as an overreaction. 

"Yes there is the potential for more software to be secure by design thanks to hashtag #AI (false positives from hallucinations notwithstanding), but cybersecurity is not a technological problem, it's a human one," Aaron Jacobson, partner at NEA, wrote.

Raymond James analyst Mark Cash called the market reaction "excessive" and noted in a report that the market was likely "extrapolating well beyond the current functionality" of Claude Code Security. 

Our thought bubble from Axios' enterprise software deals reporter Chris Metinko: "It looks like we'll see this type of thing happen anytime a large AI lab has a new release — overreaction will set in on the public market."

The intrigue: Over the last few months, Axios has been asking VC investors about the value of their investments in standalone AI-powered code security companies. 

They're betting corporate security teams likely won't want to consolidate all of their security needs into an AI provider. 

What to watch: Anthropic is unlikely to stop at just Claude Code Security as the model gets better at analyzing applications for security flaws. OpenAI has also been rolling out its own AI-powered security tools.

AI apocalypse isn't coming for cybersecurity industry

Investors are panicking, and security executives are now on the defense. But if anything, AI is only likely to cause a minor stir — not a total identity crisis.

Illustration of a shopping cart full of cursors. 

Cybersecurity

Joint Chiefs Chairman Gen. Dan Caine has been advising President Trump and top officials that a military campaign against Iran could carry significant risks, in particular the possibility of becoming entangled in a prolonged conflict, according to two sources with knowledge of those internal discussions.

Why it matters: There's an ongoing debate at the top levels of the Trump administration about how to handle the Iran standoff and what the consequences of each option would be. At the moment, several of the voices in Trump's circle are urging caution, though some sources think Trump himself is leaning towards a strike.

Above all, there's the question of what success would look like when it comes to military action, and how risky it would be to try to achieve it.

On the other side, reaching a nuclear deal would likely mean walking back some of the president's previous red lines. 

As Trump debates whether and how to attack Iran, his envoys Jared Kushner and Steve Witkoff have been urging the president to hold off and give diplomacy a chance.

This account of where members of Trump's top team stand is based on conversations with five sources who have sat in or been briefed on the high-level meetings.

Caine's position could be particularly influential, because he's Trump's top military adviser and is highly respected by the president.

No one is advocating for an invasion or "boots on the ground" military action, the sources said. 

Behind the scenes: Just as with the planning for the operation to capture Nicolás Maduro, Trump has empowered a small brain trust to think through problems in Iran and present him with a range of options he can exercise at a time of his choosing that maximizes leverage and minimizes risk, a U.S. official said.

While Caine was all-in on the Venezuela operation, he has been more cautious in the discussions around Iran, two sources said.

Citing that contrast, one source described Caine as a "reluctant warrior" on Iran. Caine sees the stakes of a major operation in Iran as higher, with a greater risk for entanglement and American casualties, the two sources said.

One source said Caine was not advocating for a strike but will support and execute on any decision Trump makes.

Another source with direct knowledge of Caine's thinking said the chairman is not skeptical about a military campaign but "clear-eyed and realistic" about the chances for success and about what could come next after war starts. A senior official also denied Caine had expressed skepticism.

What they're saying: "In his role as military advisor to the President, Secretary of War, and National Security Council, the Chairman provides a range of military options, as well as secondary considerations and associated impacts and risks, to the civilian leaders who make America's security decisions. The Chairman provides these options confidentially," Joint Staff spokesperson Joe Holstead told Axios.

"General Caine is a talented and highly-valued member of President Trump's national security team. The President listens to a host of opinions on any given issue and decides based on what is best for US national security," White House spokeswoman Anna Kelly said in a written statement.

Trump posted on Truth Social that Caine would like to avoid war, but thinks it will "be something easily won" if necessary. "He has not spoken of not doing Iran, or even the fake limited strikes that I have been reading about, he only knows one thing, how to WIN and, if he is told to do so, he will be leading the pack," Trump wrote.

The intrigue: Caine has been the only military leader briefing Trump in recent weeks on Iran. 

CENTCOM commander Adm. Brad Cooper hasn't been invited to the meetings Trump convened on Iran and hasn't spoken to the president since the crisis started in early January.

Cooper's predecessor, Gen. Erik Kurilla, briefed both Trump and former President Biden on Iran. 

A senior administration official confirmed Trump hasn't spoken to Adm. Cooper.

Zoom in: Vice President Vance has also raised concerns about entanglement during internal deliberations in recent days.

One source confirmed the VP had been raising questions about the risks and complexity of the operation with military and national security officials, but denied he was outright opposed to striking Iran.

Vance hopes the talks in Geneva on Thursday will produce a diplomatic breakthrough, but is not optimistic about the odds of a deal — a position shared by many other top officials.

"He's presenting information on both sides of the argument to help the president make an informed decision," according to another source familiar with the discussions.

Meanwhile, Secretary of State Marco Rubio has been "sitting on the fence" rather than advocating strongly for or against a strike, according to two sources. 

Rubio has historically been hawkish on Iran, but he has been focusing more of his energy in recent weeks on Venezuela and Cuba.

Driving the news: Witkoff and Kushner are planning to meet Iranian Foreign Minister Abbas Araghchi on Thursday in Geneva.

Both have advised Trump that time is on his side and that his hand will get stronger with every day that passes.

Their message is that Trump should see what he can get from the Iranians, and pull the trigger if and when he decides diplomacy has lost momentum.

A source with knowledge said Trump has been leaning towards launching a strike for several days, but agreed to give Witkoff and Kushner a bit more time for negotiations. Another source said Trump insisted on more negotiations by Witkoff and Kushner because he wants to make sure all avenues are "exhausted."

The other side: Sen. Lindsey Graham (R-S.C.) is one of the main advocates in favor of military action in Trump's extended circle. He lamented in an interview with Axios on Saturday that many of Trump's advisers were counseling him not to bomb Iran. 

Graham urged the president to ignore them and move forward with a strike, including in a phone call the two had on Sunday. 

Graham and other strike advocates around Trump — mostly outside of the administration — are concerned that as time passes, momentum will be lost and Trump will have to settle for a bad deal.

Another person advocating for strikes is Israeli Prime Minister Benjamin Netanyahu. He has been growing more concerned since meeting Trump ten days ago that the U.S. will stand down.

A U.S. source who met Netanyahu last week said the prime minister left the meeting with Trump feeling he'd been unable to pull him towards his position. 

"Is he still with us?" Netanyahu asked, according to the source.  

The latest: In his post backing Caine, Trump also wrote: "I am the one that makes the decision, I would rather have a Deal than not but, if we don't make a Deal, it will be a very bad day for that Country and, very sadly, its people, because they are great and wonderful, and something like this should never have happened to them."

The bottom line: "Everyone has a job to do and does their job. Rubio isn't figuring out what planes to fly. Caine isn't worrying about diplomatic fallout. The decision to strike, when and how or if at all, has not been made," a senior administration official said.

Editor's note: This story was updated with public comments from Trump.


Trump's top general warns of Iran strike risks

Vice President Vance has also raised concerns internally

Joint Chiefs Chairman Gen. Dan Caine (R) with Secretary of Defense Pete Hegseth at Marine Corps Base Quantico last September. Photo: Alex Wong/Getty Images)

Donald Trump

Iran

Conflicts, policies and powers are intersecting and shaping the world. Breaking news and analysis of national security, foreign policy and global crises.

World

Blizzard warnings blanket the Northeast Monday as a beastly winter storm is snarling travel and pounding millions with heavy snow.

Threat level: In hard-hit areas, travel will be "extremely treacherous," forecasters say, and some leaders are restricting it. Meanwhile, more than half a million customers in Massachusetts, New Jersey, Delaware and Rhode Island are without power.

The latest: The National Weather Service predicted Monday morning that heavy snowfall rates and gusty winds will keep battering the Northeast and spread into New England.

The governors of New York, Massachusetts, New Jersey and several other eastern states declared states of emergency and urged residents to stay home.

The NWS said very heavy snowfall rates of at least 2 to 3 inches per hour would persist Monday, along with 40 to 70 mile-per-hour winds.

Those conditions make travel "nearly impossible."

In New York, a local NWS branch warned of whiteout conditions, which severely limit visibility.

Snowfall amounts updated Monday morning showed roughly 15 inches of snow in Central Park, more than 18 inches at Newark and upward of 22 inches at Islip on Long Island.

NWS Boston stressed in its most recent discussion that the storm would "likely bring extreme to destructive impacts south and east of the I-95
corridor."

The area forecast discussion said reports of snowfall in the region exceeding 30 inches would not be a surprise.

Blizzard warnings, travel bans in effect as brutal storm pounds Northeast

Blizzard warnings, travel bans in effect as storm pounds Northeast

In hard-hit areas, travel will be "extremely treacherous."

Axios

Monday's top stories

Musk's xAI and Pentagon reach deal to use Grok in classified systems

AI apocalypse isn't coming for cybersecurity industry

Trump's top general warns of Iran strike risks

Blizzard warnings, travel bans in effect as brutal storm pounds Northeast

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AI's "centaur phase" consumes Silicon Valley

Scoop: Hegseth to meet Anthropic CEO as Pentagon threatens banishment

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