Military & Defense Contracts

Reporting drawing on an internal German Ministry of Defence presentation found Helsing's HX-2 drone had only a 36% success rate against targets in Ukrainian combat use, contradicting the confident public positioning of Helsing co-CEO Torsten Reil, who told a Bloomberg Tech Summit audience in London that 'Europe is going to lead even over the US in terms of the deployment of real AI-enabled autonomous systems.' Helsing disputed the scale of deployment implied by the government figures and did not fully detail which promised AI components were missing from fielded systems, even as the company proceeded to raise a EUR12 billion funding round in June 2026 and continued pursuing German procurement contracts.

In August 2026, Huawei courted Egypt with a proposal to build AI data centers powered by its Ascend chips, explicitly including military and surveillance applications and integration with national population databases; reporting noted the presence of China's Ministry of Public Security insignia in proposal materials, suggesting direct involvement of Chinese state surveillance infrastructure. The bid put Huawei in direct competition with a US-backed consortium for the same government tender, marking one of the first instances of head-to-head US-China competition for a national AI data center contract. The US government raised concerns, warning of extraterritorial legal consequences for unauthorized use of restricted Huawei accelerators; Egypt is one of roughly 40 countries requiring US permission for AI chip shipments. A similar Huawei-powered national AI proposal in Malaysia was scaled back after US pressure, and Malaysian customs seized a $13 million chip shipment bound for re-export in June 2026.

Germany's Defense Ministry moved to award Munich-based Helsing a €580 million Combat Fighter System Nucleus (CFSN) contract to build the software/autonomy backbone for the country's post-FCAS air-combat program, internal documents reported by Politico in August 2026 show. The ministry's own procurement notes warned the CFSN architecture 'should avoid dependence on any one supplier' yet proceeded to award the first phase to Helsing alone, citing a national-security exemption from standard EU tender rules; of four contractors considered (Airbus Defence and Space, Helsing, MBDA Germany, Diehl Defence), only Helsing is reported to have supplied all requested evidence. The contract is structured as cost-reimbursement rather than fixed-price, and a second 2027 phase was designed to avoid the parliamentary budget-committee approval normally required for projects over €25 million.

On June 5-8, 2026, the US Department of Defense added Alibaba Group Holding Limited to its Section 1260H list of 'Chinese Military Companies operating in the United States,' citing indirect affiliation with SASAC and military-civil fusion contribution through MIIT ties. Alibaba disputed the designation, stating it 'is not a Chinese military company nor part of any military-civil fusion strategy.' The listing bars the Defense Department from contracting directly with Alibaba immediately, and from procuring its products/services through third parties starting June 2027.

On June 5-8, 2026, the US Department of Defense added Baidu, Inc. to its Section 1260H list of 'Chinese Military Companies operating in the United States,' citing indirect affiliation with SASAC and military-civil fusion contribution through MIIT ties. Baidu called the designation 'entirely baseless.' The listing bars the Defense Department from contracting directly with Baidu immediately, and from procuring its products/services through third parties starting June 2027.

On June 5-8, 2026, the US Department of Defense added BYD Company Limited to its Section 1260H list of 'Chinese Military Companies operating in the United States,' citing direct and indirect affiliation with SASAC, indirect affiliation with MIIT, and residence in or affiliation with a military-civil fusion enterprise zone. BYD called the determination a contradiction of facts, said it is 'not a military enterprise,' and stated it would pursue administrative and legal remedies. The listing bars the Defense Department from contracting directly with BYD immediately, and from procuring its products/services through third parties starting June 2027.

On June 5, 2026 Microsoft published the conclusion of its internal investigation into the Israeli military's use of Azure cloud and other Microsoft products. The review acknowledged prior gaps and committed to strengthening human rights governance procedures, expanding internal escalation paths for misuse allegations, and tightening contract language. Human-rights advocates and Microsoft employees criticized the review as insufficient because it did not commit to terminating identified contracts or publish the underlying findings. The review followed sustained internal organizing and external reporting on mass surveillance of Palestinians via Azure.

On April 27, 2026, over 580 Google employees, including 20+ directors/senior directors/VPs and senior DeepMind researchers, sent a letter to CEO Sundar Pichai urging rejection of classified military AI work. Google is negotiating with DoD to deploy Gemini AI on classified networks where Google cannot monitor usage. Over 100 DeepMind employees separately signed an internal letter demanding no DeepMind research be used for weapons or autonomous targeting. Two-thirds of signatories agreed to be named; one-third remained anonymous citing fear of retaliation.

In April 2026, Palantir CEO Alex Karp authored and promoted 'The Technological Republic,' arguing tech companies have a 'moral duty' to participate in defense, calling for national service, hard power, and religion in public life. He also stated anti-ICE protesters 'should want more Palantir in government.' Critics including Al Jazeera described it as 'technofascism.'

In a March 2026 directive, Deputy Secretary of Defense Stephen Feinberg set AI-enabled decision-making, built around Palantir's Maven Smart System, as 'the cornerstone' for the Pentagon's Combined Joint All-Domain Command and Control (CJADC2) program, and moved oversight of Maven from the National Geospatial-Intelligence Agency to the Pentagon's Chief Digital and Artificial Intelligence Office, with the Army handling future contracting. Maven's user base more than doubled from roughly 10,000 to over 20,000 active users across 35+ military tools between January and May 2025, deployed across five combatant commands, and DoD's Maven contract with Palantir was raised past $1 billion. Congressional and defense-press observers raised concerns about the lack of public detail on how the AI targeting and decision-support system is governed and about Palantir chairman Peter Thiel's close ties to the Trump administration.

In March 2026, the US Army awarded Anduril a 10-year contract worth up to $20B, consolidating 120+ procurement actions into a single enterprise deal. The contract covers AI-enabled autonomous drones (Altius, Ghost, Anvil), underwater vehicles, and the Lattice AI battlefield integration platform. This is the largest-ever defense contract awarded to a startup. It sparked campus protests including Cornell students forcing an Anduril recruitment event to end in 7 minutes.

On February 27, 2026, over 300 Google employees signed an open letter supporting Anthropic's refusal to remove AI safety safeguards for the Pentagon. The letter stated: '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.' Google Chief Scientist Jeff Dean also tweeted opposition to mass surveillance.

On February 24, 2026, Defense Secretary Pete Hegseth demanded Anthropic give the Pentagon unrestricted access to Claude and remove two safeguards: a ban on fully autonomous lethal weapons targeting and a ban on mass domestic surveillance of Americans, threatening to cancel Anthropic's $200M Pentagon contract and designate the company a 'national security supply chain risk.' On February 26, 2026, CEO Dario Amodei publicly refused, saying Anthropic 'cannot in good conscience' remove the safeguards given Claude's unreliability for lethal decisions. The Pentagon proceeded with the supply-chain-risk designation and President Trump ordered federal agencies to stop using Anthropic's technology. On August 27-28, 2026, US District Judge Rita Lin ruled the blacklisting was unlawful First Amendment retaliation and a Fifth Amendment due-process violation, finding the Pentagon's security claims 'entirely unfounded' and that officials built their case 'after the fact to justify the foreordained conclusion.'

On February 23-24, 2026, xAI reached agreement with the Pentagon to deploy Grok on classified military systems at Impact Level 5 (IL5) - the highest military AI security classification. Unlike Anthropic, xAI accepted the Pentagon's 'all lawful use' standard without restrictions on autonomous weapons or mass surveillance. The deal positions Grok to replace Claude across up to 3 million DoD personnel, with potential applications in intelligence analysis, weapons development, and battlefield operations.

On February 22-28, 2026, OpenAI negotiated and signed an agreement with the Pentagon for classified network deployment. Altman claims the deal includes safeguards aligned with Anthropic's red lines, though the language differs meaningfully: OpenAI requires "human responsibility for use of force" while Anthropic requires "human in the loop" for autonomous weapons. OpenAI also secured cloud-only deployment (not edge systems like drones) and the right for models to refuse tasks. Critics note "human responsibility" (accountability) is a weaker standard than "human in the loop" (authorization required). CNN reported it remains unclear what actually differs between OpenAI's accepted terms and Anthropic's rejected ones.

A November 2025 internal German Ministry of Defense presentation found Helsing's HX-2 loitering munitions suffered high failure rates on takeoff and vulnerability to electronic jamming during Ukrainian frontline testing. Ukraine suspended additional orders and Germany said it would not place follow-on orders until Ukraine formally expressed renewed interest. Helsing disputed the characterization, said it was unaware of the internal presentation, rejected the reported failure rates, and said it was 'too early to draw conclusions from limited frontline testing.'

In Q1 2026, Cohere expanded into military AI, signing agreements with TKMS (Jan 13) and Hanwha Ocean (Mar 31) - the two competing bidders for Canada's up to $60 billion, 12-submarine Canadian Patrol Submarine Project - to build AI decision-support, engineering, and design tools for their rival bids. Cohere also partnered with Saab (Mar 23) to develop AI for the GlobalEye airborne early-warning surveillance system pursued for Canada, and with Thales for AI on patrol ships. Cohere made no public statement addressing the apparent conflict of representing both submarine bidders simultaneously.

In January-February 2026, Anthropic and the Pentagon reached a standoff over a $200 million contract. Anthropic demanded "human in the loop" restrictions - specifically that Claude not be used in "fully autonomous weapons (those that take humans out of the loop entirely)." CEO Amodei stated "frontier AI systems are simply not reliable enough to power fully autonomous weapons" and offered to work on R&D to improve reliability. The Pentagon demanded "all lawful use" language. Defense Secretary Hegseth gave a Friday 5pm deadline; Amodei refused. Trump ordered all agencies to cease Anthropic use and Pentagon designated Anthropic a "supply chain risk" - language normally reserved for foreign adversaries.

In January 2026, Palmer Luckey publicly supported President Trump's plan to limit pay for defense contractor leaders and crack down on the defense industry, telling Bloomberg TV 'I think it's even good maybe to scare people sometimes.' He revealed he pays himself only $100,000 per year at Anduril. While noting some changes 'might not necessarily help the defense space,' he stood by Trump's policies despite the president's rebuke of defense companies and their CEOs.

On December 26, 2025, China imposed sanctions on Palmer Luckey along with 9 other US defense executives and 20 companies for their role in US arms sales to Taiwan. Luckey is barred from entering China and from conducting business there. Anduril had jointly manufactured the Barracuda 500 autonomous cruise missile with Taiwan's National Chung-Shan Institute. Luckey publicly celebrated the sanctions, telling Fox Business 'It's an award I'm very, very proud to win.'