New Delhi, Feb. 17 -- A deepening dispute over how artificial intelligence should be used in modern warfare is now pushing the Pentagon towards an extraordinary step: treating a leading American AI firm as a security liability.

Defense Secretary Pete Hegseth is "close" to cutting business ties with Anthropic and designating the company a "supply chain risk", a senior Pentagon official told Axios - a move that would effectively penalise not only Anthropic but also any contractor that relies on its technology.

The same official described the prospective decision to Axios in blunt terms: "It will be an enormous pain in the ass to disentangle, and we are going to make sure they pay a price for forcing our hand like this."

Pentagon's threat...