The consequences of the ban have already caused panic in the defense contracting market. Integrating companies and B2B contractors (Defense Industrial Base) are forced to urgently rip Claude API calls out of their internal systems, as the presence of these models now violates DoD compliance. This precedent shows the vulnerability of the AI startup ecosystem: the state can, with a stroke of a pen, cut a company off from federal budgets and force the private sector to undergo mandatory software refactoring.
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