US District Judge Rita Lin in California issued a preliminary injunction blocking the Pentagon's classification of Anthropic as a 'supply chain risk,' ruling that the government had retaliated against the company for refusing to remove ethical guardrails on military AI use. 'Nothing in the governing statute supports the Orwellian notion that an American company may be branded a potential adversary and saboteur of the U.S. for expressing disagreement with the government,' Lin wrote. The Pentagon has 7 days to seek an emergency stay from the Ninth Circuit.
The dispute originated in February when Anthropic refused Pentagon demands to modify its acceptable use policies to allow mass domestic surveillance and fully autonomous weapons. Defense Secretary Pete Hegseth responded by designating Anthropic a supply chain risk — a label previously reserved for foreign adversaries like Huawei — and ordered all federal agencies to purge Claude within 180 days. Anthropic sued on March 9, and the case has become a landmark test of whether AI companies can enforce ethical red lines in government contracts.
OpenAI announced the close of a $110 billion funding round at a $730 billion pre-money valuation on March 31, with Amazon committing $50 billion (including $35 billion contingent on an IPO or AGI milestone), Nvidia and SoftBank each contributing $30 billion. SoftBank separately secured a $40 billion bridge loan on March 27 to backstop its commitment, with payments structured in quarterly tranches of $10 billion. The round remained open for additional investors and would eventually reach $122 billion by early April.
At $730 billion pre-money, OpenAI's valuation exceeded every publicly listed company except Apple, Microsoft, Nvidia, and Alphabet. The company reported $2 billion in monthly revenue and over 900 million weekly active users. Amazon's $35 billion conditional tranche effectively makes a 2026 IPO a requirement of OpenAI's financing structure rather than a voluntary strategic decision.
OpenAI confirmed the shutdown of Sora, its AI video generation platform, after internal documents obtained by multiple outlets revealed the service was burning approximately $15 million per day in compute costs while generating only $2.1 million in daily revenue. The financial hole was compounded by Disney's decision to walk away from a $1 billion partnership deal that would have integrated Sora into the studio's production pipeline.
The Sora shutdown marks the highest-profile product failure in OpenAI's history and raises questions about the economics of generative video. OpenAI's own internal forecast reportedly projected profitability for Sora no earlier than 2031. The API will continue operating until September 24, 2026 to allow existing customers to migrate to alternatives like Google's Veo 3.1 or Kling 3.0.