Mr. Michael, who was on a call with Anthropic executives at the time, said the Pentagon wanted the company to allow for the collection and analysis of unclassified, commercial bulk data on Americans, such as geolocation and web browsing data, people briefed on the negotiations said.
Anthropic told the Pentagon that it was willing to let its technology be used by the National Security Agency for classified material collected under the Foreign Intelligence Surveillance Act. But the company wanted a legally binding promise from the Pentagon not to use its technology on unclassified commercial data.
At that point, Mr. Michael asked to speak with Dr. Amodei, who was not on the call. Mr. Michael was turned down. Shortly after, Mr. Hegseth said the talks were over.
I seriously doubt that they were under misconceptions as to what Anthropic’s position was.
Source (NYT)