# VC10X Pulse - Is Anthropic the New King of AI? - The Department of Defense Deal

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 5 Mar 2026, 11 min.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/116443092/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2026-2-5%2F419356928-44100-2-08f1dd18d7ad.mp3

In one week, Claude went from #131 to #1 on the App Store. ChatGPT uninstalls surged 295%. And Sam Altman publicly admitted his company's communications were "opportunistic and sloppy." We break down exactly what happened — and what it means for the future of AI investment. In this episode: → Why Anthropic walked away from a $200M Pentagon contract — and what their two specific red lines were → The full timeline of Sam Altman's communications breakdown: the vague X post, the AMA that backfired, and the Monday admission → Why the enterprise data is the most important story nobody is talking about (50%+ of US business AI spend) → Anthropic's $20B revenue run rate and what the download data actually shows → What this week means for investors watching the AI competitive landscape LINKS Prashant Choubey - https://www.linkedin.com/in/choubeysahab Subscribe to VC10X newsletter - https://vc10x.beehiiv.com Subscribe on YouTube - https://youtube.com/@VC10X Subscribe on Apple Podcasts - https://podcasts.apple.com/us/podcast/vc10x-investing-venture-capital-asset-management-private/id1632806986 Subscribe on Spotify - https://open.spotify.com/show/7F7KEhXNhTx1bKTBFgzv3k?si=WgQ4ozMiQJ-6nowj6wBgqQ VC10X website - https://vc10x.com For sponsorship queries reach out to prashantchoubey3@gmail.com SUBSCRIBE FOR MORE VC10X breaks down the most important stories in finance, tech, and markets every week. Subscribe for actionable insights. #Anthropic #OpenAI #AIInvesting #Claude #ChatGPT #VC10X #VentureCapital #TechInvesting`

## Transcript

[0:00] In the first week of March 2026, something quietly extraordinary
[0:04] happened in the AI industry. Anthropic's cloud app went from
[0:08] #131 on the App Store in late January to #1 above ChatGPT,
[0:14] above everything. At the same time, ChatGPT
[0:17] uninstalls serves nearly 300% in a single day.
[0:20] According to TechCrunch, Anthropic servers buckled under
[0:24] the weight of new sign ups, and Bloomberg reported that
[0:28] Anthropic is now tracking toward a $20 billion annual revenue run
[0:33] rate. This wasn't the result of a
[0:36] product launch. It was in the marketing
[0:38] campaign. It was the consequence of the
[0:40] single strategic decision, and it tells us a great deal about
[0:44] where the AI industry is heading.
[0:47] Today on VC10X, we break it all down.
[0:51] Let's start with the facts on the ground, because the sequence
[0:53] of events here matters a great deal.
[0:56] Anthropic had actually been the first AI lab to deploy it's
[0:59] models inside the Department of Defence's classified network
[1:03] through a partnership with Palantir.
[1:05] They were already inside. The dispute was about the
[1:08] ongoing terms of that relationship.
[1:11] The Pentagon wanted a blanket commitment.
[1:13] AI models available for quote all lawful purposes.
[1:17] Anthropic drew 2 specific red lines, no mass domestic
[1:21] surveillance of American citizens and no fully autonomous
[1:25] weapon systems capable of making strike decisions without human
[1:29] oversight. The Department of Defence would
[1:32] not put those in writing. Talks collapsed on Friday,
[1:35] February 28th. Defence Security designated
[1:38] Anthropic a supply chain risk to national security.
[1:41] Hours later, the same evening, Sam Ortman posted on X
[1:45] announcing that Open AI had reached a deal to deploy its
[1:48] model in the Department of Defence's classified network.
[1:51] The timing was immediately noted by practically everyone
[1:55] watching. Here's the part that matters.
[1:57] Earlier that same week, Ortman had told Open AI employees in an
[2:01] internal memo that his company shared the same red lines as
[2:05] Anthropic, the same prohibitions on mass surveillance and
[2:09] autonomous weapons. The public post on Friday
[2:11] evening was weak on the specifics of how those
[2:14] protections were actually in shamed in the new contract.
[2:17] The backlash was immediate and substantial.
[2:20] According to TechCrunch at GBT uninstall source by 297%.
[2:24] The day after the deal became public, App Store Review that I
[2:28] showed one star reviews up 775% and five star reviews falling by
[2:33] 50%. John Graffiti appeared on the
[2:36] sidewalk outside Open the Eye San Francisco offices, and one
[2:40] of Open the Eye's own research scientists, Aiden McLaughlin
[2:43] posted publicly on X that he personally didn't think this
[2:47] deal was worth it. What happened next is a case
[2:49] study in crisis communication and specifically and how not to
[2:53] do it. Over the weekend, Altman held an
[2:56] Ask Me Anything session on X to defend the decision.
[3:00] He argued that Anthropic had been more focused on specific
[3:03] prohibitions in the contract, while Open AI was comfortable
[3:06] with language citing applicable laws, He suggested Anthropic may
[3:11] have wanted more operational control.
[3:13] The explanation landed poorly because it raised an obvious
[3:17] question. If Open AI achieved the same red
[3:19] lines to different contract language, why couldn't the
[3:23] Pentagon accept Anthropics version?
[3:26] It also remained unclear, and Altman did not clarify why the
[3:30] Department of Defense agreed to accommodate Open the Eye on
[3:33] these terms but not Anthropic. The asymmetry was not addressed
[3:37] head on. By Monday, the position had
[3:40] shifted further. In a post on X sharing what he
[3:43] described as an internal memo, Ottman acknowledged the company
[3:46] should not have rushed the announcement, his exact words
[3:50] now on the record. We were genuinely trying to
[3:53] deescalate things and avoid a much worse outcome, but I think
[3:57] it looked opportunistic and sloppy.
[4:00] Open AI announced it would amend the contract to add explicit
[4:03] language prohibiting its AI from being used for domestic
[4:07] surveillance on American citizens and barring
[4:10] intelligence agencies from access.
[4:13] But in an employee all hands. That same week, Altman had
[4:16] disclosed something that generated further concern
[4:20] internally that operational decisions about how open AI
[4:24] technology is used by the Pentagon ultimately rest with
[4:26] the defence secretary, not with open AI.
[4:30] Fortune reported that multiple senior figures at the Wharton
[4:32] Schools Accountable AI Lab publicly accused open AI of
[4:36] undercutting Anthropic at a critical moment.
[4:40] The critique was direct. If the AI labs had closed ranks
[4:44] and stood together, the Pentagon's leverage would have
[4:47] been minimal. Instead, they were played as
[4:50] market competitors. The reputational damage in the
[4:53] consumer market was by then already done and quite
[4:56] measurable. Let's look at what the data
[5:00] actually shows because this is where it gets generally
[5:03] interesting from an investment and market structure
[5:05] perspective. On the consumer side, Sensor
[5:09] Tower data shows clouds daily downloads increased by 484% from
[5:15] February 1st to March 2nd. Within that same period, Cloud
[5:19] went from 131 on the App Store to #1 and simultaneously hit #1
[5:25] on the Android Play Store. The servers could not keep up.
[5:29] Boris Sherney, a senior figure at Anthropic, publicly
[5:32] acknowledged on X that they were seeing insane demand and were
[5:36] working around the clock on stability.
[5:38] Now, here's what makes this strategically interesting for
[5:41] enterprise investors. The enterprise side of the story
[5:44] is arguably even more significant than the consumer
[5:47] one. Ramp Economics Lab, which tracks
[5:51] corporate spend data from over 50,000 US businesses, published
[5:55] data to invoices ending February 2026.
[5:58] Their number show Anthropic has now captured more than 50% of
[6:02] enterprise AI chat subscription spend in the United States.
[6:06] Claude Enterprise and Claude team are collectively outpacing
[6:11] every ChatGPT tier in corporate billing.
[6:14] Think about what that means structurally.
[6:16] Enterprise contracts are stickier, higher margin and
[6:19] longer duration than consumer subscriptions.
[6:22] Anthropic isn't just winning a social media moment, they appear
[6:25] to be winning the business decision maker.
[6:28] Bloomberg reported on March 3rd that Anthropics run rate venue
[6:32] has surpassed $19 billion and is approaching $20 billion
[6:36] annually, more than double its run rate from just 12 months
[6:40] prior. Now, let's think about this from
[6:42] a strategic standpoint. Because some observers have
[6:45] framed Anthropic's decision to decline the Pentagon contract as
[6:48] a sacrifice, The number suggests a more nuanced picture.
[6:53] The Department of Defence contract was worth up to $200
[6:56] million. At $20 billion revenue run rate,
[7:00] that represents approximately 1% of annual revenue, 1%.
[7:05] What Anthropic received in return, even if unintentionally,
[7:08] was a brand loyalty moment that no advertising budget in the
[7:11] world could manufacture. Google Trends data shows
[7:15] Anthropic's search interest rising sharply relative to Open
[7:18] AI in the weeks following the news.
[7:20] For a significant segment of privacy conscious users, the
[7:24] company became the AI they could trust.
[7:26] Now, it's important to say we don't know whether this was a
[7:29] calculated move. Anthropic has not commented on
[7:32] it in those terms, and it would be speculative to assume so.
[7:36] What we can observe is the outcome was commercially
[7:39] significant regardless of the intent.
[7:41] There's a second strategic layer worth noting.
[7:44] At the exact moment millions of new users began flooding into
[7:47] cloud, Anthropic chose to ship persistent memory on the free
[7:51] plan, not on the Pate here on the free tier.
[7:55] This is a deliberate final decision making the free product
[7:58] stick here at the precise moment acquisition is at its peak.
[8:03] It's a classic growth engineering move executed well.
[8:07] And in that same seven day window, Anthropic also shipped
[8:10] voice mode, remote log code, and particularly notable, a feature
[8:15] allowing users to import their ChatGPT conversation history
[8:19] directly into cloud. They lowered the switching cost
[8:22] for open air users at the most opportune moment possible.
[8:26] Let's close this with the investor lens because that's
[8:29] what the channel is about. The AI market has until recently
[8:33] been framed as a 2 horse race, open AI and everyone else.
[8:38] This week's data challenges that framing a few things are now
[8:42] becoming clear. First, consumer trust is a mode
[8:46] in AI in a way it isn't in most software categories.
[8:51] When you share your work, your health questions, your legal
[8:54] concerns with an AI, you are making a trust decision.
[8:58] Anthropic's brand is now exlicitly associated with saying
[9:01] no to data sharing arrangements that users found uncomfortable.
[9:05] That's a differentiated Osition. Secondly, enterprise AI spend is
[9:11] consolidating faster than expected and Anthropic is
[9:14] winning that consolidation. In the US, the ramp data showing
[9:18] 50% plus enterprise market share is the single most strategically
[9:21] significant data point of the entire story and it received a
[9:25] fraction of the media attention of the App Store.
[9:27] Number 3rd, Anthropic straight of product shipping has
[9:32] accelerated. Voice mode, persistent memory,
[9:34] cloud code, cross-platform import, all in a single week of
[9:38] peak demand. Their engineering capacity
[9:41] appears to be scaling with their commercial ambitions.
[9:44] Let's talk about the risks involved here.
[9:47] Anthropic remains a private company.
[9:49] It's valuation is substantial and revenue multiples in AI
[9:52] remain elevated. Infrastructure cost at this
[9:55] scale are significant. The server strain we saw this
[9:59] week is evidence of that, and Open AI is not standing still.
[10:03] They have resources, distribution partnerships, and
[10:06] product breadth that Anthropic has yet not matched.
[10:09] But directionally, the momentum this week is unambiguous.
[10:12] Anthropic gained users, enterprise customers, brand
[10:16] trust, and cultural relevance in roughly 72 hours.
[10:19] Now, to answer the big question, is Anthropic the new king of AI?
[10:24] It's too early to say definitively, and anyone who
[10:27] tells you otherwise is speculating.
[10:29] What we can say is that this week, for the first time, the
[10:32] comparative landscape of the AI industry shifted in a way that
[10:35] is visible in App Store charts, enterprise billing data, and
[10:39] when you run weird simultaneously, that's not a
[10:42] social medium and there's a market signal there.
[10:45] We'll be watching this closely. If you found this breakdown
[10:48] useful, subscribe to VC10X for more data-driven analysis of the
[10:51] technology investment landscape. We'll be back next week with
[10:54] another story from the front lines of global investing VC10X.

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