Anthropic has secured a major win in California after facing a setback with the US Department of Defense earlier this year. California Governor Gavin Newsom announced a new agreement that will allow state agencies and local governments to use Anthropic’s Claude chatbot at discounted prices. This deal marks a boost for the company, especially after it lost out a key Pentagon contract over disagreements related to how its AI system could be used as Anthropic alleged that the government could have misused it for surveillance. Under the new agreement, California state agencies and local governments will be able to access Claude along with training and technical support from Anthropic. Governor Gavin Newsom said the goal is to improve government services without replacing human workers, stating, “AI should not replace the human work of government; it should help our workers move faster, solve problems more effectively, and deliver better results for Californians.” Anthropic’s talks with the US Department of Defense broke down over concerns about how Claude could be used, as Anthropic wanted safeguards against surveillance and autonomous weapons without human oversight, but Defense Secretary Pete Hegseth reportedly rejected those ideas. The Pentagon had chosen OpenAI for the contract instead of Anthropic, and the federal government also classified Anthropic as a ‘supply chain risk.’