I spent the weekend thinking about the latest government directive regarding Anthropic, and I kept returning to a theme from my recent scholarship.
For the past year and a half, I’ve researched and written about the federal government’s approach to AI governance. Much of my concern centers on a false binary: the claim that governance and innovation are opposing forces. That oversight is a drag, that safeguards are “blockers,” and that the only way to win the AI race against China is to treat regulation and bureaucratic process as the enemy of AI dominance. It is the underpinning of this administration’s AI policy. Don’t take my word for it. Read some of the statements made repeatedly across this administration:
- “The United States continues to lead the world in Artificial Intelligence (AI) because of the enormous talent and innovation of our AI industry, and because we refuse to stifle this innovation with overly burdensome regulation.”
- “It is the policy of the United States to sustain and enhance the United States’ global AI dominance through a minimally burdensome national policy framework for AI.”
- “To maintain global leadership in AI, America’s private sector must be unencumbered by bureaucratic red tape.”
I have argued that this is the wrong approach to AI governance. In Buying Blind: Corruption Risk and the Erosion of Oversight in Federal AI Procurement, I argued that governance and innovation are not opposing forces but mutually reinforcing conditions for responsible AI acquisition and deployment. Governance sustains innovation by ensuring fair, transparent markets and by building the institutional trust that adoption depends on. In Governance as a “Blocker”: How the Pentagon’s New AI Strategy Trades Oversight for Speed, I walked through decades of procurement history to show what happens when we treat oversight as the enemy of progress. I pointed to other mature industries that run critical infrastructure, such as aviation, pharmaceuticals, and financial auditing, that long ago reached the opposite conclusion: in high-risk systems, oversight is the condition that enables innovation without destroying trust.
What I never considered, in any of my work, was that the speed-first administration—the one that treats oversight as the thing standing between America and global AI dominance—would be the one to pull the trigger. According to New York Times reporting, Anthropic received 90 minutes’ notice before the government moved to restrict foreign-national access to its Fable 5 and Mythos 5 models on national security grounds. According to Anthropic, the restriction applies to any foreign national, including its own employees. It was broad enough that the company had to disable both models for all customers to comply. This came on the heels of a supply-chain-risk designation against the same company, announced via tweet, which was later backfilled with a justification and preliminarily blocked by a federal judge, who found serious procedural problems and that Anthropic was likely to succeed on its claim that the government retaliated against it for protected speech.
There may well be a legitimate national security concern this time, but the way this was done makes it impossible to know and casts even a justified action in the worst possible light. The problem is not that the government exercised discretion; national security demands such latitude. Administration officials reportedly claim the company failed to honor a cybersecurity executive order, but a dispute like that is precisely what a fair process is meant to resolve, not a 90-minute ultimatum. What is striking is the absence of any meaningful process.
In Governance as a “Blocker,” I discussed my colleague Professor Joshua Schwartz’s description of procurement regulation as a pendulum that swings between the costs of overregulation and underregulation. When rigid rules create inefficiency, policymakers push for discretion; when discretion enables abuse, the system swings back toward constraint. Neither extreme is stable, and across administrations, the government rarely gets the calibration right. But I had been thinking about that pendulum as a swing between too many rules and too few. What happened this week is something else entirely: not too few rules, but no real process. Absolute discretion is not the deregulated end of the pendulum. It is the unstable end—the point where the absence of any constraint produces exactly the abuse that has always swung the pendulum back toward a period of aggressive regulation and oversight.
We’ve seen this movie before, and we know how it ends. Operation Ill Wind exposed systemic corruption in defense procurement and led to the passage of the Procurement Integrity Act. The pricing, waste, and defense management scandals of the 1980s led to the creation of the Packard Commission. Of course, the actors differ—then it was contractors exploiting lax oversight, now it is the government wielding unchecked discretion. But the lesson holds: extremes never last and ultimately lead to overcorrection. And it is why the deepest irony of this ordeal is that the people who believe they are protecting innovation from governance are governing in ways that have always produced more of the regulation they fear.
Start with a single firm. Stable, predictable governance is what makes frontier investment rational; arbitrary exclusion makes it a gamble. Nothing chills this incentive faster than knowing your market access can vanish overnight, on a contested basis, and with no meaningful opportunity to respond before it does.
The administration says it wants to lead the AI race, refuses to stifle innovation, and insists America’s AI leadership relies on a thriving private sector. Then it moves against a leading developer on national security grounds, leaving the company with no choice but to pull its best models for everyone to ensure compliance. That is a strange way to treat the private sector on which American AI leadership depends.
The damage does not stop at one firm. An administration that governs this way will not avoid the heavy regulation it fears. It is manufacturing the conditions for catastrophe or abuse that, in every cycle I’ve documented, triggers exactly that response. The speed-first camp thinks it is at the pendulum’s deregulated end, but it is standing at the end that swings back hardest.
In Blacklisting by Tweet is Not a Thing, I asked what kind of business partner the government wants to be. But the concerns raised by this incident are far more significant for the future of frontier AI development. The administration states that America’s leadership in AI depends on unleashing the full potential of its private-sector innovators. Yet within hours, from a midday call to an afternoon directive, it left a leading developer with little choice but to take its best models offline for everyone. Every other frontier developer is watching closely. You cannot unleash an industry on those terms.