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American Focus > Blog > Tech and Science > OpenAI’s $200M DoD contract could squeeze frenemy Microsoft
Tech and Science

OpenAI’s $200M DoD contract could squeeze frenemy Microsoft

Last updated: June 17, 2025 2:59 pm
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OpenAI’s 0M DoD contract could squeeze frenemy Microsoft
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OpenAI Secures $200 Million Contract with U.S. Department of Defense

OpenAI announced on Monday that it has been awarded a contract by the U.S. Department of Defense worth up to $200 million. The contract will involve the development of prototype systems using OpenAI’s frontier models for various administrative tasks and other purposes.

The company outlined potential uses for the technology, including assisting service members with healthcare, organizing data on different programs, and enhancing proactive cyber defense capabilities. It is important to note that all applications of the technology must align with OpenAI’s usage policies and guidelines.

The DoD’s official announcement stated that the contract will focus on developing frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains. The exact implications of “warfighting” in this context are yet to be clarified, but OpenAI has explicitly prohibited the use of its technology for developing weapons.

With concerns raised by prominent figures in the tech industry about China’s advancements in AI, it is not surprising that the DoD is looking to leverage OpenAI’s capabilities for national security purposes. The competition between China’s AI models and those of the western world has been likened to a “cold war” by some industry experts.

Interestingly, this partnership with the DoD sheds light on the strained relationship between OpenAI and its major investor, Microsoft. Despite Microsoft’s extensive contracts with the federal government for cloud services, the DoD has opted to work directly with OpenAI for AI development.

The contract with the DoD is part of OpenAI’s broader initiative, “OpenAI for Government,” which aims to provide AI solutions directly to government agencies. This move comes after Microsoft recently announced the approval of its Azure OpenAI Service for all classified levels within the DoD.

See also  Apple CEO Tim Cook says tariffs to add $900M in costs in Q3, but future uncertain

Both OpenAI and Microsoft have yet to comment on the specifics of the contract. This collaboration underscores the growing importance of AI technology in national security and government operations.

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