US artificial intelligence giant Anthropic has announced an expansion of its restrictions on Chinese entities, now including subsidiary companies and organizations based overseas. This move, driven by national security risks, marks an industry first.

Backed by Amazon, Anthropic is recognized for its advanced Claude chatbot and AI models, emphasizing safety and responsible development in its operations.

Current Restrictions and New Changes

As it stands, companies based in China, along with entities from Russia, North Korea, and Iran, are already barred from accessing Anthropic’s commercial services, citing legal, regulatory, and security risks. This information was confirmed in a statement released by the company on Friday.

Despite these existing restrictions, some groups have managed to access Anthropic’s services through subsidiaries incorporated in other countries. Anthropic raised concerns, stating, “When these entities access our services through subsidiaries, they could use our capabilities to develop applications and services that ultimately serve adversarial military and intelligence services and broader authoritarian objectives.”

Impact of New Policies

Anthropic’s latest update to its terms of service will affect entities that are over 50% owned, either directly or indirectly, by companies from unsupported regions. This change applies “regardless of where they operate,” according to the company.

The restrictions come as competitors like OpenAI also limit access to their products in China, leading to a rise in locally developed AI solutions from Chinese companies such as Alibaba and Baidu.

Challenges Faced by Users

Some users in China have circumvented these restrictions by utilizing VPN services to access US generative AI chatbots like ChatGPT and Claude. However, these methods are often unreliable and come with risks.

A Pioneering Move

“This is the first time a major US AI company has imposed a formal, public prohibition of this kind,” remarked Nicholas Cook, a lawyer specializing in the AI sector with over 15 years of experience in international law within China.

Cook noted that the immediate commercial impact of this decision may be modest, as US AI providers have already faced significant barriers to operating in the Chinese market.

Broader Implications

Despite the potential limited commercial effects, Cook believes that such a stance will prompt questions about whether other companies will adopt a similar approach.

An Anthropic executive informed the Financial Times that this move could significantly impact revenues, estimating a reduction in the “low hundreds of millions of dollars.”

Company Profile and Growth

Founded in 2021 by former OpenAI executives, Anthropic is headquartered in San Francisco. Recently, the company announced it had secured $13 billion in its latest funding round, boasting over 300,000 business customers.

The number of accounts projected to generate more than $100,000 annually has nearly quadrupled compared to the previous year, showcasing rapid company growth.

Chinese Reaction

During a recent briefing, Chinese foreign ministry spokesman Guo Jiakun expressed unfamiliarity with Anthropic’s announcement. He reiterated, “The Chinese side has consistently opposed the politicization, instrumentalization, and weaponization of science, technology, and economic and trade issues.”

Shifting Landscape in AI

Assumptions regarding the US’s dominance in the fast-evolving AI sector have been upended this year with the introduction of Chinese start-up DeepSeek’s chatbot, which reportedly matches leading American systems at a fraction of the cost.