Governor Gavin Newsom (D-CA) and Anthropic have made a deal that allows California government agencies to use Claude at a discounted price. This agreement comes at a time when businesses are struggling to manage the hefty costs of enterprise subscriptions to AI tools.

Under the deal, all state agencies and local governments will have access to Claude, Anthropic’s AI chatbot, as well as training and support from Anthropic. A press release from the Governor’s office says that Claude will help state employees draft documents and analyze information.

“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,” Governor Newsom said in a statement.

This deal follows Newsom’s March executive order that intends to accelerate the use of AI “to make government more efficient” while also maintaining stronger safety standards.

“While others in Washington are designing policy and creating contracts in the shadow of misuse, we’re focused on doing this the right way,” Newsom said at the time.

As Anthropic forges a closer relationship with the state of California, the federal government has made an enemy out of the OpenAI rival. Earlier this year, Anthropic and the U.S. Department of Defense clashed over a contract that would give the government agency permission to deploy Claude for any lawful use. Anthropic sought to explicitly carve out protections that prevent the government from using its technology to surveil Americans or deploy autonomous weapons without human oversight. But Defense Secretary Pete Hegseth refused, and the agency signed a deal with OpenAI instead. The government went as far as to declare Anthropic a “supply-chain risk,” preventing the company from working with any other Pentagon contractors.

While the state’s path clearly diverges from the actions of the federal government, California’s CIO and Department of Technology director Chris Given told POLITICO that the supply-chain risk designation “just didn’t come up” while negotiating this Anthropic contract.