That's not at all what this is. Anthropic was very clear up-front what they would and wouldn't allow. They were not going to "subvert" anything. "Degrade function" in this context means that there is a risk that ongoing changes to the covered system will cause problems for the government. That wouldn't have been the case here; it would have been clear from the start what the military would and wouldn't be allowed to do with it, and that wouldn't change.