That's not normal in a free country - even less so in one that claims to have a free market.

Anthropic said "don't use our products for targetting decisions in military ops". The DoD could have easily said "actually then, we won't use your products at all". Instead, the DoD said "either you let us use your products in targeting decisions, or we won't let you sell to anyone who sells to us for any purpose, using a law that only applies to adversaries of the USA".