The DoD is free not to sign contracts. Having them be able to get a company blacklisted from a whole sector just because they couldn't agree on terms with that company is obviously very different than that.

The idea that "fair for the military to object to" implies "fair for the military to ban from their supply chain in any capacity no matter how unrelated the use" is so outlandish that it's never been done before (to a US company), and I think we can be confident that the DoD has frequently objected to would-be contractors' terms.

The claim that it being done for the first time - by a Secretary of Defense denounced the politics of the company in the same text where he announced the designation - isn't "political", is something I have a hard time believing a functioning adult who isn't employed defending the government in court could adopt.

But hey, maybe in some language this is a "textbook" official statement with no "politics":

  Cloaked in the sanctimonious rhetoric of “effective altruism,” they have attempted to strong-arm the United States military into submission - a cowardly act of corporate virtue-signaling that places Silicon Valley ideology above American lives.