Suchman and Myers West both pointed to OpenAI’s close partnership with Microsoft, a major defense contractor, which has invested $13 billion in the LLM maker to date and resells the company’s software tools.
That explains it. Microsoft wants to cash in on their massive investment in OpenAI by embedding ChatGPT into every bit of software they can. Defense being an important sector for them, I'm surprised the military ban was ever in OpenAI's usage policy.
Stupid question, why would they need to? Couldn't they license the models under a ToS that is totally different from the public one? Isn't the public ToS just for Joe Schmoes off the street?