Key facts
- A federal appeals court declined to block the Pentagon's blacklisting of Anthropic.
- The Pentagon designated Anthropic a national security risk.
- The designation blocks Anthropic from Pentagon contracts.
- Anthropic claims the designation has cost it billions in lost business and damaged its reputation.
- A judge in a separate California federal court has blocked the designation.
A federal appeals court on Friday declined to block a Defense Department order blacklisting AI startup Anthropic from government contracts, deeming it a national security risk. The ruling from the US Court of Appeals for the District of Columbia Circuit came in a lawsuit by Anthropic challenging its designation by the Pentagon. The AI startup claims this designation has cost it billions of dollars in lost business and damaged its reputation ahead of a highly anticipated initial public offering.
However, a judge overseeing a separate legal challenge in California federal court has blocked the designation. The D.C. Circuit's decision is not a final ruling, and Anthropic stated it remains confident that courts will ultimately agree the supply-chain risk designation is unlawful.
Acting U.S. Attorney General Todd Blanche hailed the ruling as a victory for military readiness, stating that military authority and operational control belong to the Commander-in-Chief and Department of War, not a tech company. The designation, the first time a U.S. company has been publicly designated a supply-chain risk under obscure government-procurement statutes, came after Anthropic refused to allow the military to use its Claude AI chatbot for U.S. surveillance or autonomous weapons due to safety and ethics concerns.
President Donald Trump had previously directed federal agencies to cease all use of Anthropic's technology, citing concerns about the company's political leanings and its refusal to remove usage guardrails. Defense Secretary Pete Hegseth issued orders designating Anthropic under two different laws, which Anthropic is challenging separately.