Federal Court Upholds Government's Ability to Label Anthropic a Supply Chain Risk

A federal appeals court on Friday rejected AI firm Anthropic's challenge to the U.S. government's designation of the company as a supply chain risk. The decision permits the Pentagon to proceed with removing Anthropic's Claude models from its systems and prohibiting the use of its products for Department of Defense work.

The U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 in favor of the Pentagon. The dispute between the AI company and the government began in February when President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and labeled the company a supply chain risk. Anthropic CEO Dario Amodei stated concerns that the company's products could be used for mass surveillance or autonomous armed drones.

"The Department reasonably feared that Anthropic might manipulate Claude’s design to prevent it from performing national-security functions that the Department deems contractually authorized and necessary," wrote Judge Gregory G. Katsas in the majority opinion. This ruling is separate from a summer decision by a federal judge in California, who found the Pentagon acted illegally by punishing the AI company for its criticism of Pentagon views on AI use.

An Anthropic spokesperson stated the company "respectfully disagrees" with the court's decision. "Another federal court has already held the government’s parallel designation unlawful," the statement continued. "We remain confident in our position and are considering all options, including further review."