US Appeals Court Upholds Pentagon's Exclusion of Anthropic from Supply Chain

A United States appeals court has upheld the Defense Department’s decision to exclude Anthropic from its supply chain. This decision was made after the AI startup refused to remove certain safeguards on its Claude model, which the Pentagon Secretary Pete Hegseth requested to be lifted for use in fully autonomous lethal weapons and mass domestic surveillance. The supply chain risk designation, made in March, resulted in the cancellation of Anthropic’s military contracts and prohibited other Defense Department contractors from using its technology. Anthropic has stated that the blacklisting has resulted in billions of dollars in lost business and has harmed its reputation ahead of a planned initial public offering. The designation against Anthropic is noted as an unusual application of authority against a US company. The company has faced criticism from the White House, particularly regarding CEO Dario Amodei’s warnings about the dangers of AI, which US President Donald Trump has dismissed as a hoax. The appeals court ruling has created a potential legal conflict with a separate federal court decision in California that deemed a broader ban imposed by the Trump administration against Anthropic as illegal. The Pentagon's decision, upheld on Friday, is based on public procurement regulations and remains in effect. An Anthropic spokesperson stated, "We respectfully disagree with the court’s decision. Another federal court has already held the government’s parallel designation unlawful. We remain confident in our position and are considering all options, including further review." Reports indicate that the military had been utilizing Claude in various classified and sensitive operations, including during the January operation that captured Venezuelan leader Nicolas Maduro.