Anthropic Fights Back Against Pentagon Supply Chain Risk Label

Unprecedented Legal Battle Unfolds

Anthropic is suing the Trump administration, asking federal courts to reverse the Pentagon's decision designating the artificial intelligence company a "supply chain risk" over its refusal to allow unrestricted military use of its technology. Anthropic filed two separate lawsuits Monday, one in California federal court and another in the federal appeals court in Washington, D.C., each challenging different aspects of the Pentagon's actions against the company. It was the first time the federal government is known to have used the designation against a U.S. company.

The lawsuit claims the designation is unlawful and violated free speech and due process rights. "The Constitution does not allow the government to wield its enormous power to punish a company for its protected speech. No federal statute authorizes the actions taken here. Anthropic turns to the judiciary as a last resort to vindicate its rights and halt the Executive's unlawful campaign of retaliation," the filing said.

The complaint says the actions could jeopardize "hundreds of millions of dollars" in revenue. The lawsuit says Anthropic is being harmed "irreparably" and could lose hundreds of millions of dollars. The company is seeking to block enforcement of the designation while challenging its legal foundation.

The Clash Over AI Ethics and Military Use

The dispute stems from Anthropic's refusal to allow its model to be used for mass surveillance or development of autonomous weapons after Defense Secretary Pete Hegseth pressured the company to remove certain safeguards from its AI systems . Anthropic had two firm red lines: It didn't want its technology to be used for mass surveillance of Americans and didn't believe it was ready to power fully autonomous weapons with no humans making targeting and firing decisions.

Defense Secretary Pete Hegseth argued that the Pentagon should have access to AI systems for "any lawful purpose" and that it shouldn't be limited by a private contractor. "From the very beginning, this has been about one fundamental principle: the military being able to use technology for all lawful purposes," the official told CNBC. "The military will not allow a vendor to insert itself into the chain of command by restricting the lawful use of a critical capability and put our warfighters at risk."

The timing couldn't be more critical. The military continues to use Anthropic during the U.S. war on Iran, as AI helps warfighters identify potential targets at a rapid pace. Advanced AI technology is identifying targets in Iran and quickly prioritizing them, supporting the massive military operations carried out by U.S. and Israeli forces.

OpenAI Steps In as Competitor

On February 28, OpenAI announced it had reached a deal that will allow the US military to use its technologies in classified settings. CEO Sam Altman said the negotiations, which the company began pursuing only after the Pentagon's public reprimand of Anthropic, were "definitely rushed." The move drew immediate criticism and led to uninstalls of ChatGPT [that] surged 295% after OpenAI locked in the deal with the Department of Defense.

The reason OpenAI was able to make a deal when Anthropic could not was less about boundaries, Altman said, but about approach. "Anthropic seemed more focused on specific prohibitions in the contract, rather than citing applicable laws, which we felt comfortable with," he wrote. OpenAI says one basis for its willingness to work with the Pentagon is simply an assumption that the government won't break the law.

A top robotics engineer at OpenAI announced her resignation from the company on Saturday, citing the same concerns Anthropic raised. "AI has an important role in national security. But surveillance of Americans without judicial oversight and lethal autonomy without human authorization are lines that deserved more deliberation than they got," Caitlin Kalinowski posted on X and LinkedIn.

Industry-Wide Implications

A supply-chain risk label is usually reserved for foreign adversaries and requires any company or agency that does work with the Pentagon to certify that it doesn't use Anthropic's models. Defense tech companies are telling employees to stop using Claude, and to switch to other artificial intelligence models and assistants. Harstrick told CNBC in an email that 10 of his firm's portfolio companies that work with the Department of Defense, "have backed off of their use of Claude for defense use cases and are in active processes to replace the service with another one."

Dozens of scientists and researchers at OpenAI and Google DeepMind — arguably the company's two biggest competitors — filed an amicus brief in their personal capacities on Monday supporting Anthropic. The group argued that the supply chain risk designation could harm US competitiveness in the industry and hamper public discussions about the risks and benefits of AI.