Federal court says US government can label Anthropic a supply chain risk

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In the latest twist in Anthropic's dispute with the Pentagon, a federal appeals court on Friday rejected the AI lab's challenge to the government's labeling of it as a supply chain risk.

The decision allows the Pentagon to continue to remove Anthropic's Claude models from its systems and bar the use of its products for Defense Department work. Judges from the U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 in the Pentagon's favor.

The dispute between the AI company and the government broke out in February when President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and designated the company a supply chain risk. Anthropic CEO Dario Amodei refused to back down over concerns 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,” Judge Gregory G. Katsas wrote in the majority opinion.

The ruling is separate from one a federal judge made this summer in California, where she found the Pentagon acted illegally by punishing the AI company for its criticism of the Pentagon's views on AI use. This case, which was filed earlier this year in Washington, D.C., focused on a different rule the Pentagon was using to try to declare Anthropic a supply chain risk.

An Anthropic spokesperson said in a statement 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.”

The White House did not immediately respond to a request for comment.