Anthropic Sues Pentagon Over AI 'Supply Chain Risk' Label

Anthropic, an AI company, has sued the Pentagon over its designation as a 'supply chain risk.' The lawsuit challenges the decision by the Trump administration and aims to block the company's blacklisting.

Anthropic filed two federal lawsuits on March 9 challenging the Pentagon's designation of the AI company as a "supply chain risk" — a label historically reserved for foreign adversaries like Huawei and Kaspersky. The suits, filed in U.S. District Court for the Northern District of California and the federal appeals court in Washington, D.C., allege the designation is "unprecedented and unlawful" and punishes Anthropic for exercising First Amendment-protected speech through its public advocacy for AI safety guardrails. Anthropic is seeking a permanent injunction to block enforcement while the case proceeds.

The dispute stems from contract renegotiations between Anthropic and the DOD over how Claude could be used by the military. Anthropic insisted its models would not be used for fully autonomous weapons or mass domestic surveillance, while the Pentagon wanted unfettered access across "all lawful purposes" with no restrictions dictated by a private company. When Anthropic refused to remove its guardrails, the Trump administration on February 27 ordered federal agencies and military contractors to cease business with the company, with Defense Secretary Pete Hegseth formally issuing the designation on March 5–6. At least 10 defense-tech companies have already dropped Claude, and Anthropic's complaint states the designation could jeopardize "hundreds of millions of dollars" in revenue.

The case has broader implications for the AI industry's relationship with the military. Claude was already embedded in the U.S. military's Maven Smart System (built by Palantir) used during strikes on Iran in early March, and nearly 900 tech workers at Google and OpenAI signed an open letter calling for clearer limits on military AI use. A Lawfare analysis argues the Pentagon's designation "won't survive first contact with the legal system," while MSFT has confirmed it will continue making Anthropic's models available despite the controversy. CEO Dario Amodei was reportedly back at the negotiating table with the DOD as of March 5 in a last-ditch effort to reach an agreement.