U.S. News: Court Says Pentagon Can Label Anthropic A Risk

“WASHINGTON -- A federal appeals court upheld the Defense Department's decision to designate Anthropic a security risk, giving the Trump administration a win in its complicated feud with one of the nation's top artificial-intelligence developers.

 

The federal appeals court in Washington said in a 2-1 decision Friday that the law giving the Pentagon the authority to deem a company a supply-chain risk gave Defense Secretary Pete Hegseth the latitude to take the action against Anthropic because the company's refusal to have its AI tools used in mass surveillance or autonomous weapons could undermine military operations.

 

"The Department had ample support for its conclusion that the continued integration of Claude into the Department's information systems, by the Department or its contractors, presented a statutorily covered national-security risk," the court wrote.

 

Anthropic had argued the designation was an unprecedented attack retaliating against it for disagreeing with the Defense Department in contract negotiations. A federal judge in California recently sided with the company in a parallel dispute covering parts of the designation under a different statute, fueling uncertainty on the future of the supply-chain risk label. That ruling made clear that other parts of the government couldn't blacklist Anthropic while the Pentagon fight continued.

 

Legal analysts have said a split between the courts could ultimately lead to the Supreme Court.

 

"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," an Anthropic spokeswoman said.

 

The supply-chain risk is normally used on companies based in foreign adversaries like China's Huawei that pose security risks. AI analysts have said the administration's move was a self-inflicted wound in the global AI race because it could damage Anthropic, which makes some of the nation's most powerful models and has said it has lost contracts and suffered reputational harm from the move.

 

A win for the government could give the Pentagon more latitude to take similar actions against companies in the future, analysts have said.

 

The rulings are part of a delicate relationship between the administration and Anthropic, which are working together on the release of new AI models while the legal fight continues.

 

Pentagon officials have said the department is nearly entirely done moving away from Anthropic's models, using tools from OpenAI and other competitors.

 

"Warfighters will sleep better knowing that no private company will insert their opinions in the chain of command," Emil Michael, undersecretary of defense for research and engineering, said on X.” [1]

 

1. U.S. News: Court Says Pentagon Can Label Anthropic A Risk. Ramkumar, Amrith; Somerville, Heather.  Wall Street Journal, Eastern edition; New York, N.Y.. 26 Sep 2026: A3.