The U.S. appeals court on Friday upheld the Pentagon's decision to exclude Anthropic from the defence supply chain after the company refused to remove safety limits on its Claude model. The March supply-chain designation terminated Anthropic’s military contracts and barred other contractors from using its technology. The ruling may conflict with a recent California federal court decision that found a broader ban unlawful. Anthropic says it disagrees and is considering further legal options as it prepares for an imminent IPO.
U.S. Appeals Court Upholds Pentagon Ban On Anthropic — Legal Clash With California Ruling Looms
The supply chain risk designation, formally made in March 2026, canceled Anthropic's military contracts and barred other Pentagon contractors from using its technology (ANDREJ IVANOV)
A U.S. appeals court on Friday upheld the Pentagon's decision to exclude AI startup Anthropic from the defence supply chain after the company declined to remove certain safety restrictions from its Claude model.
Background
The dispute began in February when Anthropic refused a request from Pentagon Secretary Pete Hegseth to lift limits that would allow Claude to be used for fully autonomous lethal weapons and broad domestic surveillance of Americans. In March, the Department of Defense issued a supply-chain risk designation that terminated Anthropic’s existing military contracts and barred other Pentagon contractors from using its technology.
What the Ruling Means
The appeals court decision was grounded in public procurement regulations, and it leaves the Pentagon designation in effect. Officials described the use of this authority against a U.S. company as highly unusual. The ruling may, however, create a legal conflict with a separate federal court in California that last month found a broader Trump-administration ban on Anthropic unlawful.
Reactions and Implications
Anthropic said it disagrees with the appeals court decision and is considering further options. The company has also become politically isolated at the White House, even as it remains a major player in the AI sector and prepares for an imminent initial public offering. Anthropic CEO Dario Amodei has publicly warned about AI risks; former President Donald Trump has described those warnings as a "hoax."
"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 spokesperson said.
Media reports indicate the U.S. military had been using Claude across a range of classified and sensitive systems. Some outlets have claimed Claude was used in a January operation tied to Venezuela's leader Nicolás Maduro; that specific claim remains publicly unverified. The appeals-court ruling preserves the Pentagon’s procurement-based restriction while the broader legal conflict plays out.
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