Appeals Court Upholds Pentagon's Anthropic Supply-Chain Risk Label

A federal appeals court in Washington, DC, refused to overturn a Pentagon supply-chain risk designation against Anthropic, dealing a setback to the AI company in its dispute with the Department of Defense. The ruling was decided 2-1 by a three-judge panel.

The Pentagon sanctioned Anthropic under two separate supply-chain laws to remove Claude AI models from the military and parts of the federal government. Anthropic had said it would not allow the government to deploy its current AI models for autonomous weapons or domestic surveillance.

Defense Secretary Pete Hegseth called Anthropic's stance a significant national security risk. The appeals court rejected Anthropic's claims that its due process and free speech rights were violated.

The ruling follows a mixed legal record: a federal judge in San Francisco tossed out one of the supply-chain risk labels in March and confirmed that decision last month. The appeals court's decision leaves the Pentagon's designation in place.

The Pentagon has not provided detailed updates on replacing Claude with alternatives such as SpaceX's Grok, Google's Gemini, or OpenAI's GPT models. Anthropic is moving toward a potential initial public offering of its shares later this year, according to Wired.