Appeals Court Upholds Pentagon Blacklisting of Anthropic Over AI Safeguards

A US appeals court on Friday upheld the Pentagon's decision to exclude AI startup Anthropic from its supply chain, a move stemming from Anthropic's refusal to remove certain safeguards on its Claude model.

The conflict began in February when Anthropic declined Pentagon Secretary Pete Hegseth's demand to lift restrictions on Claude's use for fully autonomous lethal weapons and mass domestic surveillance of Americans. The March designation as a supply chain risk canceled Anthropic’s military contracts and barred other Pentagon contractors from using its technology. The military had been using Claude across classified and sensitive systems.

An Anthropic executive questioned Claude's use by a Pentagon contractor, Palantir, during the January 3 military operation that captured Venezuelan President Nicolas Maduro. This objection led to alarm and raised material doubts as to whether they would cause their software to stop working or cause some other disastrous action that would put their warfighters[‘] lives in danger, according to Under Secretary of Defense Emil Michael.

Anthropic maintains it cannot modify its models once delivered, but the Washington appeals court found the military must keep up to date on new versions. In a 2-1 decision, the D.C. Circuit rejected Anthropic's challenges, which included claims of First Amendment violations, misuse of a national security law, and sidestepping normal contract cancellation processes. The majority found it reasonable for the Pentagon to designate Anthropic due to Claude's built-in restrictions and the unresolved contract dispute.

Judge Gregory Katsas, writing for the majority, stated, in their Republic, it is the President and the Secretary of War who must determine how best to balance risks. Anthropic stated it respectfully disagrees with the decision and is considering options, including review by the full appeals court, ahead of a highly anticipated initial public offering.

A separate lawsuit saw a federal judge in San Francisco strike down a parallel designation under a different law, blocking a government-wide ban on Anthropic. The Pentagon immediately turned to competitors after the designation.