Anthropic filed two federal lawsuits March 9 against the Department of Defense and other federal agencies challenging the Trump administration's decision to label the AI company a "supply chain risk," escalating a standoff over whether the Pentagon can demand unrestricted access to Claude for military operations.
The lawsuits—filed in San Francisco federal court and the D.C. Circuit Court of Appeals—allege the government is retaliating against Anthropic for exercising First Amendment-protected speech about AI safety limitations. The company claims the supply chain risk designation is "unprecedented and unlawful," arguing such labels are typically reserved for foreign adversaries, not American companies with policy disagreements.
Dispute Centers on Two Red Lines Pentagon Rejected
The conflict erupted after Anthropic refused to remove two restrictions from its military contract: the company would not allow Claude to be used for mass surveillance of American citizens or for fully autonomous weapons that kill without human oversight. Defense Secretary Pete Hegseth demanded the Pentagon have access to AI systems for "any lawful purpose" without private contractor limitations.
After negotiations broke down in late February, President Trump publicly called Anthropic's leadership "left wing nut jobs" and directed all federal agencies to stop using the company's technology. Hegseth followed by designating Anthropic a supply chain risk, effectively banning any Pentagon contractor from using Claude in defense-related work.
The General Services Administration subsequently terminated Anthropic's "OneGov" contract, ending the availability of Anthropic services across federal agencies. The company alleges "hundreds of millions of dollars" in current and future contracts are now in jeopardy, with reputation and core business under attack.
Legal Challenge Questions Presidential Authority
Anthropic's lawsuits argue that "no federal statute authorizes the actions taken here," claiming the Defense Department's designation was issued "without observance of the procedures Congress required." Federal law generally requires agencies to conduct risk assessments, notify targeted companies, allow responses, make written national-security determinations, and notify Congress before excluding vendors from federal supply chains.
The company also accuses President Trump of operating outside authority granted by Congress when he directed every federal agency to immediately cease using Anthropic's technology. Anthropic argues the Constitution does not allow the government to punish companies for protected speech about their own products' limitations and AI safety concerns.
Competitors Rally Behind Anthropic Despite Business Opportunity
In a remarkable show of industry solidarity, dozens of scientists and researchers at OpenAI and Google DeepMind—Anthropic's two biggest competitors—filed an amicus brief in their personal capacities supporting the lawsuit. The group argued the supply chain risk designation could harm U.S. competitiveness in AI and hamper public discussions about AI risks and benefits.
The brief stated that "until a legal framework exists to contain the risks of deploying frontier AI systems, the ethical commitments of AI developers—and their willingness to defend those commitments—are essential safeguards." This support arrived even as both OpenAI and Google stand to gain customers from Anthropic's Pentagon exclusion.
The Pentagon maintains the dispute is about operational control, not speech, arguing the military cannot allow private vendors to insert themselves into the chain of command and put warfighters at risk during national security emergencies. The Wall Street Journal previously reported Claude has been used in military operations including the raid that arrested Venezuelan leader Nicolás Maduro and for intelligence assessments in the ongoing Iran conflict.
Legal experts expect a protracted battle likely reaching the Supreme Court, with the outcome setting precedent for whether AI companies can maintain safety restrictions when selling to governments.
