A federal appeals court in Washington ruled 2-1 to uphold the Pentagon decision to bar AI startup Anthropic from military contracts. The court agreed that the Pentagon was right to classify the company as a national security supply chain risk.
The legal battle stems from Anthropic refusing to let its technology power autonomous weapons and mass surveillance.
Defense Secretary Pete Hegseth argued that these safety restrictions could jeopardize military operations.
Anthropic rejected the ruling. The company stated it is currently weighing its next steps.
A federal judge in San Francisco previously blocked a parallel classification under a different law in late August. That judge called the other action unlawful retaliation against the artificial intelligence safety stance of Anthropic.
Anthropic reported that the designation has cost the firm billions of dollars. The company also stated the label is hurting its planned initial public offering.
US intelligence agencies remain heavy users of the AI models created by Anthropic. Questions persist regarding how those intelligence operations align with the supply chain risk label.
Certain members of the tech industry and former military officials have publicly backed Anthropic during this dispute.
The Trump administration appears to be punishing the company because it views Anthropic as left-leaning and woke. President Trump has stated this view explicitly.
Anthropic is weighing its next steps regarding the ruling.
