A federal appeals court in Washington, D.C., on Friday upheld the Pentagon's decision to blacklist Anthropic, marking a blow to the artificial intelligence company in its months-long dispute with the Trump administration. The 2-1 decision by Circuit Judges Gregory Katsas and Neomi Rao rejected Anthropic's argument that the Department of Defense's designation of the company as a supply chain risk was arbitrary, unauthorized, and unconstitutional. Circuit Judge Karen LeCraft Henderson dissented from the majority opinion.
Judge Katsas, writing for the court, stated that "The Department had ample support for its conclusion that the continued integration of Claude into the Department's information systems, by the Department or its contractors, presented a statutorily covered national-security risk." This ruling allows the Pentagon's designation, formally made in March 2026, to remain in effect. This designation canceled Anthropic's military contracts and barred other Pentagon contractors from utilizing its technology.
The conflict originated in February when Anthropic refused Pentagon Secretary Pete Hegseth's demand to remove restrictions on using its Claude AI model for fully autonomous lethal weapons and mass domestic surveillance of Americans. The company has since become estranged from the White House, despite its crucial role in the AI sector and an anticipated blockbuster IPO within weeks. President Donald Trump has dismissed Anthropic CEO Dario Amodei's warnings about AI dangers as a hoax.
This appeals court decision creates a potential legal conflict with a separate federal court ruling in California last month, which deemed a broader ban imposed by the Trump administration against Anthropic as illegal. An Anthropic spokesperson expressed disagreement with the court's decision, noting the conflicting ruling and stating, "We remain confident in our position and are considering all options, including further review." The military had previously used Claude in classified and sensitive systems, reportedly including operations such as the January capture and deposition of Venezuelan leader Nicolas Maduro.
