Judge rules Pentagon’s Anthropic supply-chain blacklist was illegal retaliation

The company sued the government in March, alleging directives and public disparagement by Trump administration officials violated its free speech and due process rights, among a range of other claims.

fact

In her order, Lin also found that the Department of Defense violated the Administrative Procedure Act and formally overturned Hegseth’s directive that all other Pentagon contractors stop doing business with Anthropic.

fact

The dispute between the AI company and the government broke out in February when President Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and designated the company a supply chain risk.

fact

Anthropic CEO Dario Amodei refused to back down over concerns the company’s products could be used for mass surveillance or autonomous armed drones.

fact

Anthropic sued the Pentagon over the supply chain risk designation in March for what it called an “unlawful campaign of retaliation” over its refusal to allow unrestricted military use of its technology.

fact

Anthropic’s primary tech industry rival, ChatGPT maker OpenAI, made its own deal to work with the Pentagon just hours after the government punished Anthropic for its stance.

fact

In the 59-page ruling, Lin, an appointee of former President Biden, wrote that neither the Constitution nor the federal statute the government invoked allows them to “impose sweeping penalties based principally on Anthropic’s critique of the Administration’s views.”

fact

The legal challenge intensified an unusually public dispute over how AI can be used in warfare and mass surveillance.

fact

That case involves a different rule the Pentagon is using to try to declare Anthropic a supply chain risk.

fact

In a hearing July 30, Lin had said that the government’s position was “really troubling” to her and that it seemed “at odds to me with the First Amendment.” She also said she believed the record had “gotten worse for the government” over time.

fact

Anthropic and OpenAI are ramping up for buzzy initial public offerings.

fact

In that same hearing, Department of Justice lawyers argued that the nature of AI models is “so staggeringly enormous and opaque” that the Defense Department cannot evaluate it in the same way it would a physical piece of hardware.

fact

Lin’s ruling is a victory for Anthropic, which had warned that the supply chain risk designation could cost the company billions of dollars and complicate its business model.

fact

That case will be heard by a three-judge panel, two of whom are Trump appointees who have expressed skepticism about Anthropic’s arguments.

fact

Anthropic is also planning an IPO later this year that could value the firm at $2tn and raise $100bn, exceeding the record set by SpaceX in June.

fact

The company said it was not given a chance to dispute the designation, in violation of its fifth amendment right to due process.

fact

The company argued in the lawsuit that Defense Secretary Pete Hegseth overstepped his authority with the new designation.

fact

Anthropic's lawsuit said the government's actions were both "unprecedented and unlawful".

fact

The Pentagon also argued that Anthropic's refusal to accept new contract terms raised concerns over what the company could do with its technology.

fact

Anthropic said in its lawsuit that its business had been impacted by the government's actions and its right to freedom of speech had been violated.

fact

Pentagon leadership directed offices to cease using Anthropic’s products after talks with the firm broke down.

fact

The AI firm argued in court the Pentagon retaliated against the company over what it believes is a “protected viewpoint” of the company.

fact

The Department of Justice (DOJ) argued speech used within contract negotiations is not protected, but Lin said that position is “unsupported.”

fact

“Defendants claim that because of Anthropic’s ‘increasingly hostile manner through the press’ and its criticism of the Department of War’s views on AI use, defendants ‘cannot trust Anthropic to ensure the integrity of its models,'” Lin wrote.

fact

Lin agreed, stating Anthropic CEO Dario Amodei was “consistent with a longstanding practice of public speech on AI safety” when he publicly debated the safety restrictions required for Claude.

fact

The ruling marks a victory for Anthropic in its monthslong legal battle against the administration over its push to impose guardrails on its powerful AI model Claude, which is used by the military.

fact

The administration argued those moves were necessary to safeguard national security.

fact

Lin said her order does not require the government to use Anthropic or stop it from giving another AI firm its business, "so long as those actions are consistent with applicable regulations, statutes, and constitutional provisions."

fact

In her ruling, Lin wrote that Anthropic does not meet the legal definition of a "supply chain risk," a designation typically used to prevent a foreign adversary from sabotaging a crucial U.S. system.

fact

The government has argued in the past that Anthropic's tough negotiating stance and push for AI restrictions caused federal officials to fear the company could engage in "future sabotage" by installing a "kill switch" in its software.

But Lin called this concern "entirely unfounded," pointing to evidence offered by Anthropic that it doesn't have the ability to maintain "backdoor" access to its systems. She also argued the fears of sabotage are tough to square with the government's continued interest in collaborating with Anthropic on advanced AI models.

fact

But Lin called this concern "entirely unfounded," pointing to evidence offered by Anthropic that it doesn't have the ability to maintain "backdoor" access to its systems. She also argued the fears of sabotage are tough to square with the government's continued interest in collaborating with Anthropic on advanced AI models.

fact

"The government is certainly owed deference on weighty issues of national security," Lin wrote in a 59-page opinion.

fact

And Lin reversed several other federal agencies' efforts to cut off Anthropic, which followed a Truth Social post by Mr. Trump ordering the government to "IMMEDIATELY CEASE all use of Anthropic's technology." She said those moves weren't authorized by law, and the president's directive was a "retaliatory act, taken without due process, meant to punish Anthropic for its protected speech."

fact

"An IT vendor does not become a potential adversary of the United States whenever it asks probing questions or stubbornly insists on particular contracting terms, even if doing so causes DoW to doubt its trustworthiness," Lin said in her ruling Thursday.

fact

But Lin called this concern "entirely unfounded," pointing to evidence offered by Anthropic that it doesn't have the ability to maintain "backdoor" access to its systems. She also argued the fears of sabotage are tough to square with the government's continued interest in collaborating with Anthropic on advanced AI models.

fact

The judge wrote that "the decision to publicly broadcast Anthropic's punishment via social media—even before the formal, administrative process of making the necessary findings to designate Anthropic a supply chain risk had begun— makes little sense except as an attempt to swiftly make a public example of Anthropic for daring to criticize the Administration."

fact

Lin also invalidated a February social media post by Hegseth stating that no military contractors are allowed to conduct "any commercial activity with Anthropic," saying it led to a broader "boycott" of the AI firm — even among military contractors that were using Anthropic for non-military-related work.

fact

Lawyers for the government had conceded that designating Anthropic as a supply chain risk didn't prevent companies from using the AI technology for other purposes.

fact

The military argued that federal laws and internal policies already prevent domestic mass surveillance or fully autonomous weapons, so there is no need to restrict those practices in the Pentagon's contracts.

fact

After negotiations between the two sides broke down in February, the Trump administration lashed out at Anthropic, accusing it of seeking to impose its own ideology on the military.

fact

The government pushed back, arguing it cut off Anthropic not because it criticized the Trump administration, but because the Defense Department — which the administration has sought to rename the Department of War — no longer trusted the company. It also argued Mr. Trump has the power to decide not to buy Anthropic's services, and called the decisions by federal agencies to stop using Claude "internal IT housekeeping."

…

"The government did not retaliate against Anthropic for any protected speech," Justice Department lawyers wrote in June.

fact

Anthropic and its CEO, Dario Amodei, have long been vocal in their support for regulations and guardrails to manage the dangers of unconstrained AI technology.

fact

The Trump administration has called for some voluntary federal oversight of powerful AI models, but argues that overly stringent regulations could stifle innovation and make the U.S. less competitive against China, and has accused some AI models of being politically biased or "woke."

fact

The Trump administration has called for some voluntary federal oversight of powerful AI models, but argues that overly stringent regulations could stifle innovation and make the U.S. less competitive against China, and has accused some AI models of being politically biased or "woke."

fact

The government pushed back, arguing it cut off Anthropic not because it criticized the Trump administration, but because the Defense Department — which the administration has sought to rename the Department of War — no longer trusted the company. It also argued Mr. Trump has the power to decide not to buy Anthropic's services, and called the decisions by federal agencies to stop using Claude "internal IT housekeeping."

fact

Anthropic drew support from civil liberties groups and from other tech industry players, including Microsoft, which wrote in an amicus brief that designating Anthropic a supply chain risk "may bring severe economic effects that are not in the public interest."

fact

The disagreement burst into public view earlier this year, as the two sides feuded over AI restrictions.

fact

Lin was skeptical of the Trump administration's position early on. She issued a preliminary injunction blocking the government from cutting off Anthropic in March, after calling the moves "troubling" and "Orwellian."

fact

The government pushed back, arguing it cut off Anthropic not because it criticized the Trump administration, but because the Defense Department — which the administration has sought to rename the Department of War — no longer trusted the company. It also argued Mr. Trump has the power to decide not to buy Anthropic's services, and called the decisions by federal agencies to stop using Claude "internal IT housekeeping."

fact