Appeals court upholds Pentagon exclusion of Anthropic

A US appeals court has upheld the Pentagon’s decision to exclude artificial-intelligence company Anthropic from its supply chain, leaving in place a procurement designation that cancelled the company’s military contracts and barred other Pentagon contractors from using its technology. The dispute began in February, when Anthropic refused a demand from Pentagon Secretary Pete Hegseth to remove restrictions on the use of its Claude model for fully autonomous lethal weapons and mass domestic surveillance of Americans. The Pentagon formally designated Anthropic a supply-chain risk in March.

The ruling concerns the Pentagon’s procurement decision and conflicts with a separate federal court ruling in California last month, which found that a broader ban imposed by the Trump administration against Anthropic was unlawful. The Pentagon decision upheld on Friday remains effective. Anthropic said it disagreed with the appeals court.

“Another federal court has already held the government’s parallel designation unlawful,” a company spokesperson said in a statement to US media. The company said it was considering further review. Under Secretary of Defense Emil Michael welcomed the ruling in a post on X, saying it meant that “no private company will insert their opinions in the chain of command.” The Pentagon quickly turned to competitors after the dispute.

OpenAI signed an agreement on the day of Anthropic’s ban, while xAI signed in February and Google and Microsoft followed several months later. The military had been using Claude across classified and sensitive systems, according to court filings. Those filings said the technology was used during a January operation that captured and deposed Venezuelan leader Nicolas Maduro.

The decision is an unusual use of supply-chain authority against a US company and leaves Anthropic facing continued exclusion from Pentagon procurement while its legal options remain under consideration.