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Anthropic filed two federal lawsuits against the Trump administration, challenging a Defense Department decision to brand the artificial intelligence company a “supply chain risk” — a designation historically reserved for foreign adversaries — after the company refused to allow the military unrestricted use of its AI models for autonomous weapons and mass domestic surveillance.
The complaint, filed in the US District Court for the Northern District of California, called the actions “unprecedented and unlawful” and accused the administration of retaliation.
“The Constitution does not allow the government to wield its enormous power to punish a company for its protected speech,” the lawsuit states. A second, shorter lawsuit was filed in the DC Circuit Court of Appeals because a separate statute invoked by the government can only be challenged in that jurisdiction, and Anthropic is seeking relief in both courts simultaneously.
The dispute had been building for weeks. Anthropic signed a $200 million contract with the Department of Defense in July 2024 and was the first AI lab to deploy its technology across the agency’s classified networks. As the companies renegotiated the contract’s forward terms, the core disagreement crystallized: the Pentagon wanted Anthropic to grant the agency unfettered access to its AI models across all lawful purposes, while Anthropic wanted assurance its models would not be used for fully autonomous weapons or domestic mass surveillance. CEO Dario Amodei met with Defense Secretary Pete Hegseth on February 24 but the two sides failed to reach an agreement. Three days later, on February 27, Trump ordered all federal agencies to immediately cease using Anthropic’s technology, and Hegseth formally issued the supply chain risk designation.
The supply chain risk label requires any company or agency doing work with the Pentagon to certify that it does not use Anthropic’s models. The General Services Administration terminated Anthropic’s “OneGov” contract, ending the availability of Anthropic services to all three branches of the federal government. Hegseth said the military would stop using Claude “immediately” but also announced a six-month phaseout of the technology to prevent disruption of critical operations — an acknowledgment that the US military had become significantly dependent on the tool it was now blacklisting.
The Wall Street Journal reported that Claude had been used in military operations including the raid that led to the arrest of Venezuelan leader Nicolás Maduro, for intelligence assessments, and for identifying targets in the ongoing war with Iran. Anthropic did not confirm those specific uses.
Just hours after the Anthropic-Pentagon negotiations collapsed, OpenAI struck its own deal with the Department of War, apparently agreeing to provide its models without the contractual limitations Anthropic had insisted upon. The deal drew sharp criticism, with many questioning whether OpenAI’s contract language offered meaningfully different protections. OpenAI later acknowledged the announcement looked “sloppy and opportunistic” and said it was renegotiating some terms. In an internal memo reported by The Information, Amodei called OpenAI staff “gullible” and accused the company’s leadership of spreading “straight-up lies” — a remarkable public rupture between two companies that share the same AI safety concerns but diverged sharply on how to navigate the Trump administration’s demands.
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Anthropic’s lawsuit asks the court to block Hegseth’s order and declare it “arbitrary, capricious, an abuse of discretion, and contrary to law,” and to find that Trump did not have the authority to order the rest of the government to cut ties with Anthropic.
“Anthropic’s contracts with the federal government are already being canceled. Current and future contracts with private parties are also in doubt, jeopardizing hundreds of millions of dollars in the near-term,” the filing said. Anthropic’s chief revenue officer Sathyanarayana Rao said the government’s actions could reduce Anthropic’s 2026 revenue by multiple billions of dollars across its entire business.
The White House showed no sign of retreating. White House spokeswoman Liz Huston said the president “will never allow a radical left, woke company to jeopardize our national security by dictating how the greatest and most powerful military in the world can use technology.” Hegseth had previously written on X: “Their true objective is unmistakable: to seize veto power over the operational decisions of the United States military. That is unacceptable.”
The Pentagon declined to comment on pending litigation. Legal experts had already questioned whether the supply chain risk designation was legally sound before the lawsuit was filed. Lawyers Michael Endrias and Alan Z. Rozenshtein argued in the nonprofit publication Lawfare that the designation “exceeds what the statute authorizes,” that “the required findings don’t hold up,” and that Hegseth’s own public statements “may have doomed the government’s litigation posture before it even begins.”
Support for Anthropic’s position came from an unexpected quarter. Nearly 40 Google and OpenAI employees filed a brief in court supporting Anthropic’s efforts to limit improper uses of AI, offering their expertise on the dangers of the technology being used at scale.
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“As a group, we are diverse in our politics and philosophies, but we are united in the conviction that today’s frontier AI systems present risks when deployed to enable domestic mass surveillance or the operation of autonomous lethal weapons systems without human oversight,” the brief stated. Meanwhile, Microsoft, Google, and Amazon confirmed they would continue using Claude for work outside defense agencies — a critical signal that the supply chain risk designation had not collapsed Anthropic’s commercial business, even as it threatened government revenue.
Anthropic’s profile rose dramatically amid the conflict. Its Claude AI app surpassed OpenAI’s ChatGPT in the iPhone App Store for the first time the day after the Pentagon said it would terminate its contract. The company also said on March 5 that more than a million people were signing up for Claude every day.
University of Richmond School of Law professor Carl Tobias predicted the case would ultimately reach the Supreme Court, saying that while Anthropic may prevail in federal court, “this government is not shy about appealing” and would likely take “a scorched earth approach” to the litigation.
