The US Department of Defense appears to be illegally punishing Anthropic for trying to restrict the use of its AI tools by the military, US district judge Rita Lin said during a court hearing on Tuesday.
“It looks like an attempt to cripple Anthropic,” Lin said of the Pentagon designating the company a supply-chain risk. “It looks like [the department] is punishing Anthropic for trying to bring public scrutiny to this contract dispute, which of course would be a violation of the First Amendment.”
Anthropic has filed two federal lawsuits alleging that the Trump administration’s decision to designate the company a security risk amounted to illegal retaliation. The government slapped the label on Anthropic after it pushed for limitations on how its AI could be used by the military. Tuesday’s hearing came in a case filed in San Francisco.
Anthropic is seeking a temporary order to pause the designation. The relief, Anthropic hopes, would help convince some of the company’s skittish customers to stick with it just a bit longer. Lin can issue a pause only if she determines that Anthropic is likely to win the overall case. Her ruling on the injunction is expected in the next few days.
The dispute has sparked a broader public conversation about how artificial intelligence is increasingly being used by the armed forces, and whether Silicon Valley companies should give deference to the government in determining how the technology they develop is deployed.
The Department of Defense, which now calls itself the Department of War (DoW), has argued that it followed procedures and appropriately determined that Anthropic’s AI tools could no longer be relied upon to operate as expected during critical moments. It has asked Lin not to second-guess its assessment about the threat it claims Anthropic poses to national security.
“The worry is that Anthropic, instead of merely raising concerns and pushing back, will say we have a problem with what DoW is doing and will manipulate the software … so it doesn’t operate in the way DoW expects and wants it to,” Trump administration attorney Eric Hamilton said during Tuesday’s hearing.
Lin said that it was Defense Secretary Pete Hegseth’s role—not hers—to decide whether Anthropic is an appropriate vendor for the department. But Lin said it’s up to her to determine whether Hegseth violated the law by taking steps beyond simply canceling Anthropic’s government contracts. Lin said it was “troubling” to her that the security designation and directives more broadly limiting use of Anthropic’s AI tool Claude by government contractors “don’t seem to be tailored to stated national security concerns.”
As Anthropic’s spat with the government escalated last month, Hegseth posted on X that “effective immediately, no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic.”
But on Tuesday, Hamilton acknowledged that Hegseth has no legal authority to bar military contractors from using Anthropic for work unrelated to the Department of Defense. When asked by Lin why Hegseth would have posted that, Hamilton said, “I don’t know.”
Lin further questioned Hamilton about whether the Pentagon had considered taking less punitive measures to move the department away from using Anthropic’s tools. She described the supply-chain-risk designation as a powerful authority typically reserved for foreign adversaries, terrorists, and other hostile actors.
Michael Mongan, a WilmerHale attorney representing Anthropic, said it was extraordinary for the government to go after a “stubborn” negotiating partner with the designation.
The Pentagon has said it is working to replace Anthropic technologies over the coming months with alternatives from Google, OpenAI, and xAI. It also said it has put measures in place to prevent Anthropic from engaging in any tampering during the transition. Hamilton said he didn’t know if it was even possible for Anthropic to update its AI models without permission from the Pentagon; the company says it is not.
A ruling in the other case, at the federal appeals court in Washington, DC, is expected to come soon without a hearing.
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