The AI company filed two federal lawsuits on Monday, arguing the Trump administration’s ‘supply chain risk’ designation is unconstitutional retaliation for protected speech.
There is a phrase in Anthropic’s court filing that sets the tone for everything that follows: “Anthropic turns to the judiciary as a last resort to vindicate its rights and halt the Executive’s unlawful campaign of retaliation.” It is the language of a company that believes it is not simply fighting a contract dispute, but a constitutional one.
On Monday, the San Francisco-based AI company filed two federal lawsuits against the Trump administration, targeting the Pentagon’s decision last week to formally designate Anthropic a “supply chain risk to national security”, a label that has historically been reserved for companies tied to foreign adversaries such as China and Russia.
It is believed to be the first time the designation has been applied to an American company.
The first lawsuit was filed in the US District Court for the Northern District of California. It asks a judge to vacate the designation and grant an immediate stay while the case proceeds. A second, shorter suit was filed in the US Court of Appeals for the District of Columbia Circuit, targeting a separate statute the government invoked that can only be challenged in that jurisdiction.
Both cases make substantially the same argument: that the administration acted unlawfully, without proper statutory authority, and in violation of Anthropic’s First Amendment rights.
More than a dozen federal agencies are named as defendants, including the Department of Defence, the Treasury, the State Department, and the General Services Administration.
The legal action is the culmination of a two-week standoff that escalated with unusual speed into one of the more remarkable confrontations between a technology company and the US government in recent memory.
The dispute centres on two conditions Anthropic has insisted on in its contracts with the Pentagon: that its Claude AI system not be used for mass domestic surveillance of American citizens, and that it not be used to power fully autonomous weapons, systems capable of targeting and firing without human authorisation.
The Pentagon, which has been using Claude on classified networks since the company became the first AI lab to achieve that clearance, demanded that any renewed contract drop these restrictions and grant the military use of Claude for “all lawful purposes.” Anthropic refused.
What followed was a sequence of events that proceeded with striking speed. On 27 February, President Trump posted on Truth Social calling Anthropic a “radical left, woke company” and directing every federal agency to “immediately cease” all use of its technology.
Within hours, Defence Secretary Pete Hegseth announced on X that he was designating Anthropic a supply chain risk, meaning no contractor, supplier, or partner doing business with the US military could conduct any commercial activity with the company. The formal letter confirming the designation arrived on 3 March, five days after the deadline Anthropic had been given to agree to the Pentagon’s terms.
The practical scope of the designation turned out to be narrower than Hegseth’s initial announcement implied. Anthropic CEO Dario Amodei said in a statement last Thursday that the relevant statute limits the designation’s reach to the direct use of Claude in Pentagon contracts, it cannot, Amodei argued, be used to sever all commercial relationships between defence contractors and the company.
Microsoft, Google, and Amazon all reviewed the designation and reached the same conclusion, issuing statements confirming that Claude would remain available to their customers for work unrelated to defence contracts. Hegseth had explicitly said the opposite in his original post.
The economic stakes are nonetheless substantial. In declarations accompanying Monday’s filings, Anthropic executives laid out the damage in granular terms. Chief Financial Officer Krishna Rao warned the court that if the designation were allowed to stand and customers took a broad reading of its scope, it could reduce Anthropic’s 2026 revenue by “multiple billions of dollars”, an impact he described as “almost impossible to reverse.”
Chief Commercial Officer Paul Smith cited a specific example: one partner with a multi-million-dollar annual contract had already switched to a rival AI model, eliminating an anticipated revenue pipeline of more than $100 million; negotiations with financial institutions worth roughly $180 million combined had also been disrupted.
The complaint itself makes two distinct legal arguments. The first is a First Amendment claim: that the administration’s actions punish Anthropic for its public advocacy around AI safety, its position on autonomous weapons and domestic surveillance, which constitutes protected speech.
“The Constitution does not allow the government to wield its enormous power to punish a company for its protected speech,” the filing states. The second argument challenges the statutory basis of the designation, invoking 10 USC 3252, the procurement law the Pentagon relied upon. Anthropic argues the statute requires the government to use “the least restrictive means” to protect the supply chain, not deploy it as a punitive instrument against a domestic company over a policy disagreement.
The Pentagon’s position is that the dispute is fundamentally about operational control rather than speech. Pentagon officials have argued that a private contractor cannot insert itself into the chain of command by restricting the lawful use of a critical capability, and that the military must retain full discretion over how it deploys technology in national security scenarios.
In an indication that the designation was not straightforwardly about security, a Pentagon official was quoted in Anthropic’s court filing as saying the government intended to “make sure they pay a price” for the company’s refusal, language Anthropic’s lawyers have flagged as evidence of improper motivation.
The case has drawn an unusual show of solidarity from Anthropic’s direct competitors. A group of 37 researchers and engineers from OpenAI and Google DeepMind, including Google’s chief scientist Jeff Dean, who signed in a personal capacity, filed an amicus brief on Monday supporting the lawsuit.
The brief argues that the designation “chills professional debate” about AI risks and undermines American competitiveness. “By silencing one lab,” the researchers wrote, “the government reduces the industry’s potential to innovate solutions.” The filing is notable given that OpenAI struck a new deal with the Pentagon within hours of the Trump administration’s order, a move that drew sharp criticism from OpenAI employees and that Altman later acknowledged looked “sloppy and opportunistic.”
Legal observers have been sceptical that the designation will survive judicial scrutiny. Paul Scharre, a former Army Ranger and now executive vice president of the Center for a New American Security, told Breaking Defense that Hegseth’s initial characterisation of the ban simply exceeded what the supply chain risk statute permits, and that even the narrower formal designation would likely struggle in court, given the law’s requirement for the least restrictive means. Procurement laws passed by Congress, Anthropic argues in its filings, do not give the Pentagon or the president authority to blacklist a company over a policy disagreement.
A first hearing could take place in San Francisco as early as this Friday, according to reports. Anthropic has asked for a temporary order that would allow it to continue working with military contractors while the legal case unfolds. The DoD said it does not comment on litigation.
Among the contradictions the complaint highlights: the military reportedly continued to use Claude during active combat operations in Iran, after the ban had been announced. A six-month phaseout was also ordered simultaneously with an immediate prohibition. And the company retains active FedRAMP authorisation and facility and personnel security clearances that would ordinarily be incompatible with a national security risk finding. None of these inconsistencies have been publicly addressed by the government.
Whatever the court decides, the case has already set a precedent of a different kind: a major AI company, backed by researchers at its own rivals, publicly litigating the government’s right to weaponise procurement law against a domestic company for taking a public stance on how its technology should and should not be used. The outcome could determine, as Anthropic’s complaint puts it, whether any American company can “negotiate with the government” without risking its existence.
