A federal appeals court upheld the Pentagon’s blacklisting of Anthropic from military contracts, working as a victory for United States President Donald Trump and Defense Secretary Pete Hegseth in their feud against the AI startup over safety guardrails.
The 2-1 decision by the United States Court of Appeals in Washington, DC, came in a lawsuit by Anthropic challenging its March designation by the Pentagon as a national security supply chain risk, which the startup stated has cost it billions of dollars in lost business and damaged its reputation ahead of a highly anticipated initial public offering.
The majority of the court said it was reasonable for the Pentagon to designate Anthropic after it refused to let its products be used for autonomous weapons or mass surveillance. It also rejected Anthropic’s claim that the Pentagon had retaliated against it for its views on AI safety and ethics.
Siding with Hegseth’s argument that Anthropic’s safety restrictions could compromise military operations, the majority said, “The Secretary raises the deeply sobering prospect of overly constrained AI models shutting down unexpectedly and thus causing important military operations to fail.”
On the other hand, Anthropic said in a statement that it respectfully disagrees with the decision but remains confident in its position and is considering its options, including review of the three-judge panel’s decision by the full appeals court. Previously, in the case, a federal judge in San Francisco came up with a different finding, suggesting that the administration had unlawfully retaliated against Anthropic for its views on AI safety.
United States District Judge Rita Lin in San Francisco also blocked Trump’s government-wide ban on Anthropic and Hegseth’s order barring military contractors from doing any business with the startup. The sanctions on Anthropic came after months of negotiations concluded in failure and public recriminations by Hegseth and Trump, who accused Anthropic of putting American lives in danger with ideological posturing.
