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Anthropic has sued the Pentagon and other federal agencies to challenge the decision to brand the AI lab a “supply chain risk”, claiming the move could knock billions of dollars off its revenues this year.
The company on Monday asked a federal court in California to declare the designation — usually reserved for Chinese and Russian vendors — “arbitrary” and “capricious”. It also asked a judge to block the Trump administration from implementing it.
The US government was “seeking to destroy the economic value created by one of the world’s fastest-growing private companies”, the company’s lawyers wrote. “Anthropic’s reputation and core First Amendment freedoms are under attack.”
The lawsuit marks an escalation in a weeks-long dispute between Anthropic and the Pentagon over the military use of its AI technology, after the AI start-up insisted the US military accept curbs on the use of its technology.
The group’s chief financial officer Krishna Rao said in a separate filing that “multiple billions of dollars” worth of contracts could be jeopardised if customers decided doing business with Anthropic would compromise their work with government.
The start-up last week said “the vast majority” of its customers would be unaffected by the US action. Three of the company’s key partners — Amazon, Microsoft and Google — have said they would retain ties to Anthropic outside of defence work.
Anthropic has raised $60bn to date and the group’s annualised revenues are about $19bn.
Rao added the designation “risks substantially undermining market confidence and Anthropic’s ability to raise the capital critical to train next-generation models”.
White House spokesperson Liz Huston on Monday said President Donald Trump and defence secretary Pete Hegseth “will guarantee that they are never held hostage by the ideological whims of any Big Tech leaders”.
“Under the Trump administration, our military will obey the United States constitution — not any woke AI company’s terms of service,” she said.
Defence officials have sought sweeping rights to deploy the company’s models, while Anthropic insisted on guardrails it said were necessary to prevent misuse — a disagreement that ultimately led to the collapse of negotiations and the start-up being declared a supply chain risk.
The designation, which was formalised last week, obliges companies to cut Anthropic out of their supply chains on military contracts. Trump has also demanded that federal agencies stop using Anthropic.
Rao said hundreds of millions of dollars in annual revenue were at risk if customers take a narrow view of the Pentagon’s order.
A group of more than 30 engineers and researchers at Google and OpenAI threw their personal support behind Anthropic’s suit in an amicus brief on Monday.
“If allowed to proceed, this effort to punish one of the leading US AI companies will undoubtedly have consequences for the United States’ industrial and scientific competitiveness in the field of artificial intelligence and beyond,” wrote signatories including Google DeepMind’s chief scientist Jeff Dean.
The $380bn start-up refused to sign an open-ended contract with the defence department, with chief executive Dario Amodei indicating he would stick to two “red lines” prohibiting the use of its technology for lethal autonomous weapons and domestic mass surveillance.
According to the filing, Hegseth “began demanding that Anthropic discard its usage restrictions altogether and replace them with a general policy under which the department may make ‘all lawful use’ of the technology.”
Amodei said he could not “in good conscience” agree to those terms, triggering an explosive breakdown in negotiations between Anthropic and the Pentagon.
Anthropic’s Claude is the only AI model being used in classified operations, though rival group OpenAI struck a deal with the Pentagon late last month for its models to be used in the most sensitive missions.
The ChatGPT maker has also faced pushback from employees about the use of its technology for “all lawful purposes”.
Caitlin Kalinowski, who led OpenAI’s hardware team, announced her resignation from the company over the weekend, citing concerns about the use of AI for surveillance and lethal autonomous weapons.
The Pentagon said: “As a matter of Department of War policy, we do not comment on litigation.”
