WASHINGTON: A US appeals court has upheld the Pentagon’s decision to remove artificial intelligence company Anthropic from its supply chain after the company declined to remove certain safeguards on its Claude AI model.
The dispute began in February when Anthropic rejected a request from Defence Secretary Pete Hegseth to remove restrictions related to the use of Claude in fully autonomous lethal weapons and domestic surveillance applications.
Pentagon restrictions remain in place
The Pentagon formally designated Anthropic as a supply chain risk in March, cancelling military contracts with the company and preventing other defence contractors from using its technology.
The US military had previously used Claude across several classified and sensitive systems.
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According to the court ruling, concerns increased after an Anthropic executive questioned the use of Claude by defence contractor Palantir during a military operation that resulted in the capture of Venezuelan President Nicolas Maduro on 3 January.
Under Secretary of Defence Emil Michael said the concerns created doubts over whether Anthropic could interrupt software operations or take actions that could affect military personnel.
Anthropic challenges decision
Anthropic has argued that it cannot modify its AI models after they are delivered to military users.
However, the appeals court found that the company controls the behaviour of each new version of its models, while the military must continue updating to newer versions.
Judge Gregory Katsas, writing for two of the three appellate judges, said decisions over balancing such risks belong to the president and defence leadership.
Wider AI industry impact
Following the Pentagon’s decision, the department turned to other AI companies. OpenAI signed an agreement with the military on the same day as Anthropic’s ban, while xAI, Google and Microsoft also reached agreements at later stages.
Anthropic said it disagreed with the ruling and was considering further legal options. The company pointed to a separate federal court decision in California that previously found a broader government restriction against Anthropic unlawful.
The Pentagon’s decision upheld on Friday remains active under public procurement regulations.
