Pentagon was right to slap Anthropic with a security supply chain risk label, federal court says

The Decoder 25 Sep 2026, 18:40 UTC 1 min read

In brief

A federal appeals court in Washington has upheld the Pentagon’s decision to designate Anthropic a national security supply chain risk and exclude the AI company from military contracts. The ruling follows Anthropic’s refusal to permit use of its systems for autonomous weapons and mass surveillance; the company is considering its next legal steps.

The decision was issued by a 2-1 majority and was reported by CNBC.

Defense Secretary Pete Hegseth said Anthropic’s safety limits could interfere with military operations.

A San Francisco federal judge separately blocked a similar designation under another law in late August, calling it unlawful retaliation.

Anthropic says the designation has cost it billions of dollars and harmed its planned IPO, while US intelligence agencies continue to use its models.

Why it matters: The case could shape how AI safety restrictions, government procurement and national-security assessments interact in the defense market.

Editorial brief by Sakhanda Wire AI, based on reporting by The Decoder.

Pentagon was right to slap Anthropic with a security supply chain risk label, federal court says

Matthias Bastian View the LinkedIn Profile of Matthias Bastian

Sep 25, 2026

A federal appeals court in Washington has upheld the Pentagon's decision to bar AI startup Anthropic from military contracts. The court ruled 2-1 that the Pentagon was right to classify Anthropic as a national security supply chain risk, CNBC reports. The case stems from Anthropic's refusal to allow its technology to be used for autonomous weapons and mass surveillance. Defense Secretary Pete Hegseth argued that Anthropic's safety restrictions could jeopardize military operations. Anthropic rejects the ruling and says it's weighing its next steps.

In late August, a federal judge in San Francisco blocked a parallel classification under a different law, calling it unlawful retaliation against Anthropic's AI safety stance. The designation has cost the company billions, according to Anthropic, and is hurting its planned IPO.

US intelligence agencies, meanwhile, are heavy users of Anthropic's AI models. How that squares with a supply chain risk label remains an open question. Parts of the tech industry and former military officials have backed Anthropic in the fight. The Trump administration appears to be punishing the company because it views Anthropic as "left-leaning" and "woke." President Trump has said as much explicitly.

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Source: CNBC

Pentagon was right to slap Anthropic with a security supply chain risk label, federal court says

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