Anthropic Branded a Supply Chain Risk by US Government

The US government has officially labelled artificial intelligence company Anthropic a national security supply chain risk, setting up what could become a major legal battle between the tech firm and the Pentagon.

The designation, issued by the Department of Defense, which President Donald Trump has also referred to as the “Department of War”, means that the military considers the company too risky to use in its supply chain. It is the first time a US-based company has received the label.

Anthropic’s chief executive Dario Amodei said the company plans to challenge the decision in court. “We do not believe this action is legally sound, and we see no choice but to challenge it in court,” he wrote.

The conflict between Anthropic and the government comes after talks between the Pentagon and Anthropic broke down over how the military could use the company’s AI system, Claude. The government wanted the freedom to deploy the technology for “all lawful uses,” but the company refused to remove restrictions related to autonomous weapons and mass surveillance of US citizens.

Amodei previously said he could not agree to those conditions “in good conscience.”

A senior Pentagon official defended the move, saying the dispute came down to one key issue: ensuring the military can use technology without limits set by a private vendor. “From the very beginning, this has been about one fundamental principle: the military being able to use technology for all lawful purposes,” the official said. “The military will not allow a vendor to insert itself into the chain of command by restricting the lawful use of a critical capability and put our warfighters at risk.”

The dispute intensified after Trump publicly criticized the company and called on federal agencies to stop using its technology. Posting on Truth Social, he wrote: “We don't need it, we don't want it, and will not do business with them again!”

Defense Secretary Pete Hegseth later said the supply chain risk label would block companies working with the military from conducting commercial activity with Anthropic.

However, Anthropic says the restrictions are narrower than initially suggested. According to Amodei, the designation only stops contractors from using the Claude AI model directly in Department of Defense contracts, not from using the company’s technology for unrelated work.

Some of the firm’s biggest partners agree. Tech giant Microsoft said it will continue integrating Anthropic’s AI into its products for most customers, though it will exclude the Department of Defense.

“Our lawyers have studied the designation and have concluded that Anthropic products, including Claude, can remain available to our customers – other than the Department of War – through platforms such as M365, GitHub, and Microsoft’s AI Foundry and that we can continue to work with Anthropic on non-defense related projects,” a Microsoft spokesperson said.

Anthropic’s technology has been used by US government agencies since 2024 and was the first advanced AI system deployed in classified government networks. But as its relationship with the military has deteriorated, rival firm OpenAI has stepped in with its own agreement to provide AI models for classified work. OpenAI’s CEO Sam Altman has said the company’s new contract includes stronger safeguards than previous AI agreements with the government.

The Pentagon’s decision has also drawn criticism from lawmakers and policy experts. Senator Kirsten Gillibrand called the move “shortsighted, self-destructive, and a gift to our adversaries.” “The government openly attacking an American company for refusing to compromise its own safety measures is something we expect from China, not the United States,” she added.

Meanwhile, Anthropic says demand for its AI tools continues to grow despite the political dispute. The company says more than a million people sign up each day to use Claude, which remains one of the most downloaded AI apps in several countries.