Federal judge says Pentagon's treatment of Anthropic 'looks like an attempt to cripple' the company

On Tuesday, a federal judge signaled that the Trump administration’s claims that Anthropic is a “supply chain risk” may not hold up in court, but instead will be recognized as punishment for going public with its Pentagon dispute.

The case erupted into public view late last month, after Anthropic apparently refused to let the Pentagon use its Claude AI without restrictions — specifically, without contractual guardrails keeping the government from using Claude for mass domestic surveillance of Americans conducted without warrants and for deployment in fully autonomous weapons systems.

In response, the Pentagon moved to designate Anthropic a “supply chain risk,” a label previously reserved for foreign adversaries like Chinese telecom firms — even as Pentagon officials continued to negotiate the contract with the company, with Pentagon CTO Emil Michael describing the two sides as “very close” to reaching an agreement even as the “supply chain risk” designation was being finalized and President Donald Trump and officials were attacking the company on social media.

Anthropic then sued, arguing the designation was unconstitutional retaliation for publicly disclosing the dispute. And on Tuesday, a federal judge appeared to agree — at least preliminarily.

“An attempt to cripple Anthropic”

“I don't know if it's murder, but it looks like an attempt to cripple Anthropic,” said U.S. District Judge Rita Lin of the Northern District of California, during a hearing on Anthropic's bid for a termporary restraining order. Such actions, she said, “of course would be a violation of the First Amendment.”

Lin’s language echoes warnings legal experts have also raised. “If you give the government a license to kill companies, then companies are always going to be under threat of execution, and therefore they will always feel like they need to do what the government says," Matthew Seligman, founder of Grayhawk Law and a former Harvard Law lecturer, recently told Quartz.

The worry is about that kind of power, and this administration’s use of that kind of power. “If the [Department of Defense] walks up to a company and says, ‘We want to use your technology, and if you don't let us, we’re going to kill your company’ — that's a very unsettling place to be.”

The implications for investors are just as serious. “If you're an investor, and you know that any one of your portfolio companies could be killed at any time if they don't go along with whatever request the Department of Defense makes of them, that introduces a huge amount of risk,” Seligman said — particularly if you believe a current or future administration won’t use that power with restraint.

An unusually broad coalition of companies and organizations filing amicus briefs, siding with Anthropic, further underlines a widespread view that the government should not have the power to summarily execute companies. "Nearly all support Anthropic’s position seeking an injunction of the supply-chain risk designation," Fortune reported, including Microsoft $MSFT, retired military personnel, and a host of engineers and developers at OpenAI and Google $GOOGL.

Lin calls out specific government actions

Lin specifically noted that three administration actions — President Donald Trump’s blanket ban on Anthropic, Defense Secretary Pete Hegseth's directive requiring Pentagon contractors to cut commercial ties with the company, and the “supply chain risk” designation — did not appear tailored to any legitimate security concern. "If the worry is about the integrity of the operational chain of command," she said, the Pentagon "could just stop using Claude.”

Yet the Pentagon continues to use Claude to this day, including in its war on Iran.

The judge has not yet issued an official ruling. Anthropic has requested a decision by March 26th, but the court isn't bound by that date. Still, the hearing landed well for Anthropic, whose lawyers argued the designation was "inconceivable" as a good-faith security finding.

Deputy Assistant Attorney General Eric Hamilton acknowledged in court that the Defense Department failed to follow required protocol for the supply-chain designation — including briefing Congress and exploring less restrictive alternatives.