Artificial intelligence company Anthropic has filed a lawsuit against the US government after being designated a “supply chain risk” by the Department of Defense. The company argues that the decision followed its refusal to remove restrictions on military use of its AI systems and claims the government’s actions are unlawful and unconstitutional.
The lawsuit, filed Monday in federal court in California, targets the executive office of Donald Trump along with several senior officials and government agencies. Anthropic states that the designation harmed its reputation, disrupted business relationships, and jeopardized hundreds of millions of dollars in potential contracts.
Dispute Over Military Use Of AI Tools
The conflict centers on disagreements between Anthropic chief executive Dario Amodei and Pete Hegseth regarding military access to the company’s AI systems. Anthropic said it declined to grant the military unrestricted use of its tools.
According to the complaint, Hegseth asked the company to remove usage limits from a defense contract. Anthropic said its agreements had always included restrictions preventing the technology from being used for “lethal autonomous warfare” or for large-scale surveillance of Americans.
Anthropic stated that it worked with defense officials to revise contract terms so that the tools could continue to support military needs while maintaining those safeguards. The company said negotiations were nearing completion before discussions ended abruptly.
Instead of continuing negotiations, the Department of Defense responded with public criticism and later labelled the firm a supply chain risk. That designation meant Anthropic’s technology could no longer be used in government systems and also barred companies working with the government from using its products in related work.
Scope Of The Lawsuit
Anthropic’s lawsuit names several senior officials in addition to the president. Defendants include Marco Rubio and Howard Lutnick. The complaint also lists 16 federal agencies.
Among them are the Department of Homeland Security, the Department of Energy, and the Department of Defense, which the administration has also referred to as the Department of War.
The company argues that the government used its authority to punish the company for protected speech. “The Constitution does not allow the government to wield its enormous power to punish a company for its protected speech,” Anthropic wrote in its filing. It added that no federal statute authorizes the actions taken against the company.
A spokesperson for the Department of Defense declined to comment, citing a policy against discussing active litigation.
White House Response
A spokeswoman for the White House, Liz Huston, criticized Anthropic’s position and described the company as a “radical left, woke company” attempting to influence military activity.
“Under the Trump Administration, our military will obey the United States Constitution – not any woke AI company’s terms of service,” Huston told the BBC.
Anthropic disputed that characterization in its complaint, arguing that the usage restrictions it proposed were consistent with safeguards already included in previous contracts.
Government Use Of Anthropic Technology
Anthropic stated that its technology has been used by US government agencies and the military since 2024. The company said it was the first advanced AI developer to have its tools deployed in government environments handling classified work.
Its AI system Claude, including the development-focused tool Claude Code, is widely used in the technology industry. Large technology companies including Google, Meta, Amazon and Microsoft integrate Claude Code into parts of their development workflows.
These companies also maintain contracts with US government agencies. Following the designation of Anthropic as a supply chain risk, Microsoft, Google, and Amazon said they would continue using Claude in projects not related to defense work.
Industry Reaction And Legal Support
Anthropic stated that the designation caused significant financial and reputational harm. The company said that both current and future contracts with private partners were now uncertain, putting hundreds of millions of dollars at risk.
The firm also warned that the government’s response could discourage companies from raising concerns about how AI systems are deployed.
Later on Monday, nearly 40 employees from Google and OpenAI submitted a court brief supporting Anthropic. The employees described potential risks associated with deploying advanced AI systems for domestic mass surveillance or for autonomous weapons without human oversight.
The signatories wrote that they represent a range of political perspectives but share concerns about the potential misuse of large-scale AI technologies. They argued that safeguards such as technical limits or usage restrictions are necessary when such systems are used in sensitive environments.
Contract Developments Following The Dispute
Amid the dispute between Anthropic and the government, Sam Altman said last week that OpenAI moved quickly to finalize a new contract with the Department of Defense.
Anthropic is not seeking financial damages through the lawsuit. Instead, it asks the court to rule that the directive issued by President Trump exceeded presidential authority and violated constitutional protections. The company also requests that the court remove the supply chain risk designation.
Carl Tobias said a rapid settlement could occur but suggested the administration may continue fighting the case. He said the government could pursue appeals if the company wins in federal court, potentially sending the dispute to the US Supreme Court.
Featured image credits: Flickr
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