Anthropic's Tussle With Trump Administration Faces Fresh Legal Setback

A U.S. appeals court upheld the federal government's authority to label AI firm Anthropic a supply-chain national security risk.

• The U.S. Court of Appeals for the D.C. Circuit rejected Anthropic’s challenge against the Trump administration's supply-chain security classification. 
• Despite the D.C. Circuit's decision favoring the government, a federal judge in San Francisco issued a previous injunction that remains in effect, temporarily shielding the company. 
• The legal clash stems from earlier failed contract talks regarding military usage of Anthropic's artificial intelligence platform. 

The U.S. Court of Appeals in Washington, D.C., refused to dismantle the Trump administration's designation of Anthropic as a national security supply-chain risk, rejecting a legal challenge by the artificial intelligence startup.

Tensions between Washington and the Claude developer escalated earlier this year after negotiations to integrate Anthropic’s military-grade software into defense infrastructure collapsed.

“The Department had ample support for its conclusion that the continued integration of Claude into the Department’s information systems, by the Department or its contractors, presented a statutorily covered national-security risk,” according to the opinion for the Court filed by Circuit Judge Katsas.  

Anthropic Disagrees

Despite the federal appellate panel's favorable outcome for the administration, the impact on Anthropic seems muted for now. A separate ruling from a federal district court judge in San Francisco—which previously blocked the enforcement of the supply-chain blacklist—remains in effect, keeping the ban lifted in the interim.

“We respectfully disagree with the court’s decision,” an Anthropic spokesperson told CNBC in a statement. “Another federal court has already held the government’s parallel designation unlawful. We remain confident in our position and are considering all options, including further review.” 

The court ruled that the government acted reasonably under the Federal Acquisition Supply Chain Security Act. The court explained that operational friction reached a turning point when an Anthropic executive raised concerns about using Claude in an overseas military mission. According to the court opinion, this sparked serious doubts about the system's reliability.

"This led to alarm by the DoW and the prime contractor who provides Anthropic software, and raised material doubts as to whether they would cause their software to stop working or cause some other disastrous action that would put our warfighters['] lives in danger," the court ruling read.  

Impending IPO

The ongoing legal warfare with the Defense Department arrives at a pivotal moment for the artificial intelligence giant. Anthropic has been aggressively laying the groundwork for a landmark initial public offering (IPO) expected in late 2026, targeting a $2 trillion valuation. This would make it the largest public offering in history. 

Stocktwits retail sentiment on Anthropic was ‘bullish’ with ‘high’ message volumes.  

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