US appeals court upholds Pentagon blacklisting of Anthropic

A US federal appeals court on Friday upheld the Pentagon’s decision to blacklist artificial-intelligence company Anthropic from military contracts, delivering a victory to President Donald Trump and Defence Secretary Pete Hegseth in their dispute with the startup over safeguards on the use of its technology.

The 2-1 ruling by the US Court of Appeals in Washington came in Anthropic’s challenge to the Pentagon’s March designation of the company as a national security supply chain risk. Anthropic has said the designation has cost it billions of dollars in lost business and damaged its reputation ahead of a closely watched initial public offering.

The appeals court majority found the Pentagon’s decision reasonable after Anthropic refused to permit its systems to be used for autonomous weapons or mass surveillance. The judges also rejected Anthropic’s argument that the designation amounted to retaliation over its positions on AI safety and ethics.

The majority sided with Hegseth’s argument that Anthropic’s restrictions could interfere with military operations. In an opinion by Judge Gregory Katsas, the court said: “The Secretary raises the deeply sobering prospect of overly constrained AI models shutting down unexpectedly and thus causing important military operations to fail."

Anthropic, which is based in San Francisco, said it respectfully disagreed with the ruling but remained confident in its position. The company said it was considering further legal options, including asking the full appeals court to review the three-judge panel’s decision.

The appeals court ruling contrasts with a decision last month by a federal judge in San Francisco, who struck down a parallel designation under a different law. US District Judge Rita Lin found that the administration had unlawfully retaliated against Anthropic over its views on AI safety. She also blocked the Trump administration’s government-wide ban on Anthropic and Hegseth’s order prohibiting military contractors from doing business with the company.

Hegseth had designated Anthropic as a risk under two separate laws after the company refused to remove safeguards against its technology being used for autonomous weapons or mass domestic surveillance.

By Tamilla Hasanova