Anthropic vs Pentagon: Dario Amodei-led AI firm vows legal action after Pete Hegseth's ‘supply chain risk’ designation

AI startup Anthropic on Friday said it will challenge the Trump administration's decision to declare the company a supply chain risk, taking matters to the court.

This came hours after Defense Secretary Pete Hegseth issued the order in a statement on X following a directive from President Donald Trump who asked every federal agency to drop Anthropic and Claude from its workflow.

“This action follows months of negotiations that reached an impasse over two exceptions we requested to the lawful use of our AI model, Claude: the mass domestic surveillance of Americans and fully autonomous weapons,” Anthropic said in a statement shortly after Hegseth's announcement.

It noted that the company had not yet received any formal communication from the Defense Department or White House regarding the status of the negotiations.

Anthropic had said it sought narrow assurances from the Pentagon that its AI chatbot Claude would not be used for mass surveillance of Americans or in fully autonomous weapons. However, the two sides were locked in an impasse until Amodei in a statement on Thursday refused to comply to the Trump administration's demand, which prompted the President and Hegseth's directives.

The Pentagon earlier declared Anthropic a supply-chain risk after President Donald Trump directed US government agencies to stop using the artificial intelligence giant’s products.

In its Friday statement, Anthropic said it had tried to negotiate with the Pentagon “in good faith”, saying that it supported the lawful use of AI except the two cases it flagged.

“To the best of our knowledge, these exceptions have not affected a single government mission to date,” Anthropic said.

It called the supply chain risk designation an “unprecedented action”, pointing out that the label had historically been used on adversaries. This is the first time an American company has been labelled so.

Why did Anthropic disagree with Pentagon?

Anthropic in its statement again gave the reason for its clash with Pentagon.

“We do not believe that today’s frontier AI models are reliable enough to be used in fully autonomous weapons. Allowing current models to be used in this way would endanger America’s warfighters and civilians,” Anthropic emphasised.

It further said the company believes that mass domestic surveillance of Americans “constitutes a violation of fundamental rights.”

“We believe this designation would both be legally unsound and set a dangerous precedent for any American company that negotiates with the government,” Anthropic said.

Maintaining its previous stance, the AI startup noted that "no amount of “intimidation or punishment from the Department of War” will change its position on the same.

“We will challenge any supply chain risk designation in court.”

What it means for customers

Anthropic detailed the consequences of the Defense Department's action on its existing customers, including those having contracts with the federal government.

“The Secretary does not have the statutory authority to back up this statement. Legally, a supply chain risk designation under 10 USC 3252 can only extend to the use of Claude as part of Department of War contracts—it cannot affect how contractors use Claude to serve other customers,” it said.

This, in practice, means that individual customers or those having a commercial contract with Anthropic will have no repercussion on the usage of its tools including API, claude.ai, or any of its products.

“If you are a Department of War contractor, this designation—if formally adopted—would only affect your use of Claude on Department of War contract work. Your use for any other purpose is unaffected,” it said.

The Pentagon wants to use Anthropic’s Claude chatbot for any purpose within legal limits — but without any usage restrictions from Anthropic. The firm has insisted that Claude not be used for mass surveillance against Americans or in fully autonomous weapons operations.