Judge Questions Pentagon's Retaliation Against AI Firm Anthropic

Anthropic seeks to block 'supply-chain risk' label that is scaring off customers

Mar. 25, 2026 at 10:30am by Ben Kaplan

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A federal judge in San Francisco has suggested the Pentagon may have crossed a constitutional line in its fight with AI company Anthropic, labeling the firm a 'supply-chain risk' in what the judge called an 'attempt to cripple Anthropic' and potentially unlawful retaliation for the company's push to limit military uses of its technology.

Why it matters

The case highlights tensions between tech companies and the military over the use of advanced AI, as well as concerns about the government's power to designate firms as security risks, which can severely impact their business.

The details

Anthropic is asking the judge to temporarily freeze the Pentagon's 'supply-chain risk' designation, arguing it is scaring off customers while the company pursues two federal lawsuits over the decision. The judge pressed the government lawyer on why Defense Secretary Pete Hegseth announced a sweeping order that no military contractor could do any business with Anthropic, even unrelated to the Defense Department - an order the lawyer conceded Hegseth lacked authority to issue.

  • The hearing took place on Tuesday in San Francisco.
  • A ruling on Anthropic's request for an injunction is expected before the end of the week.

The players

Rita Lin

A US district judge in San Francisco presiding over the case.

Anthropic

An AI company that is challenging the Pentagon's 'supply-chain risk' designation against it.

Pete Hegseth

The Defense Secretary who announced an order barring any military contractor from doing business with Anthropic.

Eric Hamilton

A government lawyer representing the Pentagon in the case.

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What they’re saying

“Punishing a company for bringing public attention to a contract dispute would be a violation of the First Amendment.”

— Rita Lin, US District Judge

“The sweeping use of a tool usually reserved for hostile actors is troubling.”

— Rita Lin, US District Judge

What’s next

A ruling on Anthropic's request for a temporary injunction to block the Pentagon's 'supply-chain risk' designation is expected before the end of the week.

The takeaway

This case highlights the growing tensions between tech companies and the military over the use of advanced AI, as well as concerns about the government's power to designate firms as security risks, which can severely impact their business prospects.