US Department The Department of Defense appears to be illegally punishing Anthropic for trying to limit the military’s utilize of its artificial intelligence tools, U.S. District Judge Rita Lin said during a court hearing Tuesday.
“It looks like an attempt to cripple Anthropic,” Lin said the Pentagon deemed the company a supply chain threat. “It appears [the department] penalizes Anthropic for attempting to subject this contract dispute to public scrutiny, which would obviously be a violation of the First Amendment.”
Anthropic has filed two federal lawsuits alleging that the Trump administration’s decision to designate the company as a security risk constitutes illegal retaliation. The government has sharply criticized Anthropic after it pushed for restrictions on the military’s use of artificial intelligence. Tuesday’s hearing was held in the case filed in San Francisco.
Anthropic is seeking an interim injunction to halt the nomination. Anthropic hopes the relief will help persuade some of the company’s skittish customers to stick with it a little longer. Lin can only stop the proceedings if he thinks Anthropic is likely to win the entire case. Her ruling on the injunction is expected in the coming days.
The dispute has sparked a broader public discussion about the growing use of artificial intelligence in the armed forces and whether Silicon Valley companies should show deference to the government in determining how they deploy the technology they develop.
The Department of Defense, now called the Department of War (DoW), argued that it had followed procedures and accordingly determined that Anthropic’s AI tools could no longer be relied upon to perform as expected at critical moments. She asked Lin not to hesitate in assessing the threat she believes Anthropic poses to national security.
“What’s disturbing is that instead of simply raising concerns and pushing back, Anthropic will say we have a problem with what DoW is doing and will manipulate the software … so that it doesn’t work in the way that DoW expects and wants,” Trump administration lawyer Eric Hamilton said during Tuesday’s hearing.
Lin said it’s up to Secretary of Defense Pete Hegseth – not her – to decide whether Anthropic is the right supplier for the department. But Lin said it was up to her to determine whether Hegseth violated the law by taking steps beyond simply canceling Anthropic’s government contracts. Lin said she found it “disturbing” that the security designation and guidelines more broadly restricting the use of Anthropic Claude’s AI tool by government contractors “do not appear to be aligned with the national security concerns raised.”
Hegseth, as Anthropic’s dispute with the government intensified last month published in October that “effective immediately, no contractor, supplier, or partner doing business with the United States Military may conduct any commercial activity with Anthropic.”
But on Tuesday, Hamilton acknowledged that Hegseth does not have legal authority to prohibit military contractors from using Anthropic for work unrelated to the Department of Defense. When asked by Lin why Hegseth posted it, Hamilton replied: “I don’t know.”
Lin further questioned Hamilton about whether the Pentagon was considering less punitive measures to steer the department away from using Anthropic’s tools. She described supply chain risk designation as a powerful power typically reserved for foreign adversaries, terrorists and other hostile actors.
Michael Mongan, a WilmerHale attorney representing Anthropic, said it was unusual that the government would attack a “stubborn” negotiating partner with the nomination.
The Pentagon has said it is working to replace Anthropic’s technology with Google, OpenAI and xAI alternatives in the coming months. It also stated that it had put in place measures to prevent any manipulation of Anthropic during the transition period. Hamilton said he didn’t know whether Anthropic would even be able to update its artificial intelligence models without Pentagon approval; the company says this is not the case.
The ruling in the second case, issued by a federal appeals court in Washington, D.C., is expected to come down soon without a trial.