By Jack Queen

NEW YORK, March 9 (Reuters) – Anthropic on Monday filed a lawsuit to block the Pentagon from placing it on a national security blacklist, escalating the artificial intelligence lab’s high-stakes battle with the U.S. military over usage restrictions on its technology. 

The Pentagon on Thursday slapped a formal supply-chain risk designation on Anthropic, limiting use of a technology that a source said was being used for military operations in Iran. 

Anthropic said in its lawsuit that the designation was unlawful and violated its free speech and due process rights. The filing in federal court in California asked a judge to undo the designation and block federal agencies from enforcing it. 

“These actions are unprecedented and unlawful. The Constitution does not allow the government to wield its enormous power to punish a company for its protected speech,” Anthropic said. 

Defense Secretary Pete Hegseth designated Anthropic a national security supply-chain risk last week after the startup refused to remove guardrails against using its AI for autonomous weapons or domestic surveillance.

The designation poses a big threat to Anthropic’s business with the government, and the outcome could shape how other AI companies negotiate restrictions on military use of their technology, though the company’s CEO Dario Amodei clarified on Thursday that the designation had “a narrow scope” and businesses could still use its tools in projects unrelated to the Pentagon.

President Donald Trump has also directed the government to stop working with Anthropic, whose financial backers include Alphabet’s Google and Amazon.com. Trump and Hegseth said there would be a six-month phase-out. 

Reuters has reported that Anthropic’s investors were racing to contain the damage caused by the fallout with the Pentagon.

Trump and Hegseth’s actions on February 27 came after months of talks with Anthropic over whether the company’s policies could constrain military action and shortly after Amodei met with Hegseth in hopes of reaching a deal. 

The Pentagon said U.S. law, not a private company, would determine how to defend the country and insisted on having full flexibility in using AI for “any lawful use,” asserting that Anthropic’s restrictions could endanger American lives. 

Anthropic said even the best AI models were not reliable enough for fully autonomous weapons and that using them for that purpose would be dangerous. The company also drew a red line on domestic surveillance of Americans, calling that a violation of fundamental rights. 

After Hegseth’s announcement, Anthropic said in a statement that the designation would be legally unsound and set a dangerous precedent for companies that negotiate with the government. The company said it would not be swayed by “intimidation or punishment,” and on Thursday Amodei reiterated that Anthropic would challenge the designation in court. 

He also apologized for an internal memo published on Wednesday by tech news site The Information. In the memo, which was written last Friday, Amodei said Pentagon officials did not like the company in part because “we haven’t given dictator-style praise to Trump.”

The Defense Department signed agreements worth up to $200 million each with major AI labs in the past year, including Anthropic, OpenAI and Google.

Microsoft-backed OpenAI announced a deal to use its technology in the Defense Department network shortly after Hegseth moved to blacklist Anthropic. CEO Sam Altman said the Pentagon shared OpenAI’s principles of ensuring human oversight of weapon systems and opposing mass U.S. surveillance.

(Reporting by Jack Queen in New York; Editing by Noeleen Walder, Lisa Shumaker, Daniel Wallis and Nick Zieminski)

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