Appeals court upholds the Pentagon’s blacklisting of Anthropic

A federal appeals court ruled that the Pentagon can blacklist Anthropic’s artificial-intelligence technology^1,12. The 2-1 ruling, issued on Friday, rejected Anthropic’s challenge to the designation and found the Department of Defense had “ample support” for it². Judge Neomi Rao joined the majority¹³.

The court held that a federal law on technology supply-chain threats gave the Defense Department sufficient authority to designate Anthropic a national security risk¹¹. The case, Anthropic PBC v. United States Department of War, was argued on 19 May and decided on 25 September¹⁰; Bloomberg Law lists it as 26-01049 in the US Court of Appeals for the District of Columbia Circuit⁵.

The dispute broke out in February between the company and the government, involving Trump and Defense Secretary Pete Hegseth⁴, and escalated after Hegseth mandated that the military achieve “AI Dominance” free from restrictions the company had imposed¹⁴. The designation bars Pentagon contractors from using Anthropic’s technology⁸.

Why it matters to investors

The ruling settles, at the appellate level, that a defence secretary can exclude a frontier model vendor from military work on supply-chain grounds rather than on performance or price^4,11. That is a precedent every government AI buyer and seller now has to price in.

The reaction from the department was triumphal rather than procedural. Emil Michael said in a social media post that “the hammer of justice has smashed” the company’s arguments¹, a line Breaking Defense rendered as “The hammer of justice has smashed AnthropicAI[‘s] arguments”⁶. Sources describe Michael’s role differently: the Washington Post and Breaking Defense call him the Pentagon’s chief technology officer^1,6, while The Hill and Benzinga identify him as under secretary of defense for research and engineering^9,13, the title France 24 attaches to him as quoted in the opinion⁸.

What to watch

Anthropic has hinted at an appeal, though Breaking Defense reported that its options may be limited⁶. Whether the company pursues one, and on what grounds, is the first thing to watch³.

The second is scope. The designation as decided covers military contracting^7,8, and the open question is whether the same statutory authority is used against other vendors or extended to civilian agencies¹¹. Investing.com framed the outcome as the supply-chain designation being upheld in an AI military dispute rather than a broader ruling on the technology itself¹⁴.