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U.S. appeals court upholds Pentagon designation of Anthropic as supply chain risk

  • On Sept. 25, the Columbia Circuit Court ruled 2-1 to uphold the Pentagon's designation of Anthropic as a national-security supply-chain risk, allowing the Government to bar the AI company from future defense contracts.
  • The Pentagon designated Anthropic a national-security risk earlier after the company refused to remove code preventing Claude from performing autonomous warfare and domestic surveillance, prompting Anthropic to sue the Government.
  • Circuit Judge Gregory Katsas, joined by Circuit Judge Neomi Rao, wrote that the Pentagon had sufficient reason to label Anthropic's AI a supply-chain risk, rejecting claims the label violated free speech protections.
  • Anthropic claims the designation cost it billions and damaged its reputation ahead of a planned initial public offering, stating it remains confident in its position and is considering further legal review.
  • Circuit Judge Karen LeCraft Henderson dissented, arguing the law does not cover a contractor's "honest and upfront enforcement of restrictions," while a federal judge in San Francisco previously struck down a parallel designation.
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Reuters broke the news in London, United Kingdom on Friday, September 25, 2026.
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