March 27 (UPI) — A federal judge has ordered that the Trump administration’s attempt to block Anthropic from all government contracts is illegitimate and likely illegal.
Northern California U.S. District Judge Rita Lin said in her court order Thursday that the Department of Defense’s designation of Anthropic as a “supply chain risk” is likely unlawful. She is granting the Trump administration a week to respond before the order will take effect.
“Defendants’ designation of Anthropic as a ‘supply chain risk’ is likely both contrary to law and arbitrary and capricious,” Lin wrote. “The Department of War provides no legitimate basis to infer from Anthropic’s forthright insistence on usage restrictions that it might become a saboteur.”
The Trump administration cut off usage of Anthropic’s AI in February after Anthropic refused to allow its Claude AI service to be used for autonomous weapons and mass domestic surveillance.
Lin noted that Anthropic was not aware of the supply chain risk designation until it entered the lawsuit against the government.
“Although Anthropic was on notice that the government objected to its contracting terms, it had no notice or opportunity to object before Defendants publicly barred it from all federal government work and blacklisted it with private companies working with the U.S. military,” Lin wrote. “It also had no notice or opportunity to object to the factual basis for its designation as a supply chain risk, which it learned of in this litigation.”
Anthropic challenged the Trump administration’s supply chain risk designation as a First Amendment violation, calling it “retaliation.” It argues that the administration’s decision has harmed its reputation and may cost the company hundreds of millions of dollars.
An Anthropic spokesperson said Thursday that they believe Anthropic is “likely to succeed on the merits” of its lawsuit.
“While this case was necessary to protect Anthropic, our customers, and our partners, our focus remains on working productively with the government to ensure all Americans benefit from safe, reliable AI,” the spokesperson said.
A supply chain risk designation would require all companies working with the Pentagon to demonstrate that they are not using Anthropic’s products. Secretary of Defense Pete Hegseth and President Donald Trump ordered all government agencies to stop using Anthropic products in February.
Within hours of Hegseth announcing the designation on Anthropic, OpenAI CEO Sam Altman, creator of ChatGPT, announced an agreement to provide services to the Department of Defense.
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