Judge rules Trump administration lacks evidence for Anthropic ‘supply chain risk’ label in AI dispute

A federal judge told the Trump administration on Thursday that it has not provided enough evidence to justify labeling artificial intelligence company Anthropic a supply chain risk, a designation that would bar the federal government from using the company’s technology. U.S. District Judge Rita Lin, presiding in San Francisco, heard arguments in one of two lawsuits Anthropic filed in March challenging the ban.

The dispute stems from stalled contract negotiations between Anthropic and the Department of Defense. Anthropic refused to allow its AI to be used for mass surveillance of Americans or for targeting and firing decisions involving lethal weapons, arguing the technology was not ready for such applications. The Pentagon countered that a private company should not dictate how the military uses technologies, and said it would use the tools in “lawful” ways.

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Judge questions government’s rationale

During the hearing, Judge Lin expressed concern about the government’s argument that Anthropic’s public criticism of the Department of Defense justified the ban. She called that logic “really troubling,” warning it could set a precedent of retaliating against federal contractors who disagree with the administration.

The Department of Defense further claimed Anthropic could potentially disable or alter its AI models during warfighting operations — a claim that experts say lacks evidence. Lin agreed, saying she saw no proof Anthropic could alter a delivered model or “flip some kind of kill switch.”

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Bloomberg and Axios were among the first to report on the hearing.

Broader implications for AI and government contracts

This case highlights growing tensions between AI companies and the federal government over acceptable use of artificial intelligence in military and surveillance applications. Anthropic, like several other major AI firms, has established policies limiting how its technology can be deployed, particularly in weapons systems and mass surveillance.

Judge Lin temporarily blocked the ban in March and is now weighing whether to make that order permanent. A separate related lawsuit filed by Anthropic against the Department of Defense is being heard in Washington, D.C.

The outcome could set a precedent for how the government labels and restricts technology companies it deems supply chain risks, particularly in the rapidly evolving AI sector. It also raises questions about whether private companies can impose ethical restrictions on how the military uses commercially available AI tools.

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