Washington, D.C. — September 25-26, 2026 — A federal appeals court ruled Friday that the U.S. Department of Defense can lawfully bar Anthropic’s artificial intelligence technology from military use, delivering a significant legal setback to the AI company in its ongoing dispute with the Trump administration.
The ruling
In a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Pentagon’s designation of Anthropic as a “supply chain risk” under the Federal Acquisition Supply Chain Security Act (FASCA). The ruling allows the Department of Defense to continue barring federal agencies and military contractors from using Anthropic’s Claude models on its systems.
Circuit Judge Gregory Katsas, writing for the majority, found that the Department had “ample support” for its concern that continued use of Claude posed a national security risk — specifically, that Anthropic might design its models in a way that prevents them from performing national-security functions the Department deems contractually necessary. The court also rejected Anthropic’s First Amendment claim, concluding that the exclusion stemmed from the company’s refusal to accept a specific contract term, not from its public advocacy for stronger AI regulation. Judge Neomi Rao joined the majority; Judge Karen LeCraft Henderson dissented, arguing the government had interpreted the underlying statute too broadly.
How the dispute began
The conflict dates to earlier this year, when Anthropic declined a Pentagon request to allow its AI to be used for “all lawful purposes,” citing the company’s own restrictions against enabling autonomous weapons systems and mass surveillance of U.S. citizens. In response, the Trump administration designated Anthropic a supply chain risk in March 2026, effectively cutting off its access to defense-related federal business.
A key nuance: two designations, two courts
The Pentagon relied on two separate legal designations to justify blacklisting Anthropic, which meant the dispute was litigated in two different courts simultaneously. In August 2026, a federal judge in San Francisco struck down one of the two designations, ruling that the administration had acted unlawfully — as retaliation against Anthropic for its positions on AI safety. Friday’s D.C. Circuit ruling addressed the second, separate designation, upholding it under different statutory grounds. The two rulings do not cancel each other out; each concerns a distinct legal basis, and the San Francisco ruling stands.
Anthropic’s response
An Anthropic spokesperson said the company “respectfully disagrees” with the D.C. Circuit’s decision, noting that another federal court has already found the government’s parallel designation unlawful, and that Anthropic remains confident in its position while considering further options — including a request for the full D.C. Circuit to rehear the case en banc, or an appeal directly to the Supreme Court.
What this does — and doesn’t — mean
The ruling does not bar Anthropic’s products from the federal government as a whole; it specifically upholds the Pentagon’s exclusion. Anthropic has said the blacklisting has already cost it billions of dollars in lost business and reputational damage, at a moment the company is also reportedly preparing for a highly anticipated public offering.
Disclaimer: Analysis produced with Claude (Anthropic), with editorial approval and oversight from Robert Williams. Readers are encouraged to consult additional sources; this piece does not represent the views of the parties quoted and should be read as journalistic reporting, not as a statement on their behalf.
Source: https://x.com/CNN/status/2103620840529007071?s=20
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