Anthropic wins court challenge to US supply chain risk label

[AUSTIN] The Trump administration must lift its ban on Anthropic’s artificial intelligence technology for federal agencies, a US judge ruled.

US District Judge Rita F Lin in San Francisco sided late on Thursday (Aug 27) with the Claude chatbot maker in its challenge to the Department of Defense, finding that the ban is not adequately justified.

The judge wrote that while the government “is certainly owed deference on weighty issues of national security”, its “words and deeds confirm that the challenged actions were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticising the government, not based on any articulable basis to believe that Anthropic would actually sabotage its model”.

The ruling is a key victory for the AI giant, which has been locked in a high-stakes dispute with the administration since negotiations with the Pentagon over the use of the company’s AI technology by the military fell apart earlier this year.

An Anthropic spokesperson said the company is pleased the court ruled the supply chain designation unlawful.

“We remain focused on working productively with the government to harness AI for our national security so all American benefit from this technology,” according to the statement.

The White House did not immediately respond to a request for comment.

Anthropic had sought assurances that its technology would not be used for mass surveillance of Americans or autonomous weapons deployment, but the government resisted any restrictions on its use due to national security concerns.

After discussions broke down, the Department of Defense labelled Anthropic a risk to the US supply chain, blocking government agencies from using the company’s technology.

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Anthropic sued, accusing the government of unlawfully retaliating against the company. Lawyers for the chatbot maker have said that a ban would result in billions of dollars in lost revenue.

The ban has been blocked from taking effect since March, under a separate order from Lin.

But a lawyer for the government said in late July that the Pentagon has continued to “wind down” its use of Anthropic products and intended to complete that process by Sep 30.

In her ruling, the Lin made clear that the Defense Department is not prevented from taking any lawful action that was available to it before it set the supply chain designation.

“For example, this order does not require the Department of War to use Anthropic’s products or services and does not prevent the Department of War from transitioning to other artificial intelligence providers, so long as those actions are consistent with applicable regulations, statutes, and constitutional provisions,” the judge wrote.

The California case is one of two legal challenges brought by Anthropic over being labelled as a threat. The company also sued in Washington’s federal appeals court, using a different legal argument. 

A three-judge panel of that court has yet to issue a ruling, but expressed scepticism during a May hearing that Anthropic could legally second-guess the government’s assessment that it posed a risk to the supply chain. BLOOMBERG