Judge rules Pentagon illegally blacklisted Anthropic over AI red lines

A judge in the U.S. District Court for the Northern District of California ruled that the Pentagon’s blacklisting of Anthropic was unconstitutional, finding it amounted to unlawful retaliation in violation of the First Amendment.

Judge Rita F. Lin wrote that the Defense Secretary’s decision to designate Anthropic a supply chain risk was ‘arbitrary and capricious’ and that the invocation of national security did not grant a ‘blank check to punish and retaliate against government critics.’

The dispute began when Defense Secretary Pete Hegseth sought to renegotiate AI vendors’ contracts to allow the Pentagon to use AI for ‘any lawful use,’ which Anthropic opposed on principle.

Anthropic refused to drop two restrictions: prohibiting use of its AI for mass surveillance of Americans and for lethal autonomous weapons systems.

After Anthropic stood firm, the Pentagon named it a supply chain risk—a classification typically reserved for national security threats—and moved to replace its role with deals to seven other AI labs, including Google, Microsoft, OpenAI, and SpaceX.

Anthropic filed suit in March in California district court, and in March the judge issued a temporary restraining order blocking the blacklist while the case proceeded.

In that earlier order, Judge Lin wrote that records showed Anthropic was designated a supply chain risk because of its ‘hostile manner through the press,’ which she characterized as classic illegal First Amendment retaliation.

In a statement following Thursday’s ruling, Anthropic spokesperson Danielle Ghiglieri said the company welcomed the decision and remains focused on working productively with the government to harness AI for national security in ways that benefit all Americans.