Claude’s exclusion from the Pentagon’s systems and contracts has just been validated by a U.S. court of appeals. This new setback weakens Anthropic ahead of an IPO that would value it at $2 t
Claude’s exclusion from the Pentagon’s systems and contracts has just been validated by a U.S. court of appeals. This new setback weakens Anthropic ahead of an IPO that would value it at $2 trillion, but it does not close the legal battle.
On September 25, the federal court of appeals for the District of Columbia rejected the appeals filed by Anthropic, despite the stay obtained last March. Two of the three judges held that the Pentagon could label the company as a “supply chain risk”.
This decision allows the ministry to continue withdrawing Claude from its systems. It also prohibits military subcontractors from using Anthropic’s products when working for the Pentagon.
Secure your cryptos with LedgerThis link uses an affiliate program.The main points of the judgment highlight the significance of this setback :
Judge Gregory Katsas considered that the ministry had “sufficient reasons” to conclude that the continued integration of Claude could present a risk covered by the law. This court also rejected Anthropic’s arguments based on freedom of expression and the right to due process.
Anthropic had already allowed the U.S. government to use Claude for foreign intelligence analysis, military systems design, and the conduct of certain cyber offensive operations. However, the company maintained two prohibitions.
The first concerned fully autonomous lethal weapons capable of selecting and attacking a target without human intervention. The second concerned mass surveillance of American citizens. Meanwhile, the Pentagon had demanded a contract allowing all lawful uses.
Last February, negotiations failed. Thanks to on-chain data, CEO Dario Amodei had stated that autonomous weapons were not yet reliable enough and that mass surveillance remained incompatible with democratic values, even when it could be legal.
The ministry mainly feared that Anthropic could alter Claude’s safeguards and disrupt an ongoing operation. Indeed, the court noted that the model had already refused certain government requests, including those related to classified documents and sensitive health research.
The Pentagon thus cited a 2018 federal law aimed at supply chain security. Such legislation allows an agency to exclude technology when it believes a provider would monitor, disrupt, or modify its operation.
The September 25 verdict does not represent the automatic annulment of Anthropic’s victory in California on August 27. Indeed, federal judge Rita Lin had qualified another Pentagon measure as illegal retaliation and specified that the company had not benefited from the required guarantees.
The Washington court examined a separate procedure, based notably on the 2018 law. Its majority ruled that the Pentagon had properly informed Anthropic. Furthermore, it had given the opportunity to contest its exclusion.
Judge Karen Henderson opposed this interpretation. In her view, the majority grants the government too much power to force technology providers to accept its conditions under threat of being considered national threats.
Anthropic recalled that the California judgment still favored it. The company indicates it is examining its next options. Moreover, it would request a new review of the case or try to seize the Supreme Court, without yet announcing its strategy.
This setback occurs while Anthropic prepares its stock market entry. The company officially filed a confidential draft S-1 form with the SEC on June 1. However, it has not confirmed the share price, the target amount, or its future valuation.
The operation could raise up to $100 billion and value Claude’s creator around $2 trillion. Nvidia is expected to discuss an investment potentially reaching $10 billion, but the two groups have not confirmed these negotiations.
Anthropic was still valued at $965 billion after its May fundraising. Reaching $2 trillion would therefore imply more than doubling in a few months.
The exclusion from military markets does not directly threaten all its commercial activities. However, it adds a regulatory risk that future investors will need to assess, especially regarding public contracts and relationships with defense suppliers.
