US appeals court upholds pentagon's designation of Anthropic as supply-chain risk

A federal appeals court in Washington, DC, has upheld the US Department of Defense's designation of Anthropic as a supply-chain risk, rejecting the company's attempt to overturn the label. The ruling, issued on September 25, 2026, affirmed the Pentagon's stance that integrating Anthropic's Claude AI models into military systems posed a national-security risk. The court emphasized that Anthropic's restrictions on Claude's capabilities were insufficient to mitigate the risk. Anthropic, represented by spokesperson Danielle Cohen, remains confident in its position and may pursue further appeals. The Pentagon had previously sanctioned Anthropic under supply-chain laws to exclude its AI models from federal agencies by this month. The decision means Anthropic's models will remain blocked, with the dispute likely to persist through years of legal challenges. The ruling follows earlier court decisions, including a March ruling in San Francisco that was upheld last month. Anthropic has reported lost revenue due to the designation, though it has not disclosed the full impact. The company is preparing for an IPO later this year. Meanwhile, the Pentagon is exploring alternatives like SpaceX's Grok and Google's Gemini, despite ethical concerns from some employees at those firms.