Anthropic requested the government commit to no further penalties during a court hearing, but the Justice Department declined. The administration is preparing an executive order to ban Anthropic's tools across the federal government.
The AI startup is suing, alleging unconstitutional sanctions that have caused billions in revenue risk and irreparable harm. A judge scheduled a preliminary hearing for March 24, though Anthropic sought a faster timeline.
The dispute originated from Anthropic's refusal to allow unrestricted military use of its AI, citing ethical concerns. Legal experts argue the sanctions abuse laws to punish political opponents but note courts often defer to government national security claims.
Main Topics: Legal battle between Anthropic and the Trump administration, government sanctions and impending ban, business impact on Anthropic, origins in ethical AI/military use debate, constitutional and legal expert opinions.
At Anthropic’s first court hearing challenging sanctions imposed by the Trump administration, the AI tech startup asked the government to commit that it wouldn’t levy additional penalties on the company. That didn’t happen.
“I am not prepared to offer any commitments on that issue,” James Harlow, a Justice Department attorney, told US district judge Rita Lin over video conference on Tuesday.
In fact, the government is gearing up to take another step designed to sideline the company from doing business with federal agencies. President Trump is currently finalizing an executive order that would formally ban usage of Anthropic tools across the government, according to a person at the White House familiar with the matter but not authorized to discuss it. Axios first reported on the plan.
Tuesday’s hearing stemmed from one of the two federal lawsuits Anthropic filed against the Trump administration on Monday, alleging that the government unconstitutionally designated it a supply-chain risk and turned it into a tech industry pariah. Billions of dollars in revenue for Anthropic is now at risk, with current customers and prospective ones dropping out of deals and demanding new terms, according to the company.
Anthropic seeking a preliminary court order suspending the risk designation and barring the administration from taking further punitive measures against the company.
The court appearance on Tuesday was to decide on the schedule for a preliminary hearing, and Anthropic is eager for it to happen soon to prevent further harm to its business. Michael Mongan, an attorney for Anthropic at WilmerHale, told Lin he was less concerned about delaying it until April if the Trump administration could commit to not taking additional action. “The actions of defendants are causing irreparable injuries, and those injuries are mounting day by day,” Mongan said.
After Harlow declined, Lin moved up the date of the hearing to March 24 in San Francisco, though that timeline was still later than Anthropic wanted. “The case is quite consequential from both sides, and I want to make sure I’m deciding on an expedited record but also a full record,” the judge said.
Scheduling in the other case, which is in Washington, DC, is on hold while Anthropic pursues an administrative appeal to the Department of Defense, which is expected to fail on Wednesday.
The months-long dispute between the Pentagon and Anthropic began when the AI startup refused to sign off on its current technologies being used by the military for any lawful purpose, which it fears could include broad surveillance of Americans and the launch of missiles without human supervision. The Defense Department contends usage decisions are its prerogative.
Several attorneys with expertise in government contracts and the US Constitution believe the administration’s action against Anthropic continues a pattern of abusing the law to punish perceived political enemies, including universities, media companies, and law firms (such as WilmerHale, the firm representing Anthropic). The experts believe Anthropic should prevail, but the challenge will be overcoming the deference that courts often give to national security arguments from the government, especially during times of war.
“If this is a one-off, you might give the president some deference,” says Harold Hongju Koh, a Yale Law School professor who worked in the Barack Obama presidential administration and has written about the Anthropic case. “But now, it’s just unmistakable that this is just the latest in a chain of events related to a punitive presidency.”
David Super, a Georgetown University Law Center professor who studies the constitution, says the provisions the Defense Department used to sanction Anthropic were designed to protect the country from potential sabotage by its enemies.
“It is an absurd stretch of the English language to equate ‘does not agree to every demand of Pete Hegseth’ with ‘sabotage,’” Super says, referring to the secretary of defense. “The US Supreme Court has repeatedly warned against this sort of repurposing, both in the recent case striking down the president's tariffs and in earlier cases striking down President Biden's actions, such as student loan forgiveness or the pandemic-era eviction moratorium.”
Until the lawsuits are resolved, the tech industry is left to grapple with a series of practical dilemmas. Software companies that rely on Anthropic’s suite of tools known as Claude are confused about whether they need to pursue alternatives. OpenAI and Google are moving forward with Pentagon deals to supplant Anthropic, despite pressure from their employees to push back on government demands over how their technology should be used.
Zohra Tejani, a partner at the law firm Seyfarth Shaw who counsels tech companies on federal contracts, says that Anthropic may ultimately succeed in freeing itself of the supply-chain risk label and resume its normal work with many customers. But it may not win back business with the current administration, she says.
The government’s multifront attack on Anthropic and its ethical principles—even if struck down by the courts—could make other contractors fearful about becoming the next target. In the end, that may be the ultimate victory for the Trump administration.
“The Pentagon is sending a message to every other AI company: If you defy the Pentagon, you risk nationalization and heavy-handed government intervention,” says Christoph Mlinarchik, a former Pentagon contracting officer who now advises federal suppliers. “The Pentagon does not want to cede veto or moral authority to contractors, no matter the flavor of technology.”
Makena Kelly contributed reporting.
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