Tech · AI firm AnthropicJudge Blocks Pentagon's Blacklist of Anthropic as Unlawful RetaliationAired August 29, 2026 at 5:49 PM UTCWritten September 7, 2026 at 9:22 PM UTCRead the write-upThis storyTranscript · LOADING0:00A federal judge has wiped out the Pentagon's blacklist of AI company Anthropic.0:04The ruling calls it unlawful retaliation for the company's refusal to help build0:08mass surveillance and autonomous weapons.0:10But a second case in Washington could still keep the label alive, will it?0:14The confrontation began on February 27th, when President Trump ordered federal0:18agencies to stop using Anthropic's AI assistant.0:21Defense Secretary Pete Hegseth, posting the same day, accused the company of a0:25master class in arrogance and betrayal and ordered contractors to cut all commercial0:29ties.0:30Anthropic had said it would work with the military but refused to drop two red0:34lines, mass domestic surveillance of Americans and fully autonomous lethal weapons.0:39The formal supply chain risk designation under 10 U.S.C.0:42Section 3252 came in a letter dated March 3rd, making Anthropic the first U.S.0:47company ever publicly designated under a statute aimed at foreign sabotage.0:51The company filed suit on March 9th.0:53Judge Lynn had already stepped in once, issuing a preliminary injunction on March0:5726th.0:58At the July 30th summary judgment hearing, She said the government's record had1:02gotten worse.1:03Then on august 27th, she issued her 59-page decision.1:07Judge Lynn wrote that the empty invocation of national security is not a blank check1:11to punish and retaliate against government critics.1:13She found the government's actions were based on a desire to make a public example1:16out of Anthropic for its arrogance in criticizing the government, not based on any1:20articulable basis to believe that Anthropic would actually sabotage its model.1:24The ruling rests on three independent grounds.1:27First Amendment retaliation.1:28Fifth Amendment due process.1:30An arbitrary and capricious agency action under the Administrative Procedure Act.1:34But the ruling does not end the fight.1:36A separate designation was made under a different statute.1:3941 USC Section 4713.1:42The Federal Acquisition Supply Chain Security Act.1:45That case is pending in the DC Circuit, where a panel including two Trump appointees1:50previously denied Anthropic's emergency stay.1:52So the company can still technically be labeled a supply chain risk on paper until1:56that court says otherwise.1:57For Anthropic, the immediate practical effect is a cleared reputation and a cleared2:02path toward an initial public offering that bankers and investors have discussed2:05valuing around $2 trillion with up to $100 billion raised.2:09Those are banker figures, not court findings.2:12Judge Lynn vacated the designation and the contractor boycott directive, and she2:16denied the government even a seven-day administrative stay.2:19But she did not order the Pentagon to use Claude at all, and she rejected2:22Anthropic's argument that the president's agency-wide directive exceeded2:26presidential power.2:27The order leaves the Defense Department free to select a different vendor by lawful2:31means.2:32The Pentagon has already moved.2:34Its chief technology officer said the department is about two-thirds of the way off2:38Anthropic Systems with a September 29th removal date.2:41The key players, Judge Rita F.2:42Lynn, issued the ruling.2:44Defense Secretary Pete Hegseth made the original designation.2:47President Trump ordered the agencies off the product.2:50Anthropic's CEO Dario Amodei leads the company.2:53And on the DC Circuit, Judges Gregory Katsus and Naomi Rao were on the panel that2:57denied Anthropic's emergency stay.2:59Anthropic welcomed the ruling.3:01With a spokesperson saying, we welcome the court's ruling that this supply chain3:05risk designation was unlawful, the company said it remains focused on working3:09productively with the government on AI for national security.3:12But the unresolved question is whether a court willing to call a national security3:16justification a blank check for retaliation holds against a different court where3:20two of the three judges have already voted against the company, that decides whether3:24this is a lasting check or the first round in a longer contest over who gets to3:28define what AI may be used for.Explore with HeyDexThe shortThe short ↗