A federal judge has ruled that the Pentagon’s decision to blacklist Anthropic as a “supply chain risk” was unconstitutional retaliation against the AI lab’s public refusal to loosen its military use restrictions. Judge Rita F. Lin of the Northern District of California wrote that the designation was “unlawful retaliation in violation of the First Amendment,” delivering a blunt rebuke to Defense Secretary Pete Hegseth’s handling of the monthslong standoff.
The conflict began last winter when Hegseth moved to renegotiate AI contracts so the Pentagon could deploy the technology for “any lawful use.” Most labs signed on. Anthropic didn’t. The company held firm on two red lines: no mass surveillance of Americans and no lethal autonomous weapons operating without human oversight. That refusal triggered what the court described as a pressure campaign — insults from DoD officials, an ultimatum, and finally the supply chain risk label, a classification typically reserved for genuine national security threats.
Lin’s ruling was unusually direct. “The empty invocation of national security is not a blank check to punish and retaliate against government critics,” she wrote. She also found Hegseth’s designation “arbitrary and capricious,” noting that while the Pentagon can absolutely choose whichever AI vendor it wants, the sweeping measures imposed on Anthropic were “illegal and baseless.” The judge had already issued a temporary block in March, citing evidence that the company was targeted for its “hostile manner through the press” — language that reads more like a petty grievance than a procurement decision.
Anthropic CEO Dario Amodei had framed the company’s stance as a defense of democratic values, arguing that in a “narrow set of cases” AI could undermine rather than protect them. The Pentagon, meanwhile, has since signed deals with seven other labs including Google, Microsoft, OpenAI, and SpaceX. The ruling doesn’t force the DoD to work with Anthropic, but it does establish that punishing a contractor for public criticism crosses a constitutional line. For an industry watching nervously as AI becomes a national security battleground, that’s a meaningful boundary. Anthropic spokesperson Danielle Ghiglieri said the company remains “focused on working productively with the government” — a diplomatic note after what the court has now officially called illegal behavior.
