Anthropic says Trump ban puts federal contractor partnerships ‘in jeopardy’

Anthropic’s relationships with other federal contractors face irreparable harm following the Trump administration’s governmentwide ban on the company and determination that it’s a “supply-chain risk,” the Claude maker said in a lawsuit filed in a federal district court Monday.

The legal challenge against the Pentagon, as well as multiple federal agencies and officials, seeks immediate and injunctive relief from President Donald Trump’s directive banning the company from government use and the Department of Defense’s designation of the company as a supply-chain risk. Among its arguments, Anthropic alleges the actions violate federal administrative procedure law, the company’s right to free speech, and are beyond existing legal authority. 

The lawsuit also provides new details about the ramifications for Anthropic’s work with other companies contracting with the federal government. 

At least one federal contractor that Anthropic has worked with to build custom applications has already “indicated that it may suspend that work or even remove Claude from existing deployments,” and others the company has worked with “are raising concerns, pausing collaborations, and considering terminating contracts,” according to the lawsuit.

“Anthropic has no way to obtain redress from the government for those economic harms,” the company said. It estimated the actions by the Trump administration could jeopardize “hundreds of millions of dollars in the near term.”

Anthropic’s legal challenge is the latest in a squabble between the AI giant and the DOD over how its technology should be used that culminated in an outright ban on the technology in government.

While Trump claimed the company was trying to “strong-arm” the DOD, Anthropic CEO Dario Amodei said the company was trying to maintain safeguards to ensure that its technology would not be used in mass surveillance or fully autonomous lethal weapons. On Feb. 27, those tensions boiled over with Trump issuing his governmentwide ban and Defense Secretary Pete Hegseth designating the company as a supply-chain risk to national security. Both announcements were made via social media. 

Over the next several days, federal agencies took action to comply, canceling or pausing their own Anthropic uses. That included Anthopric’s OneGov contract that made the service more readily available to entities in all three branches of government, the lawsuit stated.

The impact of those decisions is widespread, per Anthropic.

Following the administration’s actions, the company said in the lawsuit that it “immediately” heard from outside partners — such as customers, cloud providers and investors — who expressed “confusion about what was required of them and concern about their ability to continue to work with Anthropic.”

Since the actions the company is challenging, “dozens of companies have contacted Anthropic seeking clarity, guidance, and, in some cases, an understanding of their termination rights,” the lawsuit said. 

A FedScoop review of public disclosures of AI use in agencies last week found the company’s services, such as Claude, were being used in various government agencies to fuel chatbots, automate workflows and streamline processes. Those disclosures are imperfect, however, and likely underrepresent all of the uses for the company’s tools.

On the governmentwide ban specifically, Anthropic argued a legal foundation doesn’t exist. “No statute authorizes federal agencies to impose abrupt and en masse orders and sanctions limiting Anthropic’s ability to compete and impugning Anthropic’s reputation,” the lawsuit said. 

Among the actions Anthropic wants the court to take: an order “to rescind any and all guidance, directives, or communications” related to enforcement of the actions it’s challenging. 

In addition to the challenge filed in the U.S. District Court for the Northern District of California, Anthropic also filed a simultaneous challenge Monday in the U.S. Court of Appeals for the D.C. Circuit.

The government has yet to formally respond to the legal action, and a Justice Department spokesperson declined to comment. White House spokeswoman Liz Huston, however, reiterated the administration’s position in response to FedScoop’s request for comment. 

“President Trump will never allow a radical left, woke company to jeopardize our national security by dictating how the greatest and most powerful military in the world operates,” Huston said.

Notably, Anthropic gained some early backing in its district court challenge from multiple OpenAI and Google employees, who filed an amicus brief supporting the company’s request for the court to take action in the form of a temporary restraining order. 

That coalition of AI engineers, researchers, scientists and professionals called the designation of Anthropic as a supply-chain risk “an improper and arbitrary use of power that has serious ramifications for our industry.”

The amici also said they understood the company’s “red lines” with respect to the use of its technology. 

“The best currently available AI systems cannot safely or reliably handle fully autonomous lethal targeting, and should not be available for domestic mass surveillance of the American people,” they wrote. “While there are various ways to establish these guardrails, we agree that these guardrails must be in place.”