Court backs Trump administration's blacklisting of Anthropic over withheld AI features
The US Court of Appeals for the District of Columbia Circuit ruled 2-1 today that the Trump administration had the authority to blacklist Anthropic technology after Anthropic withheld certain AI features from the military, even though Anthropic had no malicious intent. The panel wrote that the case "raises profoundly difficult questions about the appropriate military uses of an almost unimaginably powerful new technology," noting that the government warned of overly constrained AI models shutting down unexpectedly and failing important military operations, while Anthropic warned of unconstrained models hallucinating inappropriate targets for lethal military force. The court said Trump and Defense Secretary Pete Hegseth "must determine how best to balance the competing risks," and concluded that in doing so the Secretary "did not transgress any limits on his authority under the Supply Chain Security Act or the Constitution," so it denied Anthropic's petitions for review. The same court had already denied Anthropic's emergency motion for a stay back in April. The two judges who ruled against Anthropic, Gregory Katsas and Neomi Rao, were both appointed by Trump and served in his first administration; Katsas was previously deputy counsel to the president and Rao served in the Office of Management and Budget. Anthropic sued the Trump administration in March after it ordered federal agencies to stop using Anthropic's products and banned defense contractors from doing business with the company. Anthropic may now seek an en banc review by the full appeals court or petition the Supreme Court. An Anthropic spokesperson told CNBC, "We respectfully disagree with the court's decision. Another federal court has already held the government's parallel designation unlawful. We remain confident in our position and are considering all options, including further review." Despite the litigation, Commerce Secretary Howard Lutnick recently said the Trump administration and Anthropic have patched up their relationship and are "in tune."
Key facts
- The US Court of Appeals for the DC Circuit ruled 2-1 that the Trump administration could blacklist Anthropic for withholding certain AI features from the military.
- The court denied Anthropic's petitions for review, finding the Defense Secretary did not exceed his authority under the Supply Chain Security Act or the Constitution.
- Anthropic sued the administration in March after federal agencies were ordered to stop using its products and defense contractors were banned from doing business with the company.
- The two judges ruling against Anthropic, Gregory Katsas and Neomi Rao, were both Trump appointees who served in his first administration.
- Anthropic says a different federal court already found the government's parallel designation unlawful, and it is weighing an en banc review or a Supreme Court petition.
Why it matters
The ruling gives the executive branch broad latitude to bar a major AI developer from military and federal use over a dispute about which capabilities the company will enable, on the reasoning that balancing the risks of over-constrained versus under-constrained military AI is for the Secretary of Defense to decide, not the courts.
Who it affects
Anthropic, which now faces a federal blacklist covering government agencies and defense contractors while it explores further appeals; the Trump administration and Defense Secretary Pete Hegseth, whose authority under the Supply Chain Security Act was upheld; and, more broadly, any AI company facing pressure to enable military-requested features under threat of exclusion from federal business.
How to use it
There is no product or feature to use here: this is a legal and policy development. Companies and contractors tracking federal AI procurement should note that a blacklist decision over withheld capabilities has now survived appellate review, at least at the panel stage.
How solid is it
The account is based on the appeals court's own ruling text and an Anthropic spokesperson's statement to CNBC, both quoted directly, giving it solid grounding, though the calendar date of the ruling, the specific withheld features, and the details of the conflicting court decision Anthropic cites are not specified.
Risks and caveats
The 2-1 vote and Anthropic's statement that another federal court already found the government's parallel designation unlawful point to unresolved legal conflict; Anthropic may still seek en banc review or petition the Supreme Court, so the current ruling may not be the final word.
“case raises profoundly difficult questions about the appropriate military uses of an almost unimaginably powerful new technology.”
— the appeals court panel