A federal appeals court has upheld the Pentagon's decision to label Anthropic, an artificial intelligence company, as a supply chain risk. This means the Pentagon can continue to block the use of Anthropic’s AI models, known as Claude, within its systems and exclude them from defense-related work. The ruling came from the U.S. Court of Appeals for the District of Columbia Circuit, where a panel of judges voted 2-1 in favor of the Pentagon. The decision allows the Defense Department to maintain its stance that Anthropic poses a risk to national security through its AI technology. The dispute began earlier this year when then-President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security. They designated the company a supply chain risk, which is a term used to describe entities that could pose a threat to the security or stability of the nation’s critical infrastructure or operations. Anthropic’s CEO, Dario Amodei, pushed back, arguing that the company’s AI tools could be misused for mass surveillance or autonomous weapons. However, the court ruled that the Pentagon had a reasonable basis for its concerns, citing fears that Anthropic could manipulate its AI models to avoid performing tasks deemed essential for national security. This appeal is separate from a recent ruling in California, where a federal judge found that the Pentagon had acted unlawfully by penalizing Anthropic for criticizing the government’s approach to AI. That case involved a different legal rule and was not related to the current decision. In contrast, the current case focused on a specific provision the Pentagon used to label Anthropic as a supply chain risk. An Anthropic spokesperson expressed disagreement with the court’s decision, noting that another court had already ruled against the government’s designation. The company stated it remains confident in its position and is exploring further legal options. The White House has not yet commented on the ruling.