Anthropic Defeats The Pentagon In Court — And The Timing Couldn’t Be Better As Mega IPO Draws Closer

• The dispute began after Anthropic resisted Pentagon demands for unrestricted military use of Claude.
• Anthropic said in its March lawsuit against the government that the blacklist put hundreds of millions of dollars in contracts at risk.
• The ruling comes as Anthropic moves closer to a potential $2 trillion IPO.

Anthropic PBC scored a major legal victory Thursday after a federal judge ruled that the government unlawfully retaliated against the AI company by designating it a national-security supply-chain risk, dealing a blow to the Pentagon’s efforts to blacklist the Claude maker.

U.S. District Judge Rita Lin of the Northern District of California mostly sided with Anthropic in its lawsuit against the administration, finding that the government failed to provide evidence that the company posed an actual national-security threat, according to reports in The Wall Street Journal and Reuters. 

Instead, Lin said the designation appeared to be retaliation for Anthropic’s public disagreements with the Pentagon over how its AI models could be used.

“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” Lin wrote in her 59-page ruling, according to Reuters. She ordered the government to rescind guidance and directives related to labeling Anthropic a supply-chain risk.

Anthropic Vs Pentagon: What’s The Case?

The dispute began after Anthropic sought assurances early this year that its Claude models would not be used for fully autonomous weapons or domestic surveillance. The Pentagon rejected those restrictions, arguing that the military should be able to use AI for all lawful applications. 

After negotiations over a new military contract broke down, Defense Secretary Pete Hegseth designated Anthropic a supply-chain risk — an unprecedented use of a government mechanism intended to guard military systems against foreign sabotage.

Anthropic sued in March, arguing that the designation violated the firm’s First Amendment rights by retaliating against the company for its AI-safety positions and denied it due process under the Fifth Amendment. Anthropic warned that the designation would cost it hundreds of millions of dollars.

The judge had already granted Anthropic a preliminary injunction in March. At a July hearing, she reportedly described the government’s position that it could retaliate against a contractor for publicly criticizing it as “really troubling” and “quite extreme.”

Anthropic IPO Watch

The ruling comes as Anthropic races toward a potential initial public offering and reportedly targets a valuation of around $2 trillion, making the legal uncertainty surrounding its government business an increasingly important investor concern.

Recent reports say Anthropic could launch its IPO next month or in early October, while rival OpenAI’s listing plan is reportedly pushed to next month.

Meanwhile, Anthropic has raced past OpenAI in terms of revenue and valuation. OpenAI’s second-quarter revenue rose 18% quarter over quarter to $6.7 billion, while Anthropic’s more than doubled to $11.6 billion, according to a recent report in The Wall Street Journal. In annualized terms, OpenAI is clocking nearly $29 billion, compared with $46.4 billion for Anthropic.

On Stocktwits, retail sentiment was ‘extremely bullish’ for OpenAI and ‘bullish’ for Anthropic. Anthropic is valued at $1.15 trillion, compared to OpenAI’s private market valuation of $878.82 billion, according to data from Nasdaq Private Market.

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