A federal judge ruled Thursday that the Trump administration has not presented enough evidence to justify labeling AI company Anthropic a supply chain risk, blocking a federal ban on its technology. The decision, which could become permanent, stems from a dispute over stalled contract negotiations between Anthropic and the Department of Defense (DoD).
Judge Criticizes Government's Logic as 'Really Troubling'
U.S. District Judge Rita Lin presided over the hearing in San Francisco, where she found the government's evidence insufficient. The Trump administration had imposed the supply chain risk label, which barred federal agencies from using Anthropic's technology. The government argued that Anthropic's public criticism of the DoD justified the ban. Judge Lin called that logic "really troubling," warning it could set a precedent of retaliating against federal contractors who disagree with an administration.
Anthropic had refused to allow its AI to be used for mass surveillance of Americans or for targeting and firing decisions involving lethal weapons, arguing its technology wasn't ready for those uses. The Pentagon countered that a private company shouldn't dictate how the military uses technologies, stating it would use the tools in "lawful" ways.
DoD's Claims Lack Evidence, Judge Says
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The DoD claimed that Anthropic could potentially disable or alter its AI models during warfighting operations. However, experts say the DoD's claim lacks evidence. Judge Lin agreed, stating there was no proof Anthropic could alter a delivered model or "flip some kind of kill switch." The judge temporarily blocked the ban in March and is now weighing whether to make that order permanent.
The hearing was part of one of two lawsuits Anthropic filed against the DoD in March. The second lawsuit is being heard in Washington. The dispute began when contract negotiations between Anthropic and the DoD stalled, leading to the government's actions.
Implications for Federal Contractors
The ruling raises questions about the power of the executive branch to label companies as supply chain risks based on disagreements. Judge Lin's warning about retaliatory actions against federal contractors who voice opposition could have broader implications for government contracting. The case highlights the tension between national security concerns and the autonomy of private companies developing sensitive technologies.
The article was published July 30, 2026, at 1:26 PM PDT, by Rebecca Bellan. Bloomberg and Axios were among the first to report the hearing news.