During a hearing on Thursday, a federal judge indicated that the Trump administration has failed to provide sufficient evidence to justify designating AI company Anthropic as a “supply chain risk”—a label that effectively bars federal agencies from using the company’s technology.
U.S. District Judge Rita Lin expressed skepticism over the government’s claims, particularly those from the Department of Defense (DoD), during proceedings in the ongoing legal battle. Bloomberg and Axios were among the first to report on the hearing.
Background of the Dispute
The case stems from stalled contract negotiations between Anthropic and the Pentagon. Anthropic stated it did not want its AI used for mass surveillance of U.S. citizens or for targeting and firing decisions involving lethal weapons, arguing the technology was not yet ready for such high-stakes applications. The Pentagon responded that a private company should not dictate how the military uses its tools and assured it would use the technology in “lawful” ways.
Anthropic sued the DoD in March 2026, challenging both the ban and the risk designation. Thursday’s hearing was part of one of those two lawsuits; the second case is being heard in Washington, D.C.
Judge Challenges Key Government Claims
The government has argued that Anthropic’s public criticism of the DoD justifies the supply chain risk label. Judge Lin called this line of reasoning “really troubling,” warning it could set a dangerous precedent of retaliating against federal contractors who disagree with the administration.
The DoD also claimed that Anthropic could potentially disable or alter its AI models during active warfighting operations—a scenario experts have called unsupported by evidence. Judge Lin agreed, stating she saw no proof that Anthropic could “flip some kind of kill switch” or modify a delivered model after deployment.
What’s Next
Lin temporarily blocked the ban in March 2026 and is now weighing whether to make that order permanent. A final ruling could have significant implications for how the federal government evaluates and designates supply chain risks in the rapidly evolving AI sector.
via TechCrunch AI