Anthropic: Pentagon put billions of dollars at stake with supply chain risk designation

Lawyers for Anthropic warned a judge Tuesday that the Pentagon’s decision to label its products a supply chain risk could cost the artificial intelligence (AI) firm billions of dollars in revenue.

Michael Mongan, an attorney for Anthropic, said during Tuesday’s status conference that the company is suffering an “irreparable injury” as a result of the designation, urging U.S. District Judge Rita F. Lin for a speedy hearing on its request for a temporary block on the supply chain risk designation.

Anthropic sued the Trump administration earlier this week over the designation and President Trump’s order for federal agencies to stop using Anthropic products. The designation, which is typically reserved for foreign adversaries, came after Anthropic and the Pentagon failed to come to an agreement on the use of AI for mass surveillance or autonomous weapons.

Anthropic argues the Trump administration is retaliating against the company for its “protected viewpoint” on AI safety and the limitations of its own AI models.

Mongan told Lin that more than 100 enterprise customers contacted Anthropic in recent days with concerns about working with the AI firm in the wake of the public clash. Anthropic’s chief financial officer estimated harm to the 2026 revenue could range from hundreds of millions of dollars to billions of dollars, Mongan said.

Justice Department lawyer James Harlow pushed back against the request to move the hearing up in date, pointing out the complexities of the case with nearly 20 agencies named as defendants.

Mongan separately noted news reports have also circulated claiming the White House is preparing an executive order to formally instruct the federal government to remove Anthropic’s AI from its operations.

Asked whether the government could make a commitment against retaliatory actions in the meantime, Harlow said he is not “prepared to offer any commitments.”

Ultimately, Lin agreed to move the hearing on the temporary block from April 3 to March 24.

Hours ahead of the status conference, technology giant Microsoft threw support behind Anthropic in the complaint, filing an amicus brief urging the court for a temporary block of the designation. A spokesperson for Microsoft told The Hill that the company needs “time and a process to find common ground” on the issue.

Anthropic has argued the restrictions cannot prohibit anyone who can do business with the military from doing business with the AI firm. Microsoft, along with Google, Amazon and Apple said last week that Anthropic’s AI tools will still be available on their platforms for work that does not involve the Pentagon.

Anthropic also filed suit in the D.C. federal appeals court, requesting a review of the Pentagon’s determination.

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