Anthropic is suing the US Department of Defense and other federal bodies after being designated as “supply chain risk” by the Trump administration, effectively restricting its business with defense contractors.

The designation came after talks collapsed over Anthropic’s refusal to allow its AI systems to be used for mass surveillance of Americans or autonomous weapons, prompting the government to halt adoption of its systems and jeopardizing a Pentagon deal worth up to $200 million.

The Pentagon insists Anthropic’s AI models must be able to use the technology for all lawful purposes.

The FT said last week that Anthropic CEO Dario Amodei pushed for last-minute negotiations with defense leaders to de-escalate tensions, but the attempt was largely unsuccessful in preventing a formal blacklist.

The San Francisco-based company argues the classification lacks a legal foundation and says the lawsuit is necessary to protect its business and partnerships while continuing discussions with the government.

“Seeking judicial review does not change our longstanding commitment to harnessing AI to protect our national security, but this is a necessary step to protect our business, our customers, and our partners,” an Anthropic spokesperson told CNN.

Anthropic’s consumer business has shown resilience despite the government controversy.

The company’s Claude application surpassed OpenAI’s ChatGPT in Apple’s App Store rankings for the first time immediately following news of the Pentagon contract termination.

By early March, Anthropic reported that more than one million users were signing up for Claude daily.

Google confirmed it would keep providing Anthropic’s AI technology to its cloud customers for non-defense purposes, following the Pentagon’s classification of the company as a supply chain risk.

Microsoft made a similar statement, while Amazon also said it will continue offering Anthropic’s services outside of defense work.