Judge says Trump administration's blacklist of Anthropic was illegal

By Mike Murphy

Anthropic is planning a massive IPO as soon as this fall.

The Trump administration violated Anthropic's First Amendment rights when it blacklisted the artificial-intelligence company earlier this year, a federal judge ruled late Thursday.

U.S. District Judge Rita F. Lin of the Northern District of California said in her decision that the government had illegally retaliated against Anthropic, deeming it a supply-chain risk "for constitutionally protected expressive activities."

The Trump administration's "contemporaneous words and deeds confirm that the challenged actions were based on a desire to make a public example out of Anthropic for its 'arrogance' in criticizing the government, not based on any articulable basis to believe that Anthropic would actually sabotage its model," Lin wrote in her ruling.

Anthropic filed suit in March after the Pentagon labeled it a supply-chain risk for national security, and President Donald Trump ordered the U.S. government to stop using the company's Claude AI model, which was widely used by the Pentagon and defense contractors. That came after Anthropic - which had been awarded a $200 million contract to provide classified-level AI technology to the Pentagon - refused to allow its technology to be used for mass surveillance in the U.S. or the development of autonomous weapons.

Rivals OpenAI, Elon Musk's xAI and Alphabet's (GOOG) (GOOGL) Google have since announced their own deals with the Pentagon.

"We welcome the court's ruling that this supply-chain-risk designation was unlawful," an Anthropic spokesperson said Thursday night. "We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology."

The White House did not immediately respond to a request for comment.

A second lawsuit in the case is still pending in Washington, D..C.

The practical effects of Thursday's ruling was unclear; Anthropic is still technically labeled a security risk until the Washington case is resolved, and according to the Wall Street Journal, the Defense Department is set to be completely off Anthropic models by the end of September.

Anthropic is planning a massive initial public offering as soon as this fall, reportedly seeking a valuation of as much as $3 trillion. That would smash the current record for the largest IPO ever, set earlier this year by SpaceX (SPCX), when it raised nearly $75 billion at a $1.7 trillion valuation.

-Mike Murphy

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08-27-26 2316ET