A significant legal battle is unfolding as Microsoft and a coalition of retired military leaders throw their weight behind artificial intelligence firm Anthropic, challenging the Trump administration's designation of the company as a supply chain risk. This controversial move effectively blocks Anthropic from securing military contracts.
Microsoft, in a legal filing, is directly challenging Defense Secretary Pete Hegseth's recent action to exclude Anthropic from military work, arguing that its AI products pose a national security threat.
This stance is echoed by 22 former high-ranking U.S. military officials, including past secretaries of the Air Force, Army, and Navy, and a former head of the Coast Guard. In their own court filing, they allege Hegseth's actions constitute a misuse of government authority, describing it as "retribution against a private company that has displeased the leadership."
The Pentagon's decision against Anthropic followed an unusually public dispute over the company's refusal to permit unrestricted military use of its AI model, Claude. Donald Trump also publicly stated he was ordering all federal agencies to cease using Claude.
"The use of a supply chain risk designation to address a contract dispute may bring severe economic effects that are not in the public interest," Microsoft, a major government contractor, stated in its Tuesday filing in San Francisco federal court.
The software giant's legal brief further argues that the Pentagon's action "forces government contractors to comply with vague and ill-defined directions that have never before been publicly wielded against a U.S. company." Microsoft is seeking a judicial order to temporarily lift the designation, allowing for more "reasoned discussion" between Anthropic and the Trump administration. The Pentagon declined to comment, citing ongoing litigation.
Microsoft's filing also expressed support for Anthropic's two ethical red lines, which were a sticking point in contract negotiations after the Pentagon insisted on "all lawful" uses of its AI. "Microsoft also believes that American AI should not be used to conduct domestic mass surveillance or start a war without human control," the company asserted, adding, "This position is consistent with the law and broadly supported by American society, as the government acknowledges."
The software giant's intervention follows similar filings from other supporters, including a group of AI developers from Google and OpenAI, and organizations such as the Cato Institute and the Electronic Frontier Foundation.
The group of retired military chiefs, which includes former CIA director Michael Hayden and retired Coast Guard Adm. Thad Allen, also filed support. Their filing states, "Far from protecting U.S. national security, the Secretary’s conduct here threatens the rule-of-law principles that have long strengthened our military."
U.S. District Judge Rita Lin is presiding over the case in San Francisco, where Anthropic is headquartered, and has scheduled a March 24 hearing. While neither legal filing explicitly mentions the war in Iran, the ex-military officials warn that the "sudden uncertainty" of targeting technology widely embedded in military platforms could disrupt planning and endanger soldiers during ongoing operations.
The current commander of U.S. Central Command recently confirmed the military's use of "advanced AI tools" to "sift through vast amounts of data in seconds" during strikes on Iran, emphasizing that "humans will always make final decisions."
Anthropic was, until recently, the only one of its peers approved for use in classified military networks. However, due to this dispute, military officials are now reportedly looking to shift that work to competitors like Google, OpenAI, and Elon Musk's xAI.
