The Pentagon has formally designated Anthropic as a supply‑chain risk, triggering immediate restrictions on the company’s use in defense contracts and prompting Anthropic to threaten litigation. The Defense Department said the move protects military systems from contractual restrictions that would prevent lawful operational use; Anthropic CEO Dario Amodei said the designation applies narrowly to specific contracts and that the company will challenge the decision in court. The dispute follows collapsed negotiations between Anthropic and the Defense Department over clauses that would bar the model’s use for mass surveillance or autonomous weapons. Several defense contractors have already signaled they will comply with the Pentagon’s direction, and Anthropic investors are publicly split on the company’s strategy. Why it matters: the designation affects procurement and contracting pipelines that many universities and research centers rely on for classified or defense‑adjacent work, and it raises questions about how government security reviews will shape partnerships with AI vendors.