Anthropic’s Department of War lawsuit is even higher-stakes amid the AI boom
Anthropic suing the U.S. Department of War perhaps wasn’t a surprise, but it was nevertheless a shock.
This is the sort of thing that has happened, but is rare—and a matter of last resort. For more than a week, the Pentagon and Anthropic, valued at $380 billion, have been wrapped in a very public conflict over how the Trump Administration can (and can’t) use AI. The result: Secretary of War Pete Hegseth last week designated the company a “supply chain risk.”
In its lawsuit, filed yesterday in the U.S. District Court for the Northern District of California, Anthropic says the Pentagon’s actions are “unprecedented and unlawful.” It also claims that, for Anthropic, “hundreds of millions of dollars” of government contracts are either canceled or in jeopardy. This is the comment that Anthropic offered to my colleague Beatrice Nolan: “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.”
In short, “we’re not letting this go.” And it’s worth saying: There’s absolutely precedent for a large, emerging tech giant suing the government, albeit in different circumstances. Consider Palantir: In 2016, the company sued the U.S. Army over its intelligence software procurement process, arguing it wasn’t getting a fair opportunity to compete—and a federal judge ultimately sided with Palantir. Something similar happened in 2014, when SpaceX sued the U.S. Air Force. SpaceX demanded that its rockets be allowed to compete for key launches, and the two sides eventually settled. (SpaceX won many launch contracts in the years that followed.) And even incumbents aren’t immune to fights like this: There was also the DoD’s $10 billion JEDI cloud contract with Microsoft, which led to separate lawsuits from Amazon and Oracle (an imbroglio the government only resolved by annulling the contract in 2021).
So, this does happen. That said, this conflict between the Pentagon and Anthropic isn’t only contentious for its content (including ethical questions around the extent to which AI can be used for autonomous killing) but for the sheer financial stakes. In February, the company closed its $30 billion Series G, building on the billions that have already been poured into the one true competitor to OpenAI. As Fortune’s Jessica Mathews reported last week, investors have mostly held the line with Anthropic CEO Dario Amodei for now—but that doesn’t mean this is going to be easy moving forward.
If anything, it will only get more public, too.
A call for your questions… I’ll be interviewing Harvey CEO Winston Weinberg for the next episode of the Term Sheet Podcast, and I want to ask him your questions! Have questions for Winston? Send ‘em to alexandra.garfinkle@fortune.com.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.
Joey Abrams curated the deals section of today’s newsletter. Subscribe here.
This story was originally featured on Fortune.com