Anthropic Sees Clients Step Back Following Government Ban

Anthropic says it could lose billions of dollars due to a government ban on its services.

The artificial intelligence (AI) startup made that argument in a court hearing Tuesday (March 10) as it tried to get a judge to lift the Pentagon’s supply-chain risk designation on the company, Bloomberg News reported.

That designation came last month amid a dispute between Anthropic and the military after the company sought assurances that its tech would not be used for mass domestic surveillance or autonomous weapons. The supply-chain risk classification means that companies that wish to do business with the government are barred from working with Anthropic.

According to Bloomberg, Anthropic attorney Michael Mongan told the court that the government’s actions had caused more than 100 customers to express concerns about continuing to engage with his client.

He said a financial services firm had halted its talks with Anthropic over a $50 million contract, while a pharmaceutical company sought to shave 10 months off the duration of its contract. And a FinTech company “explicitly tied” cutting its $10 million contract in half to Anthropic’s dispute with the federal government.

Anthropic’s chief financial officer has calculated that the harm to the company’s revenue could range from hundreds of millions of dollars to billions of dollars, Mongan said.

The report said the judge has scheduled a hearing on the matter on March 24 on whether to remove the supply-chain risk designation.

In the meantime, Bloomberg added, Mongan sought a commitment from the government that it would not take further actions against the company, something Justice Department lawyer James Harlow would not agree to.

Anthropic has won the backing of the larger tech industry in its fight, the report said, with dozens of AI scientists and researchers submitting a letter to the judge on its behalf.

Microsoft, which has become one of Anthropic’s top customers, filed a motion in support of the company’s case earlier this week.

The company argued in its filing that a restraining order barring the designation would allow for a more orderly transition, avoid disrupting the military’s use of AI and keep tech firms from having to immediately alter their product and contract configuration.

A spokesperson for Microsoft told Reuters: “We believe everyone involved shares common goals, and we need time and a process to find common ground.”

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