The U.S. Department of Defense has faced legal scrutiny over its decision to label tech firm Anthropic a supply-chain risk, with a federal judge suggesting it may be an attempt to 'cripple' the company.

Anthropic is currently embroiled in two lawsuits, claiming the Trump administration's designation was illegal retaliation for pushing back on AI use restrictions by military personnel. The tech firm hopes a temporary pause on this label could help retain customers wary of potential security risks.

The dispute has reignited discussions around Silicon Valley’s responsibility to oversight in AI deployment, with Pentagon officials arguing their decision was based on national security concerns. However, Judge Rita Lin questioned the scope and legality of these measures, describing them as 'troubling' if not tailored specifically to stated security issues.

Meanwhile, Defense Secretary Pete Hegseth has posted a directive barring military contractors from engaging with Anthropic for any commercial activities, although this was later acknowledged by government attorney Eric Hamilton as lacking legal authority. The debate continues as the Pentagon seeks alternatives and faces an imminent court ruling on these contentious measures.