Appeals Court Denies Anthropic Bid to Block Pentagon Blacklisting as Small AI Rivals Fill Defense Gap

A federal appeals court denied Anthropic's request to temporarily block the Pentagon's supply chain risk designation, leaving the company excluded from DOD contracts while litigation continues. Anthropic can still work with other government agencies, including intelligence community customers evaluating its Claude Mythos model for cybersecurity. Small defense AI startups report fielding calls from generals and combatant commanders, with the Pentagon exploring shifts to Google, OpenAI, and xAI. The ruling deepens uncertainty over AI vendor access to classified military networks where Anthropic's Claude was the first AI system deployed.