Microsoft Defies Pentagon in Anthropic Legal Battle

The legal battle between the AI firm Anthropic and the U.S. Pentagon is getting even more attention. In a significant escalation, Microsoft (MSFT) has officially backed Anthropic, making it the first Big Tech giant to openly take sides in this high-stakes conflict.

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On Tuesday, Microsoft filed a document in court, known as an “amicus brief,” urging a judge to pause the Pentagon’s move to label Anthropic a “supply chain risk.” This label currently blocks defense contractors from using Anthropic’s AI.

Why Microsoft Is Taking a Stand

Microsoft is stepping in to protect more than just a business partner. The company said the move could affect the wider U.S. AI sector.

In its court filing, Microsoft said the Pentagon’s sudden decision could create confusion for companies that rely on AI tools, even those that do not work with the military. The company warned that if the government can blacklist a major U.S. AI firm without a clear process, other tech companies could face the same risk in the future.

Microsoft also has strong business ties with Anthropic. The company has invested billions in the start-up and is adding Claude’s coding models to its business software, which is used by many U.S. government agencies.

Microsoft said the government should allow time for a “reasoned discussion” about how AI should be used, instead of quick bans that could disrupt key technology services.

How the Dispute Started

The conflict began after talks between Anthropic and the Pentagon broke down over how the military could use its AI systems. Anthropic chief executive Dario Amodei reportedly set limits on how the company’s AI could be used. These limits include bans on lethal autonomous weapons and mass surveillance of U.S. citizens.

After the talks failed, Defense Secretary Pete Hegseth moved to remove Anthropic from the Pentagon’s supply chain. The label is usually used for firms seen as security risks.

The administration also asked federal agencies to stop using Claude, Anthropic’s AI chatbot.

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Wall Street has a Strong Buy consensus rating on Microsoft stock based on 33 Buys and three Holds. The average MSFT stock price target of $594.02 indicates 46.4% upside potential. MSFT stock is down 16% year-to-date.

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