Hundreds of millions of dollars in expected revenue this year from Pentagon-related work is already at risk for Anthropic, the company’s chief financial officer, Krishna Rao, wrote in a court filing on Monday. But if the government gets its way and puts pressure on a wide range of companies doing business with AI startups, regardless of any ties to the military, Anthropic could ultimately lose billions of dollars in sales, he said. According to Rao, its sales to date have crossed $5 billion since the commercialization of its technology in 2023.
Anthropic’s revenues exploded as its cloud model began to outperform rivals and show advanced capabilities in areas such as generating software code. But the company spends heavily on computing infrastructure and runs huge losses. Rao said Anthropic has spent more than $10 billion to train and deploy its models.
Paul Smith, Anthropic’s chief commercial officer, provided several examples of partners who have privately raised concerns about AI startups in recent days. He said a financial services client has halted negotiations on a $15 million deal because of the supply-chain label, and two major financial services companies have refused to close deals worth $80 million unless they get the right to unilaterally cancel their contracts for any reason. Smith said one grocery store chain canceled a sales meeting, citing the supply-chain risk designation.
“All have taken steps that reflect a deep distrust and growing fear of associating with Anthropic,” Smith wrote.
The executives’ comments are part of statements from six Anthropic leaders in support of a preliminary injunction that would allow the San Francisco company to continue doing business with the Defense Department until lawsuits regarding the supply-chain risk issue are resolved.
Anthropic has sued the Trump administration in two courts. A lawsuit filed Monday in San Francisco federal court alleges the government violated the company’s free speech rights. A separate case filed Monday in federal appeals court in Washington, DC, accuses the Defense Department of unfairly discriminating and retaliating against Anthropic.
The company is seeking a hearing as soon as Friday in San Francisco for temporary relief. The legal battle and sale result from a weeks-long dispute between Anthropic and the Pentagon over the potential use of AI technologies for mass domestic surveillance and autonomous lethal weapons. Anthropic argues that AI is not yet capable of performing tasks safely, while the Pentagon wants the right to make decisions itself.
By law, the supply-chain designation prevents a narrow group of companies doing business with the Pentagon from incorporating Anthropic into their systems. But Defense Secretary Pete Hegseth has cast a wide net. He posted on X late last month that “effective immediately, any contractor, supplier, or partner that does business with the United States military may not conduct any business activity with Anthropic.”
Rao wrote that the Pentagon reinforced the message by reaching out to several startups about the use of the cloud, something he said he learned from talking with an investor that Anthropic and the smaller companies all share. “They have become concerned and uncertain about their ability to use the cloud,” Rao wrote.
The Pentagon declined to comment on the lawsuits and did not immediately respond to a request for comment about Rao’s allegation about the outreach.
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