> The supply chain risk designation will be overturned in court,
I'm honestly uncertain how the courts will rule. You could be right, but it isn't guaranteed. I think a judicial narrowing of it is more likely than a complete overturn.
OTOH, I think almost guaranteed it will be watered-down by the government. Because read expansively, it could force Microsoft and AWS to choose between stopping reselling Claude vs dropping the Pentagon as a customer. I don't think Hegseth actually wants to put them in that position – he probably honestly doesn't realise that's what he's potentially doing. In any event, Microsoft/AWS/etc's lobbyists will talk him out of it.
And the more the government waters it down, the greater the likelihood the courts will ultimately uphold it.
> and the financial fallout from losing the government contracts will pale in comparison to the goodwill from consumers.
Maybe. The problem is B2B/enterprise is arguably a much bigger market than B2C. And the US federal contracting ban may have a chilling effect on B2B firms who also do business with the federal government, who may worry that their use of Claude might have some negative impact on their ability to win US federal deals, and may view OpenAI/xAI (and maybe Google too) as safer options.
I guess the issue is nobody yet knows exactly how wide or narrow the US government is going to interpret their "ban on Anthropic". And even if they decide to interpret it relatively narrowly, there is always the risk they might shift to a broader reading in the future. Possibly, some of Anthropic's competitors may end up quietly lobbying behind the scenes for the Trump admin to adopt broader readings of it.
> OTOH, I think almost guaranteed it will be watered-down by the government. Because read expansively, it could force Microsoft and AWS to choose between stopping reselling Claude vs dropping the Pentagon as a customer.
A tweet does not have the force of law. Being designated a supply chain risk does not mean that companies who do business with the government cannot do business with Anthropic. Hegseth just has the law wrong. The government does not have the power to prevent companies from doing business with Anthropic.
The issue is, even if the Trump admin is misrepresenting what the law actually says, federal contractors may decide it is safer to comply with the administration’s reading. The risk is the administration may use their reading to reject a bid. And even if they could potentially challenge that in court and win, they may decide the cheaper and less risky option is to choose OpenAI (or whoever) instead
They would have a very good case against the government if that were to happen. I suspect that the supply chain risk designation will not last long (if it goes into effect).
Some vendors will decide to sue the government. Others may decide that switching to another LLM supplier is cheaper and lower risk.
And I'm not sure your confidence in how the courts will rule is justified. Learning Resources Inc v Trump (the IEEPA tariffs case) proves the SCOTUS conservatives – or at least a large enough subset of them to join with the liberals to produce a majority – are willing sometimes to push back on Trump. Yet there are plenty of other cases in which they've let him have his way. Are you sure you know how they'll judge this case?
> Are you sure you know how they'll judge this case?
I'm not even sure it will get that far. There's a million different ways that this could go that mean it won't ever come before the supreme court. The designation isn't even in effect yet.
I do think if it goes into effect it will be eventually overturned (Supreme Court or otherwise) There just isn't a serious argument to make that they qualify as a supply chain risk and there is no precedent for it.
I'm honestly uncertain how the courts will rule. You could be right, but it isn't guaranteed. I think a judicial narrowing of it is more likely than a complete overturn.
OTOH, I think almost guaranteed it will be watered-down by the government. Because read expansively, it could force Microsoft and AWS to choose between stopping reselling Claude vs dropping the Pentagon as a customer. I don't think Hegseth actually wants to put them in that position – he probably honestly doesn't realise that's what he's potentially doing. In any event, Microsoft/AWS/etc's lobbyists will talk him out of it.
And the more the government waters it down, the greater the likelihood the courts will ultimately uphold it.
> and the financial fallout from losing the government contracts will pale in comparison to the goodwill from consumers.
Maybe. The problem is B2B/enterprise is arguably a much bigger market than B2C. And the US federal contracting ban may have a chilling effect on B2B firms who also do business with the federal government, who may worry that their use of Claude might have some negative impact on their ability to win US federal deals, and may view OpenAI/xAI (and maybe Google too) as safer options.
I guess the issue is nobody yet knows exactly how wide or narrow the US government is going to interpret their "ban on Anthropic". And even if they decide to interpret it relatively narrowly, there is always the risk they might shift to a broader reading in the future. Possibly, some of Anthropic's competitors may end up quietly lobbying behind the scenes for the Trump admin to adopt broader readings of it.