In a new blog post, Anthropic CEO Dario Amodei has admitted that it received a letter from the Defense Department, officially labeling it a supply chain risk. He said he doesn’t “believe this action is legally sound,” and that his company sees “no choice” but to challenge it in court. Hours before Amodei published the post, the Pentagon announced that it notified the company that its “products are deemed a supply chain risk, effective immediately.”

If you’ll recall, the Defense Department (called the Department of War under the current administration) threatened to give the company the designation typically reserved for firms from adversaries like China if it didn’t agree to remove its safeguards over mass surveillance and autonomous weapons. President Trump then ordered federal agencies to stop using Anthropic’s tech.

Amodei explained that the designation has a narrow scope, because it only exists to protect the government. That is why the general public, and even Defense Department contractors, can still use Anthropic’s Claude chatbot and its AI technologies. Microsoft told CNBC that it will continue using Claude after its lawyers had concluded that it can keep on working with Anthropic on non-defense related projects.

The CEO has also admitted that his company had “productive conversations” with the department over the past few days. He said that they were looking at ways to serve the Pentagon that adheres to its two exceptions, namely that its technology not be used for mass surveillance and the development of fully autonomous weapons, and at ways to “ensure a smooth transition if that is not possible.” That confirms reports that Anthropic is back in talks with the agency in an effort to reach a new deal. In addition, he apologized for a leaked internal memo, wherein he reportedly said that OpenAI’s messaging about its own deal with the department is “just straight up lies.”