Anthropic files for IPO the same day the U.S. government appeals, Claude ban has already affected business clients.

Beating AI News Flash: On October 26 local time, the U.S. Department of Justice filed a notice of appeal with the Ninth Circuit Court of Appeals, seeking to overturn the California court's August ruling and restore a government-wide agency ban against Anthropic. On the same day, Anthropic had just publicly filed its IPO prospectus.

The legal battle actually has two tracks. In September, the Washington appeals court already allowed the Pentagon to exclude Claude from military systems and related defense procurement on "supply chain risk" grounds.

But the California court blocked a broader ban: it not only required all federal agencies to stop using Claude, but also prohibited defense contractors from engaging in non-military commercial cooperation with Anthropic. The judge held that the government lacked sufficient basis to prove the relevant risks and that the ban was effectively retaliation against Anthropic for publicly criticizing the government.

Anthropic's prospectus shows that revenue from government agency contracts accounts for only about 1% of its total revenue, but the ban has already affected the broader commercial market. Evidence cited by the California court shows that 3 government contractors terminated contracts with Anthropic or were required to terminate cooperation. Another 3 deals worth more than $180 million in total that were close to being finalized fell through. Some customers demanded unilateral termination clauses, and some customers directly switched to competitors.

Anthropic previously estimated to the court that if the broadest ban measures were fully implemented, revenue in 2026 could decrease by several billion dollars.