Anthropic Files Its Lawsuit. Can it Win? - DTNS 5221

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1:58Tom Merritt: this is the daily tech news for monday march 9th 2026 we tell you what you need to know give you some important context and today we're really going to try to help you understand today

2:08Robb Dunewood: anthropic filed this lawsuit against the u.s calling it a supply chain risk we break down the case and we're going to discuss it and let you know what's going on yeah we're going to try

2:16Tom Merritt: to figure out if they have a chance of winning it i'm tom merit and i'm rob dunwood let's start with what you need to know with that big story.

2:26Tom Merritt: Thanks to Fred, who noted our big story on the DTNS subreddit. Anthropic filed two lawsuits on Monday against the United States government, one in California federal court and another in Washington, D.C.'s federal appeals court. I could not find the actual text of that one. Reportedly, it challenges whether Anthropic can rightfully be considered an adversary, as is required by the definition of supply chain risk in 10 U.S.C. 3252. That's the law being used to justify the designation of Anthropic as a supply chain risk. The lawsuit filed in California, however, I did get a chance to look at the text of.

3:05Tom Merritt: That one disputes the designation on five separate grounds. And the first one is one I talked about as a possibility on the weekend edition of DTNS. If you haven't listened to that, I go into detail on the actual law, USC 3252, it is unclear that the Department of Defense followed the procedures of that law. They required that the department write down its reasoning about why the designation is necessary, why there is not a less intrusive measure that could do the same thing and deliver that to Congress. Now, they've written it down and sent it to Anthropic, but it's not clear they sent it to Congress.

3:43Tom Merritt: So Anthropic is saying they didn't follow the procedures of the law. That's point one. Anthropic also says that the designation is an attempt to suppress speech and therefore a violation of the First Amendment, that the direction of agencies outside the scope of that particular law overstep presidential authority, that the designation is a violation of due process, and that it negatively impacts its business and therefore is an illegal sanction. The notification of Congress could be easily fixed. They could just write it down and send it to Congress. Then it would be on Congress to review that designation.

4:20Tom Merritt: It probably wouldn't do it. It probably would just let it sit there because it is a Republican-controlled Congress. So if the Department of Defense makes that happen, then maybe that provision goes away. So the case in California probably rests mostly on the other provisions. All the analysis I'm seeing is focusing on that First Amendment as its best bet. Anthropic will likely use the fact that the government is using its tools and has given agencies six months to wind down their use as evidence that it's not an urgent supply chain risk. Wall Street Journal has an in-depth article on the use of AI for the U.S.

4:57Tom Merritt: war against Iran, which details Palantir's tools being used for non-combat needs, including intelligence, mission planning, and logistics. And Palantir is the one that has been using Anthropics Cloud models the most. So, Rob, I feel like there is a chance, depending on what happens with filings next, that they can make a case. the one thing the Department of Defense could do is prohibit judicial review, but they'd have to follow all the I's and T's of the original law to do that.

5:31Robb Dunewood: Yeah, the thing for me is that the government is saying that this is not suitable for use, you know, here by anybody who's doing business with us, yet they're still using it. It seems to me like if there was a real concern about this software being a real supply chain risk, they would have hit the red button in the data center that says shut Anthropic down immediately.

5:56Tom Merritt: Yeah. And that's not as fast as possible.

5:58Robb Dunewood: That's not happening. So the question becomes, and when you start to think about it, is that, okay, so, so what has changed about the software? Anthropic saying nothing has changed about it. What has changed is the relationship with the federal government, with, you know, with the department of defense. We are, you know, we broke down in deals and now it feels punitive that because our deal broke down that we can no longer do business with anyone, let alone the Department of Defense. And I'm not a lawyer, don't play one on the internet, but I do wonder how that is going to play in front of a court.

6:31Robb Dunewood: I think you're right. If they send something to Congress, I think that it'll just be sent to Congress and nothing will happen. But I do wonder what's going to happen in front of a court, because this is costing Anthropic dearly to not be able to do business in the way that they've been doing business. There are other vendors that we just can't take the risk of working with you right now. We don't want to get on the bad side of the DOD. So there's a lot of things that to me are adversely affecting Anthropic. And it looks like, at least from the service, from what we've been hearing about, is just that we decided to go a different route and we don't want anybody to work with you anymore.

7:07Robb Dunewood: That's what it seems like in this particular case.

7:10Tom Merritt: Yeah. And Anthropic is making up some of its ground on the consumer side. The Claude model has become one of the most popular on the app stores, but it takes a lot more consumer revenue to replace enterprise revenue. So this is still hurting them. A couple of things I think are worth reminding folks of. One is that the dispute was that the Department of Defense said, we want to simplify this and say, we can use this for anything that's legal. And Anthropic said, we're fine with that, except we would still like to hold back in cases of autonomous lethality and mass surveillance. In those cases, we want to have a little bit of a check on that.

7:48Tom Merritt: Anthropic was not even saying you could never use it for them. They were saying, especially with autonomous, it's not good enough yet. We'd like to hold off on that until it gets good enough. And on the mass surveillance stuff, they were holding a little more of a line. And then this blew out of proportion, as we've seen over the last couple of weeks. So it's not like Anthropic and the Department of Defense were that far apart. And I think that's what OpenAI was trying to say. OpenAI, no friend of Anthropic, but OpenAI was trying to say, you're not that far apart. Look, we can do a deal that preserves your concerns and you should be able to do that deal too.

8:21Tom Merritt: And they have not been able to get those two sides to do that. The other thing I think is worth pointing out is the Department of Defense does not have to declare Anthropic a supply chain risk to stop using them. In fact, they have a better case if they don't declare it a supply chain risk because the Department of Defense can just choose not to use whoever they want. The U.S. government can even say, you know what, nobody use Anthropic because we just don't want to use them. And there would be little that Anthropic could sue about in that case. They went over the top to say, you're a supply chain risk.

8:52Tom Merritt: So now no one who does business with us can use Anthropic stuff in any way related to their business with the U.S. government. That's just punitive. And that's why Anthropic is filing these lawsuits and why they have a chance of succeeding in overturning this. I suspect that maybe the Department of Defense doesn't care and says, yeah, DOJ, go fight that. Drag it out as long as you can. If we lose it, who cares? We achieved our aim. We wanted to punish Anthropic and we wanted to have a chilling effect so that companies who use Anthropic pull it out whether they have to or not.

9:25Robb Dunewood: Yeah, that is the kicker here. This feels very punitive. And to state to your earlier point even more. Anthropic was actively working on doing these things. They just said that we're just not there yet. It's not that we don't want to allow you to do this stuff. We just don't feel that our software is capable of doing this stuff yet. So we want to hold back on it. And so when you think of it like that, it's like, you know, what has really happened? What did they put in the software that makes it now a supply chain risk? I don't think anything was put in the software. I think this, the, the, the feeling about anthropic change and we're going to go nuclear option.

10:03Robb Dunewood: We're going to make it so that we, you can't do business with anybody that does business with us. And, you know, as many people that are signing up anthropic accounts and even canceling open AI accounts, that's, that's real nice, but there's no company that is, that is in the talks of getting a DOD contract that wants to be out of the talks of getting a DOD contract and have your company taped because the DOD says no one else who works with us can work with you. That's something different. You know, contracts are lost all the time. Companies win, companies lose. But to be told that you can no longer do business, not just with us, but with anybody who does business with us, that is very, very different than what we've seen in the past.

10:46Tom Merritt: Yeah. And it is not necessary. I think the DOD is well within its rights to say, you want to hold the line on mass surveillance and lethality, we're going to go a different direction. We're going to find somebody else. That would have been fine. But declaring it a supply chain risk was not necessary to do that. And as we're going to see, Anthropic can continue to do business with companies that are doing business in areas that don't include the Department of Defense, including Microsoft, which has said, yeah, as long as it's not in a project that we are using with the Department of Defense, we're going to continue to use Claude.

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15:11Tom Merritt: All right, there's more we need to know today. Let's get to the briefs.

15:15Robb Dunewood: RWNAS let everyone on our subreddit know about this next one. Microsoft is using Anthropics Cloud Cowork to power Copilot Cowork on the Microsoft 365 Copilot AI platform. Copilot The Cowork can build presentations, create spreadsheets, and set up meetings within your company. Cloud Cowork's launch on January 30th caused concern for the future of companies like Salesforce and ServiceNow. Microsoft is bringing similar agentic capabilities to Word, Excel, PowerPoint, and Outlook as well as improving CopilotChat. The company also launched its monitoring and governance platform, Microsoft Agent 365, into general availability for$15 per user per month.

15:52Robb Dunewood: You can get all these tools together in the Microsoft 365 E7 suite for$99. per user per month. Yeah.

15:58Tom Merritt: So I think this is a big deal just because it's Microsoft getting into this area that caused some stock to tank at the end of January. I don't think this is going to cause the stock to tank because I think people have kind of reset their expectations of what these things can do. But it is the kind of thing that will not only further Claude's business, because this is something Microsoft can continue to do and not worry about the Department of fence stuff, but also it's going to make Copilot better. And it's going to bring some of these agentic capabilities into the 365 platform in ways that I think are more acceptable to enterprise admins.

16:36Robb Dunewood: I can absolutely see why these big giant software as a service type companies like Salesforce and ServiceNow, that they would be in a bit of a kerfuffle right now, that they'd be in a bit of a Because when you think about what the promise of agentic AI can do, it targets SaaS. You don't have to go build a SaaS solution to do these things, to enter this data in, to format it this way, to scrub, to put it here, to make it available to all these things that Salesforce and ServiceNow actually do. You literally just say, hey, I want this data to go from here to there. And I want it to look like this.

17:11Robb Dunewood: And I want it to do that to your AI. And it just creates it. and is it there yet? No. You know, I think there may have been an over, you know, reaction in the market and they've kind of come back from it. But that is ultimately where I do think agentic AI is going. Eventually, you won't necessarily need a service. Now you won't need a HubSpot. You won't need a Salesforce because you can just say, hey, I do this thing with this data in this way. And it says, OK, cool. And it just does it.

17:41Tom Merritt: Yeah. The smart thing that Salesforce and ServiceNow, I think both have done is incorporate these tools into their side of things so that they're future-proofing themselves to say, yes, once the stuff that we sell the most of now is not needed anymore, hopefully we've developed some other tools that will be needed, right? So I think that's part of the correction you were talking about is people realized, oh, Salesforce is continuing to offer new things, right? It's not just going to stay the way it was five years ago for the rest of its life.

18:14Robb Dunewood: Yeah, and the promise is not even close. I mean, it's not there yet. You're not replacing Salesforce with agentic AI. Not today, not today.

18:23Tom Merritt: They've got some time to adapt. A team from Harvard Business Review has conducted a study of 1 ,488 full-time US workers asking them how often they use LLMs and other generative tools in their work and how they felt it affected their thinking and feelings. they found and there's some some ways to measure burnout and mental fatigue that the survey was using as a metric they found that burnout reduced when people used these kinds of tools while mental fatigue increased and you may say well what's the difference mental fatigue is i i'm enjoying what i'm doing but now i'm i'm feeling slowed down i feel a little confused i need to take a moment i i'm not able to do as many things as possible it's the myth of multitasking.

19:09Tom Merritt: When you multitask too much, you get mental fatigue. Burnout is, I can't do this anymore. Too much mental fatigue can lead to burnout. But what they're finding is the LLMs actually reduced the burnout. I don't feel like I need to quit anymore, but the mental fatigue, that confusion increased. The most mentally fatiguing use of these tools was the increased need to monitor performance. In other words, have to check and see, did you do it? Did you do it right? Are you doing it? Another factor was that use of the tools increased your workload, which increased the number of outcomes you needed to pay attention to.

19:42Tom Merritt: Well, now I've got 10 projects instead of two because I can do 10 projects, but I have to pay attention to 10 projects. A study also found that using two tools simultaneously did increase your productivity. Adding a third tool at once, you're using three of these at once, increased it, but at a slower rate. However, if you did more than three, it started to decrease your productivity. There's a classic bell curve going on. If you use too many of these tools at once, you are not being more productive. Three is probably the max. Use of the tools to replace repetitive tasks, however, decreased burnout.

20:17Tom Merritt: And the authors were like, this makes sense. If the tedious stuff gets taken away and you don't have to monitor it because it's pretty repetitive, it's pretty automatic, you're not gonna get burned out because you're not doing the stuff you don't enjoy as much. highest incidence of mental fatigue occurred in users in marketing hr operations and engineering lowest was in legal management product management consulting and customer service and the survey found that managers who take time to answer questions about these tools and provide a clear strategy of why you're using them saw employees with less mental fatigue whereas employees who felt pressure to use the tools at any cost felt more mental fatigue.

20:58Tom Merritt: So what I like about this, Rob, is that we're starting to see an outline of, ah, this is how to responsibly use the tools in the workplace to actually increase productivity and increase employee welfare. Yes.

21:10Robb Dunewood: What's interesting, we actually had a conversation last week, last Thursday on DTNS Live Hangout with Nika Monfort, where a lot of what's happening with people in using AI is not, they are becoming a little bit more productive, but the workloads they're getting are significantly increasing, which is probably leading to the mental fatigue. It's work that I can do, but I've got so much more of it. It's just like, hey, can you slow some of this down? So that's really interesting. I think companies are going to have to ultimately learn how to balance the two. We can make you more productive, but making you more productive doesn't mean giving you necessarily more work.

21:47Robb Dunewood: It may mean allowing you to work on other things that you enjoy doing at a higher production rate. And there is, you know, there's a tipping scale there, you know, one tool, two tools, that's okay. Three tools, maybe not so okay. I think companies are going to have to massage this for a while and figure out where they are with their teams. And as you said, one of the, you know, one of the keys here is that if just a manager talks to you about the tools that you're using, that can actually lower stress. So I think that there's a lot of good information that comes out of this. And companies over the next few months, over the next few years, over the next, you know, the remainder of the decade, are going to have to figure out how do we actually get the productivity that these tools promise while keeping the people who are using the tools happy and employed successful.

22:28Yeah.

22:29Tom Merritt: I mean, it's the same principle behind not having too many direct reports, right? A manager with too many direct reports can't effectively manage all of their employees. These are essentially direct reports, right? You got too many projects going on. You can't effectively manage them. So for the first time, I think companies have to look at the attention resource of an employee and say like, well, how much are we overtaxing their ability to pay attention to stuff? And I'll bang on this again. You definitely need to measure the quality of the output of your employees, not how many times they're using an LLM because they'll just game the system and use the LLM a bunch.

23:09Tom Merritt: They'll use it wrong. They won't know why they're using it. They'll get mental fatigue. They won't be more productive because they'll be like, well, the more I use it, the better. So I'm going to use five of these at once. And it turns out that's going to lower their productivity. It's all right there. Like we're seeing it. Like you need to tell them why they're using it, answer their questions, have a clear strategy and measure them on how well they do their job, not how many times they put in a query.

23:33Robb Dunewood: Yeah, I think the companies eventually will be the winners in this area won't be the ones who are looking at if we can make them more productive, we can have fewer of them. We're seeing over and over again, that's not necessarily the way to look at it is if we can make you more productive doing the things you like to do, we can allow you to do more of those things. Yeah. And then the other people who like to do the other things allow them to do more of those things. And then by everybody really liking what they do and being more productive at the things that they like, the company overall does better.

24:07Robb Dunewood: And I think that's where companies really need to get to as compared to just looking productivity. We can have less people do the same amount of work. That is probably not the mathematics that you want to apply here. It's people doing the right work with these tools that they enjoy and then bringing that load of the stuff that they don't necessarily enjoy to the people who enjoy.

24:26Tom Merritt: Yeah. And then you improve the overall product of the company, whatever it is. Absolutely.

24:33Robb Dunewood: Local government agencies in China have begun encouraging the use of open source, open claw platforms, leading to renewed optimism in software companies. A Shenzhen district is seeking feedback on a policy to encourage free open claw services. Tencent, for example, already offers free installation of open claw on its cloud platforms. China's Ministry of Industry and Information Technology still cautions that deployments can lead to security risk if not properly configured.

24:58Tom Merritt: I can't decide what my take on this story is, honestly. Is it like, ooh, China willing to take a risk that maybe a lot of US companies won't because, you know, and try to jump ahead by using an open source? Or what a great Trojan horse the US has sent to China, giving them open claw, which is, you know, difficult to use responsibly and full of security holes that could then be exploited?

25:25Robb Dunewood: I think because we look at this ginormous country, the biggest country on earth, we just look at it. It's just China. There's a lot of folks over there. And I think what's happening is that, hey, you know what? This looks kind of cool. Let's take a look at it and see. Let's figure out if there's, is there a there there? Seems to be what this is. So of course, when that happens, we're going to have significant overreaction to it. So why are they're looking at this thing that we actually built that we try to, you know, have be more beneficial to us too. Yeah.

25:55Tom Merritt: Well, folks, you got a thought on this? What do you want to hear us talk about on the show? You heard a couple of people who've let us know about stories today. You could be one of those people too. Submit your stories and vote on them at reddit.com slash r slash daily tech news show.

26:12Robb Dunewood: This episode is brought to you by Capital One. Capital One's tech team isn't just talking about multi-agentic AI. They already deployed one. It's called Chat Concierge and it's simplifying car shopping. Using self-reflection and layered reasoning with live API checks, it doesn't just help buyers find a car they love. It helps schedule a test drive, get pre-approved for financing, and estimate trade in value. Advanced, intuitive, and deployed. That's how they stack. That's technology at Capital One. Ryan Reynolds here from Mint Mobile. The message for everyone paying big wireless way too much. Please, for the love of everything good in this world, stop.

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27:15Tom Merritt: All right, let's get into those quick headlines that we give you that'll make you look smart.

27:21Robb Dunewood: Google has added a preference to Google messages called tap to draft that changes smart replies from instantly sending or creating a draft that you can review first. I personally would be a fan of this.

27:32Tom Merritt: Yes. No, turn that setting on. It's like the thing where you like want to take the suggestion and it's like, great, I sent it. Not a good look. Oppo announced the Find N6 coming March 17th will use a titanium alloy hinge with a memory glass layer that will make the crease in its foldable difficult to see. In fact, some people call it zero appearance as if it's not there.

27:57Robb Dunewood: We need to see it to believe it. Yep. But credible people are saying you can't tell there's a hinge there. And that is that's some next level stuff, because even when you're looking at some of the phones that we know, when you're looking dead on them, you can still see it. If they're saying you can't see it, that's that's something different. ABB Robotics is integrating NVIDIA's Omniverse simulation platform into its robot training software for autonomous industrial robots, first being tested by Foxconn.

28:24Tom Merritt: Oh, good for NVIDIA. Good for Apple, I guess. Keep an eye on the dispute between chip factory, Nixperia's China operations and its parent company in the Netherlands. This has been going on for a while now. The latest is that China's commerce ministry has started warning that a fresh dispute between the two sides, which has been heating up again, could disrupt chip supplies even further. And if it did, it would be the Dutch side's fault. So they're already pointing fingers.

28:52Robb Dunewood: After 11 years at Tesla, Thomas Dimitrik, the man who oversees software for Tesla's robo taxi service is leaving to prioritize family. I'd love to see how this goes, because it means one of two things. He's leaving to prioritize family or he's leaving for some other reasons.

29:06Tom Merritt: Could be some other reason. And he's not the first, although he's one of the bigger ones to leave recently. After any Apple announcement comes the rumors of the next Apple announcement. And among them are some obvious ones, foldable devices and such. But I found one from Bloomberg's Mark Gurman more notable. Apple is working on 3D printing aluminum to make cases for phones and watches more efficiently, aka more cheaply.

29:31Robb Dunewood: Interesting. Researchers at the Granger College of Engineering at the University of Illinois have determined how to develop 2D magnetic systems that follow the same equations as mobile electrons and 2D graphene. They believe the finding could help make smaller microwave systems for wireless and cellular networks.

29:48Tom Merritt: Oh, that would be interesting to see. Magnets is graphene. Linux 7.0 release candidate 3 is one of the biggest changes in recent history. And a lot of people are like, that's not necessarily a good thing because there are way more bug reports. Linus Torvalds saying the bugs aren't scary, but the number, the volume of them worries him.

30:08Robb Dunewood: UK data center developer InScale has added a few familiar names to its board, including former meta execs Sheryl Sandberg and Nick Clegg.

30:17Tom Merritt: Yeah, OK, I know those names. And finally, TechCrunch's Zach Whitaker has done a bang-up job collecting all the info about the ongoing salt typhoon hacks. They don't always make the headlines, but they're persistent out there. These are attacks usually against phone and internet providers. Worth your time to read and catch up if you want to know the latest.

30:36Robb Dunewood: Well, folks, we end every episode of DTNSS from Share Perspectives. Today, Kevin has a thought on the whole Anthropic government contracts thing.

30:44Tom Merritt: Yeah, Kevin writes, I appreciated your coverage of the recent Anthropic versus OpenAI versus the government story. One thing that I think gets lost in the outrage is the question of who would you rather have do this? Seems obvious that the administration will find a willing vendor in the space eventually. Would you rather have one that is at least publicly saying they're trying to do the right thing or somebody who is an unknown entity that doesn't even claim to have any morals?

31:12Robb Dunewood: yeah that's a that that's a thought i think from the government standpoint we we want to work with whoever's going to do whatever we tell them to do and that that seems to be what's happening here because anthropic and open ai really are not i won't even say that that far apart i think they're both thinking the same thing about this it's just that anthropic was a company that the government got mad at first and now they're going through what they're going through yeah i think what

31:37Tom Merritt: Kevin's pointing out is people getting mad at OpenAI for stepping in and signing a contract and saying, well, we don't believe you that you want to do the same things. You've obviously compromised. And I think Kevin's saying, well, okay, maybe, but would you rather OpenAI sign the deal and not say that they want to keep those red lines? So I think it's a fair point.

31:58Robb Dunewood: And I think a lot of folks too, they just have a problem with OpenAI signing a deal with the government. And as I said before, you do not want to not do business with the federal government. We're talking specifically about the Department of Defense, but ultimately we're talking about the federal government. You want to do business with the biggest employer of people in the United States. You just want to do that.

32:20Tom Merritt: And a lot of people weren't paying attention or didn't mind that Anthropic was doing both the lion's share of the business in AI with the Department of Defense, with the U.S. military until now. For many months. Many, many, many months, yeah.

32:37Robb Dunewood: Well, folks, we want to know what you're thinking about. So if you've got some thoughts or insights into a story, please, please, please share it with us at feedback at dailytechnewsshow.com.

32:46Tom Merritt: Yeah, big thanks to Kevin for contributing to today's show. Thank you for being along for Daily Tech News Show. You folks keep us in business. You can support us by becoming a patron. If you're not already, patreon.com slash DTNS. Talk to you soon.

33:07Robb Dunewood: The DTNS family of podcasts. Helping each other understand.

33:13Tom Merritt: Diamond Club hopes you have enjoyed this program.

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