Anthropic is suing the Department of War and other federal agencies after the Trump administration formally designated the company a “supply-chain risk” late last week.

The lawsuit, filed Monday in the U.S. District Court for the Northern District of California, calls the administration’s actions “unprecedented and unlawful” and claims they threaten to harm “Anthropic irreparably.”

It’s the latest development in an ongoing disagreement between the Pentagon and Anthropic over the Trump administration’s use of its AI technology, with big implications for the control of AI overall and the relationship between business and government.

Anthropic had refused Pentagon demands to remove contractual restrictions on using its AI for domestic mass surveillance and autonomous weapons, prompting the administration to cancel the company’s government contracts and label it a national security risk.

An Anthropic spokesperson told Fortune that “seeking judicial review does not change our long-standing commitment to harnessing AI to protect our national security, but this is a necessary step to protect our business, our customers, and our partners. We will continue to pursue every path toward resolution, including dialogue with the government.”

Legal experts have already questioned whether the designation is likely to hold up in court. Lawyers Michael Endrias and Alan Z. Rozenshtein called it “political theater: a show of force that will not stick,” arguing the government cannot credibly claim an emergency threat while simultaneously planning a six-month phaseout of the technology.​​​​​​​​​​​​​​​​ 

Lest anyone think this fight has shifted entirely to the courtroom though, Axios reported late Monday that President Trump is considering issuing an executive order to eradicate Anthropic from the federal government.—Beatrice Nolan

Last week, three data centers operated by Amazon Web Services (AWS), two in the United Arab Emirates and one in Bahrain, were struck by Iranian drones or missiles. The attacks forced the facilities offline and led to service outages affecting banking, payments, delivery apps, and enterprise software across the region.

It's believed to be the first time data centers have been deliberately targeted for air strikes in a conflict. Experts say it almost certainly won’t be the last. Data centers are rapidly emerging as vital strategic assets—and vulnerable targets.

Chris McGuire, an AI and technology competition expert who worked on technology policy at the National Security Council under the Biden administration, told the Guardian that data centers built in the Middle East might need to consider measures to guard against aerial attacks. “If you’re actually going to double down the Middle East, maybe it means missile defense on data centers,” he said.—Jeremy Kahn

Microsoft has announced a new set of products to get enterprise customers to build AI agents on its platform, including a new Copilot Cowork product built on top of Anthropic’s AI product Claude Cowork and a new business productivity software bundle that