The Pentagon slapped a formal supply-chain risk designation on artificial intelligence lab Anthropic on Thursday, limiting use of a technology that a source said was being used for military operations in Iran.

The "supply-chain risk" label, confirmed in a statement by Anthropic, is effective immediately and bars government contractors from using Anthropic's technology in their work for the U.S. military.

But companies can still use Anthropic's Claude in other projects unrelated to the Pentagon, CEO Dario Amodei wrote in the statement, adding that the restrictions only apply to the usage of Anthropic AI in Pentagon contracts.

The risk designation follows a months-long dispute over the company's insistence on safeguards that the Defense Department, which the Trump administration calls the Department of War, said went too far. In his statement, Amodei reiterated that the company would challenge the designation in court.

In recent days, Anthropic and the Pentagon have discussed possible plans for the Pentagon to stop using Claude, Amodei said in the Thursday statement. The two sides have talked about how Anthropic might still work with the military without dismantling its safeguards, he added.

However, in a post on X late Thursday, Pentagon Chief Technology Officer Emil Michael said that there is no active Department of Defense negotiation with Anthropic.

Amodei also apologized for an internal memo published Wednesday by the tech news site The Information. In the memo, originally written last Friday, Amodei said Pentagon officials didn't like the company in part because “we haven’t given dictator-style praise to Trump."

The internal memo's publication came as Anthropic's investors were racing to contain the damage caused by the company's fallout with the Pentagon.

The Defense Department did not immediately return requests for comment.

The action represented an extraordinary rebuke by the United States against an American tech company that was earlier than its rivals to work with the Pentagon. The action comes as the department continues to rely on Anthropic's technology to provide support for military operations, including in Iran, according to a person familiar with the matter.

Claude likely is being used to analyze intelligence and assist with operational planning.

Anthropic was the most aggressive of its rivals in courting U.S. national-security officials. But the company and the Pentagon have been at odds for months over how the military can use its technology on the battlefield. This conflict erupted into public view earlier this year.