Startup News Digest 03/13/26
The Big Story: Anthropic supply-chain risk label could chill AI innovation
Tech companies, industry and free speech groups, and policymakers are sounding the alarm that the Trump administration’s move to designate Anthropic as a “supply chain risk” is unconstitutional, an overreach of government authority, and a threat to U.S. AI innovation. In public statements and court filings this week, a wide spectrum of voices—representing everyone from large tech companies, to tech employees, to First Amendment advocates, to former military officials—have warned that the government’s escalating fight against Anthropic will disincentivize government contract work, chill innovation, and upend democratic norms.
On Monday, Anthropic sued the Department of War after it took the unprecedented step of designating Anthropic a supply chain risk earlier this month. The supply chain risk designation prohibits systems within the Department of War from using Anthropic’s LLM, Claude, and prohibits government contractors from using Claude in their work fulfilling those contracts. It’s an unprecedented use of that designation, which was previously reserved for non-U.S. companies that pose threats to U.S. national security due to the companies’ ties to foreign adversaries. In this case, it stems from Anthropic’s refusal to allow the Department to use its AI for mass domestic surveillance and fully autonomous weapons. In addition to being an unusual use of the designation, Secretary of War Pete Hegseth’s initial public comments about the intended designation said the prohibition meant that any military contractor, supplier, or partner could not do “any commercial activity” with Anthropic, threatening a much more widespread harm to the company.
While this designation and resulting legal challenges focus on the procurement practices and public speech of a specific company, they risk creating a precedent that the government can use the government contracting process to force companies—especially those in the technology and AI industries—to act against their own interests and values. In briefs asking federal courts to halt the Department of War’s designation, tech groups, companies, and employees warned that the designation will impact the ecosystem for beyond Anthropic, while civil liberties groups and lawmakers have pointed to the dispute in their calls for more rigorous oversight and rules around how the government uses AI. Those investing in, developing, and deploying AI will be watching the courts to see how far the impact of the administration’s actions might extend.
Policy Roundup:
Startups need permanent ecommerce duties moratorium. At the end of March, a critical digital trade policy relied upon by startups—the WTO Moratorium on Customs Duties on Electronic Transmissions—is set to expire unless policymakers act. In a new blog post this week, we examine how the ecommerce duties moratorium is essential for startup competitiveness and argue that, instead of continuing the cascading uncertainty of per-ministerial conference renewals, it should finally be made permanent at the World Trade Organization’s 14th Ministerial Conference.
Some state legislatures wrapping up, sending AI bills to governors. On Thursday, the Washington state legislature wrapped its session and sent bills to the governor’s desk that would regulate AI chatbots and require AI-generated content to include provenance data. The Florida legislature will adjourn today, likely without advancing any of Gov. Ron DeSantis’ (R) AI Bill of Rights priorities. The Virginia legislature will adjourn Saturday, with action outstanding on several bills ranging from foundation model regulations, to chatbots, to AI literacy programs.
Washington noncompete ban heads to Governor. This week Washington state lawmakers passed legislation that would prohibit most employee noncompete agreements, sending the bill to Gov. Bob Ferguson (D) for signature. If enacted, the measure would replace the state’s current income-based restrictions and add Washington to a small group of states that broadly ban noncompetes. Noncompetes harm competition in the startup ecosystem and an expanded ban in Washington would be welcome after courts blocked the Federal Trade Commission’s Biden-era attempt to limit non-competes nationwide.
USTR launches new investigations to rebuild tariff rates. U.S. Trade Representative Jamieson Greer initiated Section 301 investigations into “excess capacity” of 16 trading partners, including China, the European Union, Japan, and India. The administration also indicated that further 301 announcements would be coming as they seek to reconstruct the tariff regime ruled illegal by the Supreme Court last month. Section 301 is a more durable tariff authority, and the moves underscore the administration’s commitment to tariff leverage and signal that the tariff saga is far from over.
On the Horizon:
TUE 03/17: The House Ways and Means subcommittee on trade will convene a hearing to examine advancing America’s interests at the World Trade Organization’s 14th Ministerial Conference at 10:00 AM ET.
WED 03/18: The Senate Commerce Committee will convene a hearing to examine Section 230 following the law’s 30th anniversary at 10:00 AM ET.
WED 03/18: The House Small Business Committee will convene a hearing to examine the Small Business Administration’s Office of Field Operations and its role connecting SBA resources to small businesses at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere:New York, NY. From an investor at an acquired startup to the Senior Director of Engineering at Snap Inc., Chad DePue has spent his career working throughout the tech ecosystem. Now, Chad is bringing his experience to his own startup–Sitch–an AI-powered dating app that plays the role of matchmaker for its users. We sat down with Chad to talk about Section 230, the state of AI regulation, and more.