> The supply chain risk designation will be overturned in court,

I'm honestly uncertain how the courts will rule. You could be right, but it isn't guaranteed. I think a judicial narrowing of it is more likely than a complete overturn.

OTOH, I think almost guaranteed it will be watered-down by the government. Because read expansively, it could force Microsoft and AWS to choose between stopping reselling Claude vs dropping the Pentagon as a customer. I don't think Hegseth actually wants to put them in that position – he probably honestly doesn't realise that's what he's potentially doing. In any event, Microsoft/AWS/etc's lobbyists will talk him out of it.

And the more the government waters it down, the greater the likelihood the courts will ultimately uphold it.

> and the financial fallout from losing the government contracts will pale in comparison to the goodwill from consumers.

Maybe. The problem is B2B/enterprise is arguably a much bigger market than B2C. And the US federal contracting ban may have a chilling effect on B2B firms who also do business with the federal government, who may worry that their use of Claude might have some negative impact on their ability to win US federal deals, and may view OpenAI/xAI (and maybe Google too) as safer options.

I guess the issue is nobody yet knows exactly how wide or narrow the US government is going to interpret their "ban on Anthropic". And even if they decide to interpret it relatively narrowly, there is always the risk they might shift to a broader reading in the future. Possibly, some of Anthropic's competitors may end up quietly lobbying behind the scenes for the Trump admin to adopt broader readings of it.