Pentagon Maintains National Security Risk Label for AI Company

Defense officials informed a federal appeals court on Thursday that they have rejected an AI company's request to reconsider its national security risk designation. The move clears the way for a three-judge panel to hear arguments over the Defense Department's authority to apply the label to domestic companies.

Background on the Designation Officials stated that concerns about the company's supply chain and pre-deployment risks prompted the original classification. The company disputed those concerns, saying its technology does not allow post-deployment control and that the initial assessment rested on a misunderstanding.

Judges had delayed proceedings while waiting for the Pentagon's response to the reconsideration request. With that response now filed, the court can schedule arguments on the scope of the Defense Department's regulatory reach over private AI firms.