Anthropic loses 2 models to export controls testing legal authority

The Commerce Department invoked the Export Control Reform Act of 2018 to bar foreign nationals from using Anthropic's Fable 5 and Mythos 5 models, forcing the company to disable both on June 12 — a move that former officials say stretches the law beyond its intended scope.

"This is the first time I'm aware of where we tried to restrict access to a thing that was unrelated to access to the underlying technology," said Matthew Borman, a former deputy assistant secretary of Commerce who served during both Trump administrations.

The order gave Anthropic 90 minutes to comply. The company disabled both models for all users, including non-US employees, after determining it could not reliably enforce nationality-based access controls. Amazon, which has invested $8 billion in Anthropic and operates competing models on AWS Bedrock, flagged a vulnerability in Mythos to the White House, according to Trump's interview with Axios. The Commerce Department has not published the rule in the Federal Register.

The directive threatens Anthropic's planned October IPO, which targets a $965 billion valuation — the largest technology listing since Facebook in 2012. The company confidentially filed its S-1 with the SEC on June 1, with Goldman Sachs, JPMorgan, and Morgan Stanley as lead underwriters. Annual recurring revenue reached roughly $47 billion in early June, up from $9 billion at the end of 2025, but the longer the export controls remain in place, the harder it becomes to price the offering at that valuation.

Legal Authority Under Scrutiny

The Export Control Reform Act of 2018 gave Commerce sweeping authority to designate which technologies require a license, a list that has since grown to include certain AI-related software and systems. But the department's own previous guidance concluded that simply allowing a foreign national to access cloud computing capability did not itself constitute an export, according to Borman.

Kevin Wolf, a former senior Commerce Department official who helped craft export control measures during the Obama administration, said he does not know what legal authority supports the directive. "If this is going to be their position going forward with every other model or every other data center, that will be a dramatic shift," Wolf said.

The administration has only applied the restrictions to Anthropic's models. But if left unchallenged, the maneuver could embolden Commerce to impose the same restrictions on high-end models across the entire AI industry, potentially choking off access for any foreign person using models from OpenAI's ChatGPT or Google's Gemini. An OpenAI official who briefed reporters after an AI lunch at the G7 Summit in France said it is "incredibly important" that companies comply with certain government protocols.

Allies Push for AI Sovereignty

The dispute has consequences beyond US borders. Canadian Prime Minister Mark Carney told reporters in Dublin that the Anthropic restrictions highlight a need to "build out and diversify." Canada announced a plan earlier in June to help middle powers develop alternatives to major US AI players. Japan's draft policy, revealed June 19, committed to actively and continuously review AI laws, framed around the same problem.

Alasdair Phillips-Robins, a fellow at the Carnegie Endowment for International Peace who worked on Biden-era export control policies, said companies like OpenAI are "very clearly on the trajectory to be as capable as Mythos or Fable in the not too distant future." He added: "It's become clear that the White House is going to, very plausibly, take that seriously, and may do some very aggressive things in response."

Trump told Axios on June 19 that he no longer views Anthropic as a national security threat after meeting CEO Dario Amodei at the G7 summit. The Commerce Department's order remains in force, and the Pentagon's March supply-chain risk designation barring federal agencies from using Anthropic technology has not been rescinded.

This article is for informational purposes only and does not constitute investment advice.