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While we currently maintain insurance that may cover certain costs, liabilities, and other losses in connection 
with security breaches and other incidents, the insurance market for such losses is continuously evolving, and 
we may be unable to obtain coverage for certain cybersecurity-related or data-related liabilities on commercially 
reasonable  terms,  or  at  all,  leaving  us  exposed  to  potentially  significant  uninsured  losses.  Furthermore,  there 
can  be  no  guarantee  that  the  insurance  coverage  we  do  maintain  will  be  adequate  to  compensate  us  for  the 
potential losses, or that any insurance claims we submit will be covered, paid in a timely manner, or paid at all 
by our insurance carrier or carriers.

We employ automated data collection across the web and use other methods to collect data for 
training  our  AI  models,  and  such  activities  may  subject  us  to  liability  or  limit  our  ability  to 
use the collected data, which may adversely affect our business, financial condition, or results 
of operations.

We collect and use various data sources to train our AI models, including publicly available information from 
the  internet,  datasets  licensed  or  commissioned  from  third  parties,  and  synthetic  data  generated  by  our  own 
models. We use such data across the stages of model development, including pre-training and post-training. To 
collect publicly available information, we utilize web scraping or web crawling techniques, book scanning, and 
other  methods.  While  we  take  steps  designed  to  ensure  that  our  activities  comply  with  applicable  law, 
applicable  robots.txt  notices,  and  relevant  technical  measures  such  as  paywalls  or  logins,  our  efforts  may  not 
always be successful. Further, we may not be able to verify whether information collected using such techniques 
is  protected  under  privacy,  copyright,  or  other  intellectual  property  laws  in  certain  cases,  and  our  use  of  any 
such  protected  information  may  subject  us  to  additional  liability  for  intellectual  property  infringement  or 
privacy violations. More broadly, inadequate documentation of training data sources, provenance, or chain of 
custody  could  create  legal  exposure,  complicate  our  ability  to  respond  to  regulatory  inquiries  or  litigation 
discovery  requests,  or  raise  concerns  during  due  diligence  by  investors,  partners,  or  potential  acquirers  that 
could adversely affect our strategic transactions or business relationships.

Our data collection activities have in the past resulted, are presently the subject of, and may in the future result 
in litigation or other actions filed or instituted against us, alleging that our scraping, web crawling, and other 
techniques to collect data violate the law. For example, Reddit, Inc. has filed suit against us, captioned Reddit, 
Inc. v. Anthropic PBC, alleging we improperly accessed posts stored on Reddit, Inc.’s platform in violation of its 
legal rights. On July 3, 2025, we filed a notice of removal of the case to federal court. The case was remanded to 
state court on March 30, 2026. The lawsuit is currently pending, and we continue to defend ourselves against 
the allegations.

The  costs  of  defending  against  such  litigation,  regardless  of  merit,  are  considerable,  and  such  litigation  may 
divert  management  and  key  personnel’s  attention  and  resources,  which  may  seriously  harm  our  business, 
financial condition, and results of operations. Claims of allegedly illegal scraping and web crawling techniques 
may be extremely broad, and it may not be possible for us to conduct our business in such a way as to avoid all 
such claims.

We may be required to settle such litigation on terms that are unfavorable to us. For example, a settlement may 
require  us  to  discontinue  such  allegedly  illegal  practices,  preclude  us  from  using  certain  scraping  and  web 
crawling  techniques,  and/or  require  us  to  develop  alternative  technology  or  practices.  The  development  of 
alternative technology or practices would require significant effort and expense or may not be successful. 

Similarly, if any litigation to which we may be a party fails to settle and we go to trial, we may be subject to an 
unfavorable  judgment  which  may  not  be  reversible  upon  appeal.  The  terms  of  a  judgment  may  require  us  to 
cease some or all of our operations or require the payment of substantial amounts. Any of these events could 
cause our business, financial condition, and results of operations to be adversely affected as a result.

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