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including export and import controls, sanctions, customs requirements, and related regimes, could subject us to 
liability or loss of contracting privileges or limit our ability to compete in certain markets.”

Internal Governance and Decision-Making

To institutionalize our safety commitments and ensure we are managed in a manner that responsibly balances 
our  tripartite  goals  as  a  PBC,  we  have  established  the  LTBT,  which  through  a  special  class  of  common  stock, 
Class T common stock, generally has the authority to elect and remove the Class T directors, who together will 
constitute  a  majority  of  the  authorized  members  of  our  board  of  directors.  In  addition  to  the  LTBT  and  our 
structure  as  a  PBC,  we  train  our  models  in  accordance  with  Claude’s  constitution,  which  we  make  publicly 
available, and have adopted and continue to update safety policies, such as our Responsible Scaling Policy. We 
also  solicit  and  seriously  consider  input  from  a  wide  range  of  stakeholders  and  constituents,  including  our 
stockholders, employees, customers, the LTBT, industry leaders and experts, and AI safety organizations. Such 
practices and processes have previously resulted in, and may in the future result in, slower decision-making and 
product releases. We may also face potential conflicts when safety and business interests diverge. If we do not 
successfully manage these risks related to our AI safety processes and practices, or if there is a perception that 
we have not successfully managed such risks, we may face reputational harm, internal conflicts resulting in a 
deterioration of our company culture, slower or inferior product releases, or litigation. For more information, 
see the section titled “—Risks Related to our Governance Structure.”

We  have  implemented  an  external  reviewer  program  and  engage  researchers,  adversarial  testers,  and  other 
third  parties  to  support  aspects  of  our  safety,  security,  and  model-evaluation  efforts.  Certain  of  these 
arrangements  are  novel  and  may  require  us  to  provide  such  parties  with  access  to  internal  information, 
systems, personnel, or models, which could increase the risk of disclosure of confidential, proprietary, or other 
sensitive information. In addition, findings, assessments, or public statements by such third parties may differ 
from our views and could adversely affect customer trust, regulatory perceptions, or our reputation.

Heightened  Reputational  Vulnerability.  As  we  have  publicly  positioned  ourselves  as  a  safety-focused 
organization, we face heightened vulnerability to reputational harm from any perceived inconsistency between 
our stated values and actual practices. We are held to higher standards than certain competitors that have not 
made similar public commitments, and any incidents impacting our perception as a safety-focused organization 
could result in:

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Employee  Disruption.  Employees  who  joined  our  company  based  on  our  safety  commitments  may 
experience a decline in morale, disillusionment, a loss of trust in leadership, or reduced productivity if 
they  perceive  we  are  not  living  up  to  our  stated  values.  Public  disagreements  regarding  our  safety 
approach,  including  criticism  from  current  or  former  employees,  or  the  departure  of  personnel 
associated with our safety efforts, could amplify such perceptions. Such negative perceptions could also 
impair our ability to recruit and hire new talent to the organization. Any erosion of our safety-focused 
reputation  could  also  make  it  more  difficult  or  costly  to  attract  and  retain  highly  skilled  employees, 
including  by  increasing  compensation  or  other  hiring  costs.  These  dynamics  could  lead  to  increased 
turnover, loss of institutional knowledge, and reduced effectiveness of our teams, which could in turn 
cause disruption to ongoing development and safety initiatives and impair our ability to remain at the 
frontier of AI model development. 

Customer  Backlash.  Customers  and  enterprise  partners  who  choose  to  deploy  our  models,  platform, 
and  applications  based  on  our  safety  positioning  may  lose  trust  in  us,  terminate  or  decline  to  renew 
their  contracts,  demand  refunds,  publicly  criticize  our  company,  or  switch  to  our  competitors,  which 
could  result  in  harm  to  our  reputation,  revenue  loss,  and  reduced  market  share.  These  risks  may  be 
heightened  with  respect  to  programs  in  which  we  make  models  available  only  to  a  limited  group  of 
vetted organizations, such as Project Glasswing. Organizations not selected for, or removed from, such 
programs may perceive our access decisions as arbitrary, exclusionary, or anticompetitive, which could 
result  in  reputational  harm,  loss  of  customer  or  partner  relationships,  regulatory  complaints,  or 
litigation, including claims under antitrust or unfair competition laws. Conversely, participants in such 
programs may publicly criticize us or terminate their participation if program terms, eligibility criteria, 
transition arrangements to successor models, or capability levels do not meet their expectations.

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