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regulations  applicable  to  government contracts  could  affect  our  ability  to  enter  into,  or  the  profitability  of, 
contracts with government entities.

Our  subsidiary,  Anthropic  Public  Institutions,  LLC,  is  required  to  maintain  a  facility  security  clearance  to 
perform  on  classified  contracts  for  the  U.S.  federal  government  and  must  comply  with  National  Industrial 
Security  Program  requirements.  Failure  to  comply  with  these  requirements  may  result  in  Anthropic  Public 
Institutions, LLC’s facility clearance being revoked. To the extent Anthropic Public Institutions, LLC, is not able 
to  maintain  its  facility  security  clearance,  we  may  not  be  able  to  bid  on  or  win  new  classified  contracts,  and 
existing  contracts  requiring  a  facility  security  clearance  could  be  terminated,  either  of  which  could  have  an 
adverse impact on our business, financial condition, and results of operations. 

Contracts  with  government  agencies  are  also  subject  to  audits  and  reviews  of  contractors’  administrative 
processes  and  other  contract-related  compliance  obligations.  Breaches  of  government  contracts,  failure  to 
comply with applicable regulations, failure to obtain and maintain required facility and/or security clearances, 
or unfavorable findings from government audits or reviews could result in contract terminations, reputational 
harm,  or  other  adverse  consequences,  including  ineligibility  to  sell  to  government  agencies  in  the  future, 
government  refusal  to  continue  buying  our  subscriptions,  or  fines  or  civil  or  criminal  liability,  which  could 
adversely affect our results of operations.

Our  reliance  on  a  limited  number  of  CSPs  and  suppliers,  some  of  which  have  strategic  and 
investment relationships with us and are our customers, creates complex dynamics that could 
give rise to conflicts of interest and adversely affect our access to compute.

We rely on a limited number of CSPs—Amazon.com, Inc. (together with its affiliates, “Amazon”), Google, and 
Microsoft Corporation (“Microsoft”)—and suppliers, such as Broadcom, for compute and critical components of 
our  compute  infrastructure.  These  relationships  are  governed  by  contractual  arrangements  that,  while 
providing us with significant committed compute, also create dependencies and potential vulnerabilities. These 
CSPs may experience service outages, security incidents, or capacity constraints that affect our operations. The 
terms  of  our  arrangements,  including  pricing,  compute  commitments,  and  service  levels,  are  subject  to 
negotiation  upon  renewal,  and  we  may  be  unable  to  secure  renewals  on  terms  as  favorable  as  our  current 
arrangements.  Migrating  workloads  to  alternative  providers  would  be  costly,  time-consuming,  and 
operationally complex, and may not be feasible within timeframes that would avoid material disruption to our 
model  development  roadmap  or  our  ability  to  serve  customers.  The  engineering  investment  required  to 
maintain the performance of our unified compute platform across new hardware environments means that any 
such migration could degrade our compute efficiency, increasing the compute and infrastructure costs required 
to support a given level of business activity during and following any such migration period.

Our relationships with these CSPs are multifaceted and complex. Amazon, Google, and Microsoft, through their 
respective affiliates, have made significant equity investments in our company. At the same time, they may have 
made, and may in the future make, equity investments in, provide financing to, or otherwise support companies 
whose  models,  platforms,  or  applications  compete  with  ours.  These  CSPs  are  also  our  customers,  purchasing 
our intelligence service for internal use or for their own products and services. Their purchasing decisions may 
be  influenced  by  their  own  competing  offerings,  which  could  affect  their  demand  for  our  intelligence  service. 
Additionally,  Amazon,  Google,  and  Microsoft  are  among  the  largest  technology  companies  in  the  world,  each 
with substantial AI research and development programs, AI-powered models, platforms, and applications that 
compete  with  ours,  and  strategic  interests  that  may  not  be  fully  aligned  with  our  own.  Amazon,  Google,  and 
Microsoft  each  offer  AI  services  and  develop  and  deploy  competing  AI  models  through  their  respective  cloud 
platforms.  We  make  certain  of  our  models  available  through  these  cloud  platforms,  and  our  distribution 
relationships with Amazon, Google, and Microsoft generate revenue for us, but they also create dependencies, 
give them visibility into our pricing and commercial terms across the platforms they operate, and may influence 
their  incentives  regarding  pricing,  compute  allocation,  service  quality,  sales  prioritization,  and  compensation 
structures. To the extent these CSPs promote, integrate, prioritize, or provide customer access to our models, 
platform,  and  applications  on  terms  that  are  less  favorable  than  those  applicable  to  their  own  competing 
offerings or to the offerings of other companies, including with respect to pricing, commercial terms, product 
placement, integration, or access to compute or sales incentives, our competitive position, customer adoption, 
and business results could be adversely affected.

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