The Texas law, known as HB 20, allows private parties to sue tech platforms over allegations of censorship.
The decision is a blow to tech platforms that had challenged the law as unconstitutional under the First Amendment.
CCIA and NetChoice, the groups that had challenged the law in court, didn’t immediately respond to a request for comment.
The decision by the US Court of Appeals for the Fifth Circuit raises questions about whether it could be appealed to the Supreme Court.
CNN reached out to Texas Attorney General Ken Paxton for comment.