Fifth Circuit Keeps Texas App Store Law Alive

Estimated Time to Read: 12 minutes

Thursday, the United States Court of Appeals for the Fifth Circuit formally granted Texas’s request for a stay pending appeal in the ongoing litigation over Senate Bill 2420 (SB 2420), the Texas App Store Accountability Act. The order supersedes the panel’s earlier administrative stay and means the law remains in effect while the appeal continues.

This is a significant update to the status of SB 2420. Just days earlier, the Fifth Circuit had temporarily lifted the federal district court injunctions that had blocked the law from taking effect. The June 4 order goes further by explaining why the Fifth Circuit believes Texas has likely shown that the district court committed reversible errors when it blocked the law.

To be clear, Texas Policy Research (TPR) opposed SB 2420 while lawmakers were considering the bill. Our concerns centered on limited government, free enterprise, individual liberty, data privacy, and the risk of placing state-mandated age verification and parental consent infrastructure between Texans and digital marketplaces. Those concerns remain relevant as the law moves forward.

Still, the Fifth Circuit’s order changes the legal posture of the case. The court did not issue a final ruling on the merits, but it did allow SB 2420 to remain enforceable while the appeal proceeds. That makes this order important both for supporters of the law and for critics who remain concerned about its policy consequences.

Texas App Store Accountability Act Remains in Effect

Senate Bill 2420 regulates platforms that distribute software applications for mobile devices and creates Chapter 121 of the Texas Business and Commerce Code, formally titled the App Store Accountability Act. The law requires app stores operating in Texas to use a commercially reasonable method to verify a user’s age category when an individual creates an account. It divides users into four age categories: child, younger teenager, older teenager, and adult.

The law also requires a minor’s account to be affiliated with a parent or guardian account, and it generally requires parental consent before a minor may download an app, purchase an app, or make an in-app purchase.

The Fifth Circuit described the law as an effort to help parents direct and supervise children’s app downloads and in-app purchases through age verification, parental consent, and age rating and content display requirements. The district court had issued universal preliminary injunctions against SB 2420 after applying strict scrutiny. Texas sought a stay pending appeal, and the Fifth Circuit granted that request after concluding that Texas met the applicable stay factors.

In practical terms, SB 2420 is not merely back in effect because of a temporary procedural order. It is now in effect because the Fifth Circuit has issued a published order concluding that Texas is likely to succeed on several important arguments.

Fifth Circuit Says Strict Scrutiny Was Likely the Wrong Standard

The most important legal takeaway is the Fifth Circuit’s treatment of the First Amendment issue.

The district court applied strict scrutiny, the most demanding level of constitutional review. The Fifth Circuit said that was likely an error. According to the panel, significant parts of SB 2420, if not all of it, likely regulate commercial speech rather than fully protected noncommercial speech. The court reasoned that app store transactions are commercial in nature because users browse a catalog of applications, obtain information, and download or purchase apps. It also emphasized that even supposedly free apps may involve a commercial exchange because user data and private information can function as the payment.

That framing matters. If SB 2420 is treated as a regulation of commercial speech, Texas does not have to satisfy the same strict scrutiny standard that applies to direct restrictions on protected expression. Instead, the state must show a reasonable fit between the law’s requirements and its substantial governmental interests.

The Fifth Circuit went even further by noting that SB 2420 may not regulate speech at all because it does not target substantive content, but instead regulates commercial conduct with only an incidental relationship to speech.

That is a major legal development. Opponents have argued that SB 2420 burdens access to protected speech by affecting app downloads, app listings, age ratings, and digital content. The Fifth Circuit appears more receptive to Texas’ argument that the law regulates commercial transactions, data practices, contracts with minors, and parental consent mechanisms.

Texas Wins on Child Safety and Parental Rights at This Stage

The Fifth Circuit also credited Texas’s argument that SB 2420 advances important interests in child safety, parental rights, data privacy, and online accountability.

The court stated that requiring age verification, parental consent, and app-related content ratings likely directly and materially advances Texas’ substantial interest in protecting children’s data, safety, and privacy in the digital world. It also concluded that there is likely a reasonable fit between SB 2420’s methods and the state’s goal of allowing parents to direct and supervise their children’s app downloads and in-app purchases.

This is the strongest argument for supporters of the Texas App Store Accountability Act. They frame the law as a parental empowerment measure, not a censorship regime. Under that view, the law does not decide what minors may access. Instead, it ensures parents receive notice and have an opportunity to consent before a child enters a digital transaction.

The Fifth Circuit’s order leans into that framing. It points to the role of parents in directing their children’s upbringing and recognizes the state’s interest in protecting children.

From a legal standpoint, that helped Texas. From a policy standpoint, however, this remains more complicated.

Texas Policy Research opposed SB 2420 because the question is not whether parents should have the primary role in directing their children’s digital lives. They should. The harder question is whether the state should mandate a new regulatory framework requiring app stores and developers to collect, process, verify, transmit, and rely on age and consent information for Texans using mobile devices.

That concern remains even if the law survives constitutional review.

SB 2420 Still Raises Limited Government and Privacy Concerns

The Fifth Circuit’s order is a legal win for the State of Texas, but it does not eliminate the policy concerns that led TPR to oppose SB 2420.

The final version of the law requires app stores to verify age categories, affiliate minor accounts with parent accounts, obtain consent before downloads or purchases, disclose app ratings and data practices to parents, and notify developers when consent is revoked. It also requires app stores to provide developers with current information related to the age category assigned to each user and whether consent has been obtained for each minor user.

The law includes privacy protections. App stores must limit the collection and processing of personal data to what is necessary for age verification, parental consent, and compliance records, and they must transmit personal data using industry-standard encryption protocols.

Developers are also limited in how they may use personal data provided under the law and must delete that data after completing verification.

Those safeguards are important, but they do not erase the broader concern. SB 2420 still creates a government-mandated compliance structure around age verification, parental consent, and user data. Even if the law requires data minimization and encryption, it still depends on the creation and operation of systems that verify users, connect children to parent accounts, transmit certain user status information, and maintain compliance records.

For a limited government organization, that is a serious concern. The fact that the state has identified a real problem does not automatically mean a state-mandated regulatory architecture is the best solution.

Free Enterprise Concerns Remain for App Stores and Developers

SB 2420 also raises free enterprise concerns, particularly for app stores and software developers that must comply with the new regulatory framework. The law requires developers to assign age ratings to each software application and to each purchase that can be made through the application. Developers must also provide app stores with the rating and the specific content or other elements that led to the rating.

Developers must provide notice before making significant changes to terms of service or privacy policies. Significant changes include changes to personal data practices, changes to ratings or rating-related content, new monetization features, new advertisements, and material changes to functionality or user experience.

The Fifth Circuit was not persuaded that these provisions are likely unconstitutionally vague. The panel concluded that the law likely provides meaningful guidance and that terms such as “new opportunities to make a purchase” and “material changes” have understandable meanings in context.

That legal conclusion does not mean compliance will be simple. Large app stores and major developers may have the resources to absorb new compliance costs. Smaller developers may face more difficulty navigating age ratings, content disclosures, consent status, privacy notices, and changes that require renewed parental consent.

That was one of the policy problems with SB 2420 from the beginning. The Legislature may intend to target major app store platforms, but compliance burdens often fall hardest on smaller market participants. Even a law with a legitimate child safety purpose can still distort markets, chill innovation, or create new barriers to entry.

Universal Injunctions Take Another Hit

Another important part of the Fifth Circuit’s order concerns the district court’s use of universal preliminary injunctions. The panel said the district court’s universal injunctions likely fell outside the bounds of federal equitable authority because they barred Texas from enforcing SB 2420 against anyone, not merely against the plaintiffs or properly identified members of the plaintiff organizations.

This issue reaches beyond SB 2420. Courts continue to wrestle with whether federal district courts should be able to block state or federal laws across the board before final judgment. The Fifth Circuit’s order reinforces the idea that even if some plaintiffs are entitled to relief, that relief may need to be narrower than a blanket prohibition on enforcement.

For Texas lawmakers, that means a district court injunction may not be the final word. For opponents of a law, it means litigation strategy may increasingly require more targeted claims and more specific evidence of harm.

What Comes Next for the Texas App Store Accountability Act

The case now continues on appeal while SB 2420 remains in effect. The challengers can continue arguing that the Texas App Store Accountability Act violates the First Amendment, is vague, burdens protected speech, imposes improper compliance obligations, or creates practical risks for app stores, developers, and users. They may also seek further emergency relief from the Fifth Circuit, the full court, or the U.S. Supreme Court.

Texas will defend the law from a stronger position. The Fifth Circuit has already said Texas made a strong showing that the district court likely committed several reversible errors. It also concluded that Texas made a strong showing on the remaining stay factors, including irreparable harm, the balance of equities, and the public interest.

For app stores and developers, the immediate issue is compliance. The Fifth Circuit emphasized that SB 2420 requires commercially reasonable verification methods and allows developers to rely on widely adopted industry standards when determining age ratings and related content.

For parents, the law’s intended effect is more direct. It is designed to give parents more visibility and control over app downloads, in-app purchases, app ratings, content notices, and data practices affecting their children.

For policymakers, the question remains whether the law strikes the right balance.

Policy Implications for Texas Online Safety Regulation

The Fifth Circuit’s order has major implications for Texas online safety legislation, parental rights, digital privacy, and the future of state-level technology regulation.

First, the order strengthens the legal argument that app store regulation can be treated as commercial regulation rather than censorship. That could encourage Texas and other states to pursue additional laws regulating digital marketplaces, age verification, online contracts with minors, data collection, and in-app purchases.

Second, the order elevates the parental rights framing of online safety legislation. Lawmakers are increasingly treating children’s online activity as a consumer protection issue involving contracts, data harvesting, targeted advertising, app monetization, addictive design, and parental consent.

Third, the order may embolden state lawmakers to regulate technology platforms more aggressively. That may please those who believe Big Tech has failed to protect children, but it should concern those who believe state regulation can easily expand beyond its original purpose.

Texas Policy Research opposed SB 2420 because it expands government authority over digital marketplaces, imposes compliance mandates on private businesses, and risks normalizing state-driven age verification systems. Those concerns do not disappear because Texas won an important procedural victory in court.

At the same time, the Fifth Circuit’s order makes clear that the state’s legal position is stronger than the district court initially concluded. The panel appears skeptical of the argument that SB 2420 should be treated as a direct restriction on protected speech. It also appears persuaded, at least at this stage, that Texas has a substantial interest in protecting children and helping parents make informed decisions.

That is the tension at the center of SB 2420.

The law may survive because courts view it as a reasonable commercial regulation tied to parental consent, child safety, and data privacy. But from a liberty-minded policy perspective, the law still deserves scrutiny because it expands the regulatory role of the state, creates new compliance burdens, and relies on age verification infrastructure that could carry privacy risks of its own. The bottom line is that the Texas App Store Accountability Act remains enforceable while the appeal continues. The Fifth Circuit’s order is a significant legal win for Texas, but it does not settle the broader policy debate over whether SB 2420 is the right way to protect children online while preserving free enterprise, privacy, limited government, and individual liberty.

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