The Federal Trade Commission and Media Matters have settled their litigation following a court ruling that the federal agency violated the First Amendment when it issued a civil investigative demand to the media watchdog.

The Media Matters lawsuit was dismissed on Tuesday, after the sides gave notice of a settlement, with each side bearing its own costs.

In August, a federal judge granted a preliminary injunction to halt the FTC‘s investigative demand, which the agency said was part of an investigation of an advertising boycott of Elon Musk‘s X.

Media Matters has been a target of Musk, members of the Trump administration and their allies after the group published a piece in 2023 on antisemitic posts on X that appeared next to advertisements from major brands. A number of companies pulled their advertisements from the platform, leading Musk to file what he called a “thermonuclear lawsuit” against the media watchdog.

Then, a year ago, FTC Chairman Andrew Ferguson sent a civil investigative demand to the watchdog group. Media Matters alleged that the FTC action was retaliation for its reporting, burdening it with legal costs and other expenses.

The judge, Sparkle L. Sooknanan, agreed. In her decision last year, she wrote, “It should alarm all Americans when the Government retaliates against individuals or organizations for engaging in constitutionally protected public debate. And that alarm should ring even louder when the Government retaliates against those engaged in newsgathering and reporting.”

The FTC had appealed Sooknanan’s decision, with oral arguments before a three-judge panel held last month.

An FTC spokesperson said that they had no comment on the settlement.

Last month, the agency announced a settlement with three advertising agency holding companies — WPP, Dentsu and Publicis — over claims that they violated antitrust laws. At the time, the FTC said that it was withdrawing the Media Matters’ investigative demand.

In a statement, Media Matters said that under the terms of their FTC settlement, the agency has agreed to forgo “ever reissuing or issuing a substantially similar” civil investigative demand to Media Matters.

The organization said, “The FTC also stated — in writing — that Media Matters is not the target of any investigation and that any similar future litigation would occur in D.C. The agreement — and the decisions Media Matters won in the district court and the court of appeals — offers a roadmap for other newsgathering and nonprofit organizations facing, or at risk of, government retaliation.”

Media Matters’ attorney, Nathaniel Zelinsky, senior counsel at Washington Litigation Group, said in a statement,  “This historic victory shows that the rule of law matters — and that courts can and do hold this government accountable.”

The FTC also had sought investigative demands against another media organization, NewsGuard, the service which rates media outlets for accuracy and reliability. NewsGuard sued the FTC in February over the agency’s civil investigative demand for emails, texts, reporters’ notes and subscriber lists, among other materials. NewsGuard said in its lawsuit that the investigative demand was “under the guise of a supposed antitrust investigation,” but was retaliation for its low reliability score given to Newsmax, the conservative news site.

NewsGuard is used by consumers and clients including AI companies, search engines, news aggregators, brands and researchers. 

Although the FTC also dropped the NewsGuard investigative demand, the ratings service is continuing its litigation, challenging other FTC actions. As part of a merger condition placed on the combination of Omnicom and Interpublic Group last year, the advertising firms are barred from doing business with an entity like NewsGuard. Those conditions also are similar to those placed on the FTC’s recent advertising settlements.

Matt Skibinski, chief operating officer of NewsGuard, wrote last month that the ad firms “were jawboned by the FTC until they agreed to boycott NewsGuard.”

He wrote, “Some agencies and advertisers subscribe the NewsGuard’s ratings to direct their ads to reliable news outlets rather than to Russian disinformation, healthcare hoxes and AI-generated slop. The FTC’s actions are an attempt to cut off this revenue stream that funds our journalism.”