Meta Challenges Ofcom's Fee and Fines Regime Under Online Safety Act
Meta, the parent company of Facebook and Instagram, has initiated a legal challenge against the UK media regulator Ofcom concerning the fees and fines framework it enforces under the UK's Online Safety Act, landmark legislation aimed at digital safety.
The company contends that Ofcom's method for calculating charges is flawed, specifically criticizing the use of a company’s global revenue as the basis for fines and fees. Under the legislation, breaches can result in fines of up to 10% of qualifying worldwide revenue (QWR) or £18 million, whichever is higher.
Given Meta’s reported revenue of $201 billion in the previous year, the fines could theoretically reach $20 billion. Additionally, regulations introduced in September stipulate that Ofcom’s fees will be calculated as a proportion of an organisation’s QWR and apply to businesses with annual revenues exceeding £250 million.
Meta argues that fees and potential fines should be determined based on the revenue generated within the country where the company is regulated, rather than on global revenue. The company is pursuing a judicial review of Ofcom’s decision in the High Court.
“We and others in the tech industry believe its decisions on the methodology to calculate fees and potential fines are disproportionate,” said a Meta spokesperson.
“We believe fees and penalties should be based on the services being regulated in the countries they’re being regulated in. This would still allow Ofcom to impose the largest fines in UK corporate history.”
Legal Arguments Presented by Meta’s Counsel
Monica Carss-Frisk KC, representing Meta, described Ofcom’s approach in court documents as “troubling,” noting that it results in companies like Meta bearing the majority of Ofcom’s costs, despite the legislation’s focus on a broad range of internet services offered within the UK.
“Companies such as Meta bearing the vast majority of Ofcom’s costs, despite the act making clear that it is concerned with a wide range of internet services offered in the UK,”
Carss-Frisk further emphasized that the QWR calculation is not tied specifically to revenue generated from services provided in the UK. She stated:
“If a service is provided to UK users, then all of its revenue globally will count towards QWR.”
Upcoming Hearing and Ofcom’s Response
A hearing related to Meta’s case is scheduled for 13-14 October. Ofcom has defended its fees and fines regime, stating it is based on a “plain reading of the law.” The regulator added:
“We will robustly defend our reasoning and decisions.”
Context: Other Challenges to Ofcom and the Online Safety Act
Meta is not the first US technology company to contest Ofcom’s enforcement of the Online Safety Act. The legislation has also faced opposition from the US government, including the Trump administration.
The US online forum 4chan has refused to pay fines related to the act, and Ofcom has been sued by the operators of both 4chan and Kiwi Farms websites.
Ofcom’s Role and Fee Schedule Implementation
Ofcom regulates the UK’s communications services. Starting this year, it introduced a fee schedule requiring certain online service providers, including Meta, to pay tariffs to cover enforcement costs of the Online Safety Act.
The fees apply to companies whose revenue stems from hosting user-generated content, search content, and pornography, with a turnover threshold of approximately £250 million or more from these services.
This fee regime represents a significant change for Ofcom, which historically funded its operations primarily through license fees for radio bandwidth. The new system, implemented in March, shifts the majority of Ofcom’s funding to come from companies like Meta.
Ofcom’s projected revenue for the current year is £233 million, with tariffs expected to contribute £164 million.
