Meta has launched a legal challenge against the UK's media regulator, Ofcom, over the fees and fines regime being enforced under the landmark Online Safety Act. The Facebook and Instagram owner argues that Ofcom's methodology for calculating charges is flawed and should not be based on a company's global revenue.
Background of the Dispute
Under the Online Safety Act, breaches can be punished by fines of up to 10% of qualifying worldwide revenue (QWR) or £18 million, whichever is higher. For Meta, which reported revenues of $201 billion last year, this could theoretically result in a fine of up to $20 billion for breaches in the UK. Since September, Ofcom's fees have also been based on a proportion of an organisation's QWR, applying to businesses with more than £250 million in annual revenue.
Meta's Argument
Meta contends that fees and potential fines should be based on the country where the company is being regulated. The tech giant is seeking a judicial review of Ofcom's decision in the High Court. A Meta spokesperson stated: "We and others in the tech industry believe its decisions on the methodology to calculate fees and potential fines are disproportionate. 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."
Monica Carss-Frisk KC, representing Meta, argued in court documents that Ofcom's approach was "troubling" and would lead to "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." She added that QWR is not "pegged" to revenue generated from a specific service in the UK, meaning "if a service is provided to UK users, then all of its revenue globally will count towards QWR."
Ofcom's Response
A hearing related to Meta's case is scheduled for 13-14 October. Ofcom stated that its fees and fines regime is based on a "plain reading of the law" and that it will "robustly defend our reasoning and decisions."
Broader Context
Meta is not the first US tech firm to challenge Ofcom over the act, which has also faced criticism from the Trump administration. The online forum 4chan has refused to pay fines related to the act, and Ofcom has been sued by the companies behind 4chan and Kiwi Farms websites.
Ofcom's Fee Regime
Ofcom regulates UK communications services. Beginning this year, it implemented a fee schedule requiring certain online service providers, including Meta, to pay tariffs to cover enforcement of the Online Safety Act. These fees apply to companies whose revenue comes from hosting user-generated content, search content, and pornography, with a turnover of roughly £250 million or more. The fee regime, years in the making, represents a significant change for Ofcom. Since March, the majority of Ofcom's funding now comes from companies like Meta, rather than license fees for radio bandwidth. Ofcom's revenue is set to be £233 million this year, with tariffs accounting for £164 million.
