Meta takes Ofcom to High Court over online safety fine calculations

Meta has initiated legal proceedings against the UK’s media regulator, Ofcom, challenging the methodology used to calculate fees and financial penalties under the Online Safety Act. The technology company argues that the current approach is both disproportionate and unlawful, specifically contesting the definition of qualifying worldwide revenue that Ofcom employs for firms generating over 250 million pounds annually. The dispute is currently before the English High Court, with judicial review hearings scheduled for Tuesday and Wednesday.

The regulatory framework in question was drafted by Ofcom in September of last year to introduce new protections against harmful online content. Under these provisions, companies found to have breached safety rules face fines of up to 10 per cent of their qualifying worldwide revenue or 18 million pounds, whichever amount is higher. The calculation method varies depending on the scope of the enforcement action. If Ofcom pursues a single entity, such as a specific social media platform, penalties are based solely on that entity’s revenue. However, when the regulator acts against multiple entities, including a parent company and its subsidiaries, it may calculate penalties based on the group’s total revenue. This includes income from non-regulated activities, such as enterprise software, which Meta contends should not be included.

In court filings, Meta alleges that the Online Safety Act does not grant the regulator the power to include revenue from non-regulated services when pursuing multiple entities. The US firm claims that Ofcom is therefore breaching its statutory powers and acting irrationally by creating a double counting approach to fines and fees. Meta further asserts that the regulator deliberately adopted the broadest possible interpretation of the rules to impose penalties at an unprecedented level of magnitude. In response, Ofcom maintains that Meta is incorrect and that it struck a careful balance in its approach. The regulator stated that the purpose of the regulations is to determine the methodology for calculating the maximum penalty, not to set the level of the penalty itself, which is determined on the facts of each individual case.

A spokesperson for Meta stated that the company remains committed to cooperating constructively with Ofcom as it enforces the law. However, the firm and others in the tech industry believe the current methodology is disproportionate. They argue that fees and penalties should be based on the services being regulated in the countries where they operate, a position they say would still allow Ofcom to impose the largest fines in UK corporate history. An Ofcom spokesperson defended the regulator’s position, noting that Parliament has charged it with regulating an industry that has been unregulated for more than 20 years. The regulator emphasised that effective oversight relies on its ability to levy appropriate fees and issue fines. It stated that while legal challenges are part of any regulatory regime, it will defend them robustly to ensure online safety for people in the UK.

During a meeting of the House of Lords Communications and Digital Committee on 15 September, Oliver Griffiths, Ofcom’s group director for online safety, described the regulator as operating in a highly litigious environment. He noted that Ofcom is facing two sets of legal proceedings brought by Meta over fee calculations, alongside similar claims from other online service providers. Griffiths added that the regulator is dealing with a raft of judicial reviews from services attempting to challenge data collection efforts, which are necessary to monitor and evaluate the online safety regime.