Meta, the parent company of Facebook and Instagram, has initiated a High Court legal action against UK broadcasting authority Ofcom over fees and potential fines introduced under the Online Safety Act. The legal dispute centres on how the regulator calculates charges for tech firms, which Meta argues are “disproportionate” and unjustly affect a small number of companies. Under regulations that came into force in September, fees are calculated from qualifying worldwide revenue for firms earning more than £250m annually. At a initial hearing in London on Thursday, the High Court heard arguments from Meta’s legal team, who argue that Ofcom’s methodology is unlawful and requires review. A full hearing is set for October.
The conflict over fee assessment
Meta’s legal challenge focuses on what the company considers to be a deeply problematic approach to determining its financial obligations under the Online Safety Act. Monica Carss-Frisk KC, representing the tech giant, has argued in court documents that Ofcom’s methodology is “troubling” and creates an unfair system whereby a handful of large companies bear the vast majority of the regulator’s running expenses. The barrister argues that this arrangement contradicts the spirit of the legislation, which was intended to oversee a broad range of internet services across the UK, not place financial burden on a select few firms.
A central area of dispute is Ofcom’s reliance on global qualifying revenue as the foundation for calculating fees. Meta argues this measure is unrelated to the actual earnings businesses produce from their UK operations, making the fees disproportionate to the regulated services in the UK. The company has proposed an different method whereby fees and penalties would be determined exclusively on the basis of income produced by services under regulation in the jurisdictions in which they operate. This, Meta argues, would continue to allow Ofcom to impose appropriate financial sanctions whilst ensuring a fairer distribution of regulatory costs throughout the sector.
- Fees determined by qualifying worldwide revenue rather than UK-specific earnings
- Handful of large corporations bearing vast majority of Ofcom’s operating costs
- Meta proposes fees based on revenues from regulated services in each country
- Ofcom justifies its approach as based on straightforward interpretation of the statutory framework
Meta’s legal arguments and objections
Uneven pressure on large platforms
Meta’s High Court challenge questions the validity of the fairness of Ofcom’s fee structure under the Online Safety Act. The company contends that the regulator’s system creates an unjust system where a handful of large technology firms bear the costs of applying regulatory requirements created to address a much more extensive array of internet services. According to Meta’s legal team, this cost concentration goes against the purpose of the legislation, which formally recognised the need to oversee a wide variety of internet-based platforms and services functioning in the United Kingdom.
The gap becomes notably severe when considering the size of organisations involved. Whilst Ofcom’s regulatory remit extends to many internet service providers, search engines, and smaller services, the fee arrangement effectively means that Meta, in addition to a few of other major technology companies, pays for the lion’s share of the regulator’s day-to-day expenditure. This structure, Meta maintains, is deeply unfair and creates perverse incentives that put at a disadvantage established platforms whilst possibly enabling lesser competitors to conduct business with limited financial participation to regulatory supervision.
Meta’s lawyers has emphasised that this disproportionate allocation of costs raises questions about the legality of Ofcom’s interpretation of the Online Safety Act. The company contends that whilst it acknowledges its obligation to pay to compliance expenses, the current methodology fails to reflect a fair and proportionate approach. Meta’s view is that bigger companies ought not face penalties for their market dominance through inflated fee obligations that bear no direct relationship to the actual resources needed to oversee their specific services within the UK market.
Ofcom’s regulatory approach and reaction
Ofcom has strongly upheld its methodology for determining fees and potential penalties under the Online Safety Act, asserting that its framework provides a direct reading of the legislation as Parliament contemplated. The regulator maintains that the fee structure, determined by qualifying global turnover for companies generating in excess of £250m each year, provides a fair and transparent mechanism for financing its enhanced role in digital safety oversight. Ofcom’s position is that this framework secures sufficient funding are in place to safeguard users against damaging digital material whilst ensuring coherence with how compliance expenses are typically distributed across industries. The regulator has stated it will “robustly defend” its position in court, satisfied that its interpretation accords with the plain reading of the law and serves the public interest.
An Ofcom spokesperson voiced concern at Meta’s legal action, portraying the company’s objections as reluctance to pay fees and potential future penalties determined according to the existing framework. The regulator emphasises that its framework applies consistently to all organisations meeting the criteria and reflects the legislative requirements established by the Online Safety Act. Ofcom’s stance reflects its belief that bigger social media companies, which earn considerable profits and have greater capacity to cause harm through their services, should contribute proportionally to the cost of being regulated. The regulator remains committed to implementing the Online Safety Act effectively and considers its fee structure is legally sound and essential to meet this regulatory requirement.
| Regulatory aspect | Details |
|---|---|
| Fee calculation basis | Based on qualifying worldwide revenue for companies earning more than £250m annually |
| Maximum penalty for breaches | Up to 10% of qualifying worldwide revenue or £18m, whichever is greater |
| Ofcom’s legal position | Defends methodology as plain reading of the Online Safety Act legislation |
| Scope of regulation | Applies to search engines and platforms where users can share content, including social media |
Wider implications and market intervention
The High Court challenge has drawn significant attention from other technology companies and industry bodies, signalling that Meta’s court dispute extends far beyond a single corporation’s disagreement with regulators. Epic Games, the developer behind the hugely popular Fortnite, and the Computer and Communications Industry Association have both sought permission to participate in the proceedings, pointing to broad anxiety about how Ofcom’s fee structure might affect the broader tech sector. Their involvement underscores the case’s potential to transform how online safety regulation is funded across the entire industry, with implications for companies of different sizes and business models.
Mr Justice Chamberlain recognised the case’s significance by describing it as raising issues “of wide public importance”, a recognition that the outcome could establish important benchmarks for funding approaches for regulators in the online sector. The initial hearing in London established that a complete hearing is arranged for October, providing ample time for the various parties to prepare comprehensive arguments. The timeline suggests the courts will carefully examine whether Ofcom’s approach to calculating fees based on global turnover is proportionate and legal, potentially shaping how regulators across the UK fund their operations in the years ahead.
- Epic Games and the Computer and Communications Industry Association wish to intervene in the case
- Justice Chamberlain confirmed the dispute presents issues of significant public concern to the industry
- Full hearing set for October 2025 with initial hearing concluded in London on Thursday