Leading technology companies have challenged key aspects of Ofcom’s implementation of the Online Safety Act 2023 in the High Court, arguing that the regulator has exceeded its statutory powers.
Fees and Penalties Regime
As readers will be aware, one of the central pillars of the Act is the ability for Ofcom to impose fines of up to 10% of qualifying worldwide revenue (QWR) or £18 million (whichever is greater) if regulated services fail to comply with their regulatory obligations.
Last year, Ofcom published a Statement setting out its approach to calculating QWR (discussed here) which is relevant both to the maximum penalties that may be imposed for non-compliance, as well as the fees payable by qualifying regulated services towards Ofcom’s costs of administering the online safety regime.
In response, Meta announced its intention to challenge Ofcom in court, arguing that its approach to the fees and penalties regime is disproportionate and means that “a handful of 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”.
For its part, Ofcom has defended the decisions it has reached and the reasoning behind them.
Information Notices
A week earlier, Ofcom faced a separate challenge not only from Meta, but also from TikTok and X over information notices that they received. According to reports, one spokesperson for X described the notice the organisation had received as “the most burdensome information request X has received from any regulator in any jurisdiction”, while Meta has characterised its notice as a ‘wish list’ with no legal basis.
A defeat in either case could have significant implications for Ofcom, given that they concern powers that are central to its ability to fund, administer, and enforce the online safety regime. Responding to the challenges, an Ofcom spokesperson was quoted as saying:
“Parliament has charged us with the job of regulating an industry that has been unregulated and unaccountable for more than 20 years…Effective regulation relies on our ability to gather information, levy appropriate fees, issue fines and apply the law as intended. While legal challenges are an important part of any regulatory regime, we will defend them robustly as part of our mission of making life safer online for people in the U.K”.