Meta, the holding company of Facebook and Instagram, has initiated a High Court legal action against UK media regulator Ofcom over fees and potential fines introduced under the Online Safety Act. The legal dispute centres on how the regulator determines fees for tech firms, which Meta contends 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 per year. At a preliminary hearing in London on Thursday, the High Court heard arguments from Meta’s legal team, who contend that Ofcom’s methodology is unlawful and should be reconsidered. A full hearing is scheduled for October.
The conflict over fee calculations
Meta’s legal challenge centres on what the company views as 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 establishes an unfair system whereby a small number of large companies bear the vast majority of the regulator’s operating costs. The barrister argues that this arrangement contradicts the spirit of the legislation, which was designed to oversee a broad range of internet services across the UK, not concentrate financial burden on a small group of firms.
A crucial area of dispute is Ofcom’s reliance on qualifying worldwide revenue as the foundation for fee calculation. Meta argues this measure is unrelated to the actual earnings businesses produce from their operations in the UK, rendering the fees excessive relative to the services being regulated in Britain. The company has put forward an different method where fees and penalties would be calculated based solely on revenues generated by services under regulation in the jurisdictions in which they operate. This, Meta maintains, would still permit Ofcom to impose appropriate financial sanctions whilst guaranteeing a more equitable allocation of regulatory costs across the industry.
- Fees determined by qualifying worldwide revenue rather than UK-specific earnings
- Small number of large corporations bearing overwhelming proportion of Ofcom’s operational expenses
- Meta proposes fees derived from income from regulated offerings in each country
- Ofcom defends its methodology as based on straightforward interpretation of the legislation
Meta’s legal position and concerns
Disproportionate burden on major platforms
Meta’s High Court legal action questions the validity of the fairness of Ofcom’s fee framework under the Online Safety Act. The company contends that the regulator’s methodology creates inequitable conditions where a small number of large technology firms shoulder the financial burden of applying regulatory requirements intended to regulate a much broader spectrum of internet services. According to Meta’s lawyers, this cost concentration goes against the purpose of the legislation, which clearly acknowledged the need to oversee a broad selection of internet-based platforms and services operating within the United Kingdom.
The difference becomes especially pronounced when considering the scope of companies affected. Whilst Ofcom’s regulatory authority extends to multiple internet service providers, search platforms, and lesser-known platforms, the charging model effectively means that Meta, together with a handful of other tech giants, finances the overwhelming majority of the regulator’s operational expenses. This arrangement, Meta argues, is fundamentally unjust and creates perverse incentives that disadvantage incumbent platforms whilst conceivably permitting smaller competitors to function with minimal financial contribution to regulatory control.
Meta’s legal team has emphasised that this unequal distribution of costs raises questions about the lawfulness of Ofcom’s interpretation of the Online Safety Act. The company contends that whilst it accepts its obligation to pay to regulatory costs, the existing approach fails to reflect a fair and proportionate approach. Meta’s view is that bigger companies ought not face penalties for their market dominance through excessive fee requirements that bear no direct relationship to the actual resources required to regulate their specific services within the UK market.
Ofcom’s regulatory framework and response
Ofcom has firmly defended its methodology for determining fees and potential penalties under the Online Safety Act, asserting that its approach constitutes a plain understanding of the legislation as Parliament envisaged. The regulator contends that the charging framework, determined by qualifying international earnings for companies with revenues exceeding £250m per year, provides a fair and transparent mechanism for financing its enhanced role in online safety regulation. Ofcom’s position is that this framework secures sufficient funding are available to shield users from harmful online content whilst ensuring coherence with how oversight expenditure are customarily apportioned across industries. The regulator has stated it will “robustly defend” its position in court, assured that its interpretation corresponds to the straightforward understanding of the law and furthers the public good.
An Ofcom representative voiced concern at Meta’s challenge, describing the company’s objections as resistance to paying fees and potential future penalties determined according to the existing framework. The regulator underscores that its framework applies consistently to all organisations meeting the criteria and reflects the legal provisions set out in the Online Safety Act. Ofcom’s stance demonstrates its belief that larger platforms, which earn considerable profits and have greater capacity to cause harm through their services, should fund their regulation fairly to the costs of their regulation. The regulator remains committed to implementing the Online Safety Act rigorously and considers its fee structure is legally sound and essential to discharge 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 |
Broader implications and industry intervention
The High Court challenge has drawn significant attention from other technology companies and industry bodies, indicating that Meta’s legal battle 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 requested permission to participate in the proceedings, suggesting broad anxiety about how Ofcom’s fee structure might affect the broader tech sector. Their involvement highlights the case’s potential to transform how online safety regulation is funded across the entire industry, with implications for companies of varying sizes and business models.
Mr Justice Chamberlain acknowledged the case’s significance by describing it as raising issues “of considerable public concern”, a recognition that the outcome could set important benchmarks for funding approaches for regulators in the digital economy. The initial hearing in London confirmed 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 method for determining fees based on worldwide revenue is proportionate and legal, potentially influencing how regulators across the UK fund their operations in future.
- Epic Games and the Computer and Communications Industry Association seek to intervene in the case
- Justice Chamberlain confirmed the dispute presents issues of wide public importance to the industry
- Full hearing set for October 2025 with initial hearing concluded in London on Thursday