Meta, the parent company of Facebook and Instagram, has initiated a High Court challenge against UK media regulator Ofcom over fees and potential fines established by the Online Safety Act. The court case centres on how the regulator determines fees for tech firms, which Meta argues are “disproportionate” and unjustly affect a small number of companies. Under rules that took effect 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 should be reconsidered. A full hearing is scheduled for October.
The dispute over calculation of fees
Meta’s legal challenge focuses on what the company considers to be a deeply problematic approach to calculating its monetary liabilities under the Online Safety Act. Monica Carss-Frisk KC, representing the tech giant, has contended in court documents that Ofcom’s methodology is “troubling” and establishes an inequitable system whereby a small number of large companies bear the vast majority of the regulator’s running expenses. The barrister contends that this arrangement conflicts with the spirit of the legislation, which was designed to regulate a broad range of internet services across the UK, not place financial burden on a select few firms.
A crucial area of dispute is Ofcom’s reliance on qualifying worldwide revenue as the basis for fee calculation. Meta contends this metric is disconnected from the genuine income businesses produce from their UK operations, making the fees disproportionate to the regulated services in the UK. 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 apply suitable financial penalties whilst guaranteeing a fairer distribution of compliance expenses throughout the sector.
- Fees calculated using qualifying worldwide revenue rather than UK-specific earnings
- Small number of major companies bearing vast majority of Ofcom’s operational expenses
- Meta suggests fees derived from revenues from regulated services in every jurisdiction
- Ofcom justifies its methodology as based on straightforward interpretation of the legislation
Meta’s legal arguments and objections
Disproportionate burden on leading platforms
Meta’s High Court challenge questions the validity of the fairness of Ofcom’s fee framework under the Online Safety Act. The company maintains that the regulator’s approach creates unfair arrangements where a handful of large tech companies shoulder the financial burden of implementing rules created to address a much broader spectrum of internet services. According to Meta’s legal representatives, this concentration of costs conflicts with the purpose of the legislation, which explicitly recognised the need to oversee a broad selection of online platforms and services operating within the United Kingdom.
The gap becomes notably severe when considering the size of organisations involved. Whilst Ofcom’s supervisory mandate extends to many ISPs, search engines, and smaller services, the fee arrangement effectively means that Meta, alongside a small number of other technology leaders, pays for the vast bulk of the regulator’s day-to-day expenditure. This arrangement, Meta argues, is deeply unfair and creates problematic incentives that disadvantage incumbent platforms whilst possibly enabling lesser competitors to conduct business with negligible financial input to regulatory oversight.
Meta’s legal team have stressed that this unequal distribution of costs creates doubt about the lawfulness of Ofcom’s interpretation of the Online Safety Act. The company maintains that whilst it acknowledges its responsibility to contribute to regulatory costs, the current methodology does not represent a fair and proportionate approach. Meta’s view is that bigger companies should not be penalised for their market dominance through inflated fee obligations that have no clear connection to the real costs required to regulate their particular offerings within the UK market.
Ofcom’s regulatory structure and reply
Ofcom has robustly supported its approach to calculating fees and potential penalties under the Online Safety Act, maintaining that its approach constitutes a straightforward interpretation of the legislation as Parliament intended. The regulator contends that the fee structure, calculated using qualifying worldwide revenue for companies generating in excess of £250m annually, offers an equitable and clear mechanism for funding its expanded remit in online safety regulation. Ofcom’s position is that this approach ensures sufficient funding are on hand to shield users from injurious internet content whilst ensuring coherence with how compliance expenses are typically distributed across industries. The regulator has declared it intends to “robustly defend” its position in court, assured that its interpretation aligns with the straightforward understanding of the law and serves the public interest.
An Ofcom representative expressed disappointment at Meta’s legal action, portraying the company’s objections as resistance to paying fees and foreseeable penalties determined according to the agreed methodology. The regulator underscores that its framework operates uniformly to all qualifying companies and reflects the statutory obligations set out in the Online Safety Act. Ofcom’s stance reveals its belief that bigger social media companies, which produce significant income and have greater capacity to inflict damage through their services, should contribute proportionally to the cost of being regulated. The regulator is determined to upholding the Online Safety Act effectively and believes its fee structure is both lawful and necessary to discharge this statutory obligation.
| 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 |
Extended implications and industry intervention
The High Court legal action has attracted significant attention from other technology companies and industry bodies, indicating that Meta’s court dispute extends far beyond a single corporation’s dispute 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, suggesting widespread concern about how Ofcom’s fee structure might affect the broader tech sector. Their involvement highlights the case’s potential to reshape how online safety regulation is funded across the entire industry, with implications for companies of varying sizes and business models.
Mr Justice Chamberlain recognised the case’s importance by describing it as raising issues “of considerable public concern”, a recognition that the outcome could establish important precedents for regulatory funding mechanisms in the digital economy. The preliminary hearing in London confirmed that a complete hearing is arranged for October, allowing ample time for the different parties to prepare detailed submissions. The timeline suggests the courts will carefully examine whether Ofcom’s method for determining fees based on global turnover is proportionate and lawful, potentially shaping how regulators across the UK finance their activities in the years ahead.
- Epic Games and the Computing and Communications Industry Association wish to intervene in the case
- Justice Chamberlain established the dispute raises issues of significant public concern to the industry
- Full hearing scheduled for October 2025 with initial hearing concluded in London on Thursday