Meta, the holding 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 legal dispute centres on how the regulator calculates charges for tech firms, which Meta contends are “disproportionate” and unfairly burden 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 contend that Ofcom’s methodology is unlawful and should be reconsidered. A full hearing is scheduled for October.
The conflict over calculation of fees
Meta’s court action focuses on what the company views as a fundamentally flawed 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 creates an inequitable system whereby a small number of large companies bear the vast majority of the regulator’s running expenses. The barrister argues that this arrangement conflicts with the spirit of the legislation, which was intended to regulate a broad range of internet services across the UK, not place financial burden on a small group of firms.
A central point of contention is Ofcom’s reliance on global qualifying revenue as the foundation for fee calculation. Meta argues this metric is disconnected from the actual earnings companies generate from their UK operations, rendering the charges excessive relative to the services being regulated in the UK. The company has put forward an alternative approach whereby fees and penalties would be determined based solely on income produced 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 compliance expenses across the industry.
- Fees determined by eligible global turnover rather than United Kingdom-only income
- Handful of major companies bearing vast majority of Ofcom’s operational expenses
- Meta suggests fees based on revenues from regulated services in each country
- Ofcom defends its approach as based on plain reading of the statutory framework
Meta’s legal position and concerns
Uneven pressure on leading platforms
Meta’s High Court legal action fundamentally contests the fairness of Ofcom’s fee structure under the Online Safety Act. The company maintains that the regulator’s methodology creates an unjust system where a handful of large tech companies bear the costs of applying regulatory requirements intended to regulate a much broader spectrum of internet services. According to Meta’s legal team, this cost concentration conflicts with the original intention of lawmakers, which clearly acknowledged the need to regulate a diverse range of online platforms and services based in the United Kingdom.
The disparity becomes notably severe when considering the size of businesses impacted. Whilst Ofcom’s regulatory authority extends to many internet service providers, search platforms, and lesser-known platforms, the charging model effectively means that Meta, together with a small number of other major technology companies, pays for the lion’s share of the regulator’s running costs. This structure, Meta maintains, is deeply unfair and creates misaligned incentives that put at a disadvantage major platforms whilst potentially allowing smaller rivals to function with minimal financial contribution to regulatory control.
Meta’s lawyers have stressed that this disproportionate allocation of costs creates doubt about the legality of Ofcom’s reading of the Online Safety Act. The company maintains that whilst it acknowledges its obligation to pay to regulatory costs, the current methodology fails to reflect a balanced and reasonable 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 actual resources needed to oversee 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 straightforward interpretation of the legislation as Parliament intended. The regulator argues that the fee structure, determined by qualifying worldwide revenue for companies generating in excess of £250m annually, provides a fair and transparent mechanism for supporting its widened responsibilities in internet safety enforcement. Ofcom’s position is that this framework secures adequate resources are available to protect users from injurious internet content whilst ensuring coherence with how regulatory costs are typically distributed across industries. The regulator has announced it shall “robustly defend” its position in court, satisfied that its interpretation accords with the straightforward understanding of the law and serves the public interest.
An Ofcom representative voiced concern at Meta’s challenge, characterising the company’s objections as unwillingness to meet fees and anticipated penalties calculated on the established basis. The regulator underscores that its framework functions equally to all qualifying companies and incorporates the legislative requirements contained in the Online Safety Act. Ofcom’s stance reflects its belief that bigger social media companies, which earn considerable profits and possess greater ability to cause harm through their services, should pay a fair share to the costs of their regulation. The regulator is determined to implementing the Online Safety Act properly and believes its fee framework is both lawful and necessary to fulfil 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 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 requested 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 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 significance by describing it as raising issues “of wide public importance”, a recognition that the outcome could establish important precedents for funding approaches for regulators in the digital economy. The initial hearing in London established that a full hearing is scheduled for October, providing ample time for the different parties to prepare detailed submissions. The schedule suggests the courts will thoroughly assess whether Ofcom’s approach to calculating fees based on worldwide revenue is proportionate and lawful, potentially shaping how regulators across the UK fund their operations in future.
- Epic Games and the Computing and Communications Industry Association seek to intervene in the case
- Justice Chamberlain established the dispute presents issues of wide public importance to the industry
- Full hearing scheduled for October 2025 with initial hearing concluded in London on Thursday