Meta, the parent company of Facebook and Instagram, has initiated a High Court challenge against UK media regulator Ofcom over fees and potential fines introduced under the Online Safety Act. The court case 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 based on qualifying worldwide revenue for firms earning more than £250m annually. At a preliminary 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 disagreement over calculation of fees
Meta’s court action 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 contends 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 area of dispute is Ofcom’s use of qualifying worldwide revenue as the foundation for calculating fees. Meta argues this measure is unrelated to the actual earnings companies generate from their operations in the UK, rendering the fees disproportionate to the services being regulated in the UK. The company has put forward an different method whereby penalties and fees would be calculated exclusively on the basis of revenues generated by regulated services in the countries where they operate. This, Meta argues, would still permit Ofcom to apply appropriate financial sanctions whilst guaranteeing a fairer distribution of compliance expenses throughout the sector.
- Fees determined by qualifying worldwide revenue rather than United Kingdom-only income
- Small number of major companies shouldering vast majority of Ofcom’s operating costs
- Meta suggests fees derived from income from regulated offerings in every jurisdiction
- Ofcom defends its methodology as grounded in plain reading of the statutory framework
Meta’s legal arguments and objections
Unequal impact on major platforms
Meta’s High Court legal action questions the validity of the fairness of Ofcom’s charging model under the Online Safety Act. The company maintains that the regulator’s system creates inequitable conditions where a limited group of large tech companies shoulder the financial burden of enforcing regulations designed to cover a much more extensive array of internet services. According to Meta’s lawyers, this clustering of expenses contradicts the legislative intent, which explicitly recognised the need to supervise a diverse range of online platforms and services based in the United Kingdom.
The difference becomes especially pronounced when considering the scope of businesses impacted. Whilst Ofcom’s regulatory authority extends to numerous connectivity providers, search platforms, and smaller services, the fee structure effectively means that Meta, in addition to a small number of other tech giants, funds the overwhelming majority of the regulator’s day-to-day expenditure. This structure, Meta contends, is inherently inequitable and creates problematic incentives that disadvantage major platforms whilst potentially allowing smaller competitors to operate with negligible financial input to regulatory supervision.
Meta’s lawyers has emphasised that this disproportionate allocation of costs raises questions about the lawfulness of Ofcom’s reading of the Online Safety Act. The company contends that whilst it accepts its responsibility to contribute to regulatory costs, the current methodology fails to reflect 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 actual resources needed to oversee their specific services within the UK market.
Ofcom’s regulatory structure and reply
Ofcom has robustly supported its methodology for determining fees and potential penalties under the Online Safety Act, maintaining that its approach constitutes a direct reading of the legislation as Parliament intended. The regulator maintains that the fee structure, determined by qualifying global turnover for companies with revenues exceeding £250m each year, offers an equitable and clear mechanism for funding its expanded remit in internet safety enforcement. Ofcom’s position is that this framework secures adequate resources are available to safeguard users against damaging digital material whilst ensuring coherence with how compliance expenses are customarily apportioned across industries. The regulator has declared it intends to “robustly defend” its position in court, satisfied that its interpretation accords with the direct interpretation of the law and furthers the public good.
An Ofcom representative voiced concern at Meta’s challenge, describing the company’s objections as reluctance to pay fees and potential future penalties based on the existing framework. The regulator underscores that its framework applies consistently to all qualifying companies and incorporates the legal provisions set out in the Online Safety Act. Ofcom’s stance reflects its conviction that major digital platforms, which generate substantial revenues and are better positioned to inflict damage through their services, should fund their regulation fairly to the costs of their regulation. The regulator is determined to enforcing the Online Safety Act properly and believes its fee structure is legally sound and essential 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 |
Broader implications and market intervention
The High Court challenge has drawn considerable 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 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 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 importance by describing it as raising issues “of considerable public concern”, a recognition that the outcome could establish important precedents for funding approaches for regulators in the online sector. The preliminary hearing in London confirmed that a complete hearing is scheduled for October, providing sufficient time for the different parties to develop comprehensive arguments. The timeline suggests the courts will thoroughly assess whether Ofcom’s approach to calculating fees based on global turnover is proportionate and lawful, potentially influencing how UK regulators finance their activities in future.
- Epic Games and the Computing and Communications Industry Association wish to intervene in the case
- Justice Chamberlain established the dispute raises issues of wide public importance to the industry
- Full hearing scheduled for October 2025 with initial hearing concluded in London on Thursday