Facebook and Instagram parent Meta Platforms has challenged Britain’s media regulator Ofcom over its method of calculating fees and potential fines under the European country’s “Online Safety Act”, arguing that the approach is disproportionate and could expose technology companies to excessive penalties.
The legal challenge, opened at London’s High Court on Tuesday, centres on Ofcom’s use of worldwide revenue, rather than revenue generated in the British mainland, to calculate regulatory fees and maximum potential fines.
Introduced in 2023, the “Online Safety Act” empowers Ofcom to impose penalties of up to 10% of a company’s (be it social media or a technology one) qualifying worldwide revenue or 18 million pounds (USD 23.9 million), whichever is greater.
The legislation also allows the regulator to recover the costs of overseeing the online safety regime through fees calculated with reference to revenue.
In its legal submission to the High Court, the social media conglomerate argued that Ofcom had exceeded its statutory powers by adopting an overly broad definition of qualifying worldwide revenue, with the effect of enabling the British regulator to impose the highest possible penalties.
The Mark Zuckerberg-led company is also contesting Ofcom’s approach to calculating fines when two or more services owned by the same company are found jointly liable for violations.
Meta maintains that regulatory fees and penalties should reflect the services being regulated in the countries where the rules apply.
The company said this approach would still allow Ofcom to impose some of the largest fines in UK corporate history.
“We believe fees and penalties should be based on the services being regulated in the countries they’re being regulated in,” a Meta spokesperson said, adding that the company remained committed to “cooperating constructively” with Ofcom.
The regulator, however, has defended its methodology, arguing that it has struck a careful balance in defining qualifying revenue.
In its counter submission to the court, Ofcom said worldwide revenue was used only to establish the maximum potential penalty. It added that any actual fine must proportionately reflect the failure in question.
An Ofcom spokesperson stated that the regulator was responsible for overseeing an industry that had operated for over 20 years without regulation or accountability.
The watchdog said it would robustly defend its reasoning and decisions against the legal challenges it faces.
The dispute comes as Meta faces increased regulatory scrutiny in the United Kingdom.
Last week, Ofcom opened an investigation into whether the American social media giant had properly assessed the risks associated with its Instagram Instants feature before launching it in May of this year.
Meta has also joined TikTok and X (formerly Twitter) in a separate legal hearing concerning the amount of information Ofcom is demanding from technology companies.