Meta challenges UK regulator’s math for online safety fines

The dispute over how worldwide revenue is calculated could shape how Britain enforces its law against major technology companies, with children’s rights advocates warning weak penalties could undermine protections.MANCHESTER, England (CN) — Meta urged a British court this week to curb the way the country’s online safety regulator calculates fees and potential fines, as the regulator’s lawyer dismissed the company’s challenge to its expertise as “outlandish.”The High Court hearing in London concluded late Wednesday after a day and a half of arguments over Ofcom’s use of worldwide revenue to calculate regulatory fees and the maximum penalties companies could face under the Online Safety Act, rather than a challenge to a specific fine.The 2023 law allows Ofcom, Britain’s communications regulator, to impose fines of up to 10% of a company’s qualifying worldwide revenue or 18 million pounds (about $24 million), whichever is greater.The regulator also recovers the costs of running its online safety regime through fees charged to certain companies based on their revenue.How Ofcom calculates penaltiesMeta, the owner of Facebook and Instagram, argues Ofcom has interpreted its legal powers too broadly by defining qualifying worldwide revenue in a way that could maximize fees and potential penalties.The tech giant also challenges how the regulator calculates fines when multiple services owned by the same company are held jointly liable for breaches.Meta’s lawyer, Monica Carss-Frisk, described Ofcom’s approach as “troubling” in court documents, arguing it could lead to “companies such as Meta bearing the vast majority of Ofcom’s costs,” despite the law covering a wide range of internet services offered in the U.K.Ofcom disputes Meta’s interpretation of the law, saying the company is incorrect and that the regulator had “struck a careful balance” in its approach to calculating potential financial penalties. The regulator says the rules establish how to calculate the maximum possible fine, not the amount ultimately imposed.The regulator would “determine the appropriate and proportionate level of penalty on the facts of the case at hand,” Ofcom said in court filings.Ofcom also rejects Meta’s argument that it lacks sufficient experience with the relatively new online safety regime, arguing its calculations draw on experience regulating other sectors and comparisons with established regulatory systems.Meta said it was committed to cooperating with Ofcom but argues fees and penalties should reflect the services being regulated in the countries where they operate. The company said a U.K.-based calculation would still allow the regulator to impose substantial penalties.Outside court, an Ofcom spokesperson said the regulator had been tasked with overseeing an industry that has been “unregulated and unaccountable for more than 20 years.”The spokesperson said Ofcom would “robustly defend our reasoning and decisions.”Legal stakes for online safety enforcement5Rights Foundation, a child-rights organization granted permission to intervene in support of Ofcom, warned a ruling against the regulator could weaken online safety enforcement.“The Online Safety Act cannot be a paper tiger. Parliament intended it to provide a strong deterrent,” said Leanda Barrington-Leach, the group’s executive director.Alexandros Antoniou, a senior lecturer in media law at the University of Essex, said the law’s repeated references to “qualifying worldwide revenue” made Meta’s broadest challenge difficult to sustain.“Parliament gave Ofcom a long measuring tape,” he said. “It expressly authorizes Ofcom to determine what revenue is referable to a regulated service under the act and permits group company revenue to be brought into account.”However, he believes Meta has a case about how Ofcom defines revenue that can be counted.“‘Worldwide’ means Ofcom can look at money earned around the world so long as it’s properly linked to Facebook, Instagram or another service regulated under the act,” Antoniou said. “It does not mean it can automatically count every penny Meta makes from everything it does.”Antoniou believes a broad victory for Meta could weaken the law’s deterrent effect if it substantially reduced the revenue used to calculate maximum penalties. But a narrower ruling would more likely force Ofcom to adjust its calculations than strip it of its underlying enforcement powers.The case comes amid wider disputes between big technology companies and Ofcom.The regulator is investigating X over concerns its AI Grok tool has been used to create sexualized images, while Meta is being investigated over whether Instagram’s Instants feature followed legal requirements to assess safety risks before being rolled out.Separately, Meta recently joined TikTok and X in a legal challenge concerning the amount of information Ofcom can demand from platforms.Judgment in the Meta case is expected at a later date.Courthouse News reporter James Francis Whitehead is based in England.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads