Meta challenges UK online safety watchdog over how fees and fines are calculated

By Paul Sandle

LONDON, Oct 13 (Reuters) - Facebook and Instagram owner Meta challenged Britain's media regulator on Tuesday over how it calculates fees and potential fines under the Online Safety Act, arguing that the watchdog's methods are disproportionate.

The 2023 law allows Ofcom to impose fines of up to 10% of qualifying worldwide revenue, or £18 million ($23.9 million), whichever is greater, and to recover the costs of running its regime through fees calculated by reference to revenue.

Meta's challenge comes a week after Ofcom opened an investigation into whether the company properly assessed the risks posed by its Instagram Instants feature before launching it in May.

The case brought by Meta opened in London's High Court on Tuesday and centres on Ofcom's use of worldwide rather than UK revenue to determine fees and maximum potential fines.

Meta argued that Ofcom had exceeded its statutory powers by defining qualifying worldwide revenue as broadly as possible, with the objective of imposing the highest possible penalties.

That was Ofcom's "overriding concern", Meta said in its legal submission.

Meta is also challenging Ofcom's method of calculating fines where two or more providers owned by the same organisation are found jointly liable for breaches.

Ofcom argues that its approach is proportionate and that it has struck a "careful balance" in defining qualifying revenue. Its court submission said that qualifying worldwide revenue was used only to calculate the maximum potential penalty and that any actual fine must be proportionate to the failure.

Meta is also fighting Ofcom on other fronts. It joined TikTok and X in a separate legal hearing last week over the amount of information the regulator is demanding.

Meta said it was committed to cooperating constructively with Ofcom.

"However, we and others in the tech industry believe its decisions on the methodology to calculate fees and potential fines are disproportionate," a Meta spokesperson said.

"We believe fees and penalties should be based on the services being regulated in the countries they're being regulated in. This would still allow Ofcom to impose the largest fines in UK corporate history."

Ofcom said it had been tasked with regulating an industry that had been unregulated and unaccountable for more than 20 years.

An Ofcom spokesperson said Meta's case was one of a number of legal challenges it faced. 

"On all these fronts, we will robustly defend our reasoning and decisions," the spokesperson said.

($1 = 0.7547 pounds)

(Reporting by Paul SandleEditing by David Goodman)