Following consultation, Ofcom has published details about how it intends to set the fees and maximum penalties that will apply under the Online Safety Act.
The Act specifies that the costs of Ofcom’s online safety work are to be funded by the tech companies it regulates. This is in line with how Ofcom is funded for its work in the other sectors which come within its remit. The Act also provides that firms’ “qualifying worldwide revenues” (QWR) should be used to determine the level of fees they have to pay.
In addition, when organisations breach online safety rules, they may face financial penalties. The Act provides that QWR is also to be used as the basis for calculating the maximum fines that can be levied.
Ofcom’s decisions
Among other things, Ofcom has decided to define QWR as a firm’s global revenue from relevant parts of regulated services, rather than just all revenue that is attributable to the UK, when calculating fees or the maximum penalty for a provider. Ofcom says that it estimates that fees will be equivalent to approximately 0.02%-0.03% of companies’ QWR each year.
Separately, it is also proposing that the QWR threshold at which companies are required to pay fees be set at £250m per year. However, any company in this group whose annual UK-referable revenue is less than £10m would be exempt from the fees regime.
The threshold will ultimately be for the Secretary of State for Science, Innovation and Technology to decide, and it considers that any threshold figure within a £200 million to £500 million range could be appropriate. The exemption will also be subject to approval by the Secretary of State.
Next steps
To give the fees regime effect, three statutory instruments are required to be considered by Parliament, two of which have been submitted to Parliament already. In addition, Ofcom has formally submitted its advice to the Secretary of State, who will ultimately decide on the threshold for the payment of fees and make the final statutory instrument. Later this year, Ofcom will consult on a Statement of Charging Principles in advance of when relevant firms are expected to pay fees in the financial year 2026-27. It will also consult on further practical guidance to help regulated services understand how they can comply with the relevant requirements.
