Following consultation, Ofcom has set out 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 consistent with how Ofcom is funded for its work on the other sectors within its remit. The Act also states that a company's "qualifying worldwide revenues" (QWR) should be used to determine the level of fees they have to pay.
In addition, when organisations break online safety rules, they may face financial penalties. The Act says that QWR will also be used as the basis for calculating the maximum fines that can be levied. This means that it's crucial to understand how the QWR is calculated.
Ofcom's decision
Ofcom has defined QWR as a firm's global revenue from relevant parts of regulated services where users can access user-to-user content, rather than just all revenue that is attributable to the UK, when calculating fees or the maximum penalty for a provider.
It estimates that fees will be equivalent to approximately 0.02%-0.03% of companies' QWR each year.
Separately, Ofcom has confirmed that the QWR threshold at which companies are required to pay fees will be set at £250 million per year. However, any company in this group whose annual UK-attributable revenue is less than £10 million 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 they have the power to set this at any figure between £200 million to £500 million. The exemption will also be subject to approval by the Secretary of State.
In scope services must notify Ofcom electronically if they are liable to pay fees.
The notifications must contain information including details of all regulated services; the organisations' estimated QWR, and supporting evidence such as the basis for calculations including evidence of "just and reasonable" apportionment of revenues.
Next steps
To give the fees regime effect, three statutory instruments are required to be considered by Parliament, two of which were submitted to Parliament on 26 June, including the draft Online Safety Act 2023 (Qualifying Worldwide Revenue) Regulations 2025.
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 produce the final statutory instrument.
Later this year, Ofcom will consult on a Statement of Charging Principles before relevant firms are expected to pay fees in the financial year 2026-27.
Ofcom will also consult on detailed notification guidance and further practical guidance to help regulated services understand how they can comply with the relevant requirements later this year.
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