Report from The Guardian
In Brief – Meta is challenging the methodology Ofcom, the UK’s communications regulator, uses to determine the regulatory fee and fines structure under the UK’s Online Safety Act (OSA). The fees that Ofcom charges regulated firms to fund the OSA’s regulatory process, as well as fines that could be imposed on a regulated company, are based on a company’s “Qualified Worldwide Revenues”. The fees are a percentage of QWR but apply only to businesses that made more than £250m globally the previous year. Meta is seeking judicial review in the UK High Court, contending that the approach is disproportionate and places an excessive share of Ofcom’s regulatory costs on large multinational technology firms with significant revenue outside the country. Meta argues that Ofcom fees and fines should be based on operations and revenues in the UK. Ofcom said its interpretation reflects a straightforward reading of the legislation and vowed to defend the regime.
Context – When the EU created their twin regulatory regimes for digital platforms in 2022, they established a way to pay for the Digital Services Act (DSA) but not the Digital Markets Act (DMA). The DSA fee is modeled on the supervisory fee regimes that fund bank regulators. The DSA fee regime applies only to very large digital platforms that are regulated directly by the European Commission, not to smaller platforms overseen by member state regulators. The DSA fee is based on global users and profits. Meta and Google have filed lawsuits challenging the funding EU mechanism. The two platforms, who reportedly pay a majority of the total DSA fees, argue that basing the contribution on profits imposes disproportionate burdens on a handful of platforms while allowing others, such as Amazon, Snap and X, to impose significant burdens on the regulator without paying into the enforcement kitty because they did not report net profits. The German Government has proposed creating a permanent DMA supervisory fee modeled after the DSA version, but the EU Commission has not backed the idea.