Ofcom has launched a consultation on fees and penalties under the Online Safety Act 2023. The consultation addresses, among other things, what constitutes ‘qualifying worldwide revenue’ (“QWR”) for the purposes of calculating both fees and penalties, as well as the threshold at which regulated services are required to pay fees under the Act.

Determining QWR for fees and penalties

Ofcom proposes that QWR is determined as “the total amount of revenue (in sterling) of a provider referable to a regulated service”. It explains that an amount is referable to a regulated service if it “arises in connection with the provision of the service, comprising all its parts, anywhere in the world”.

Where it is not possible to identify and separate revenues arising in connection with a regulated service from those arising from other activities, Ofcom proposes that providers “apportion revenue pertinent to the QWR calculation on a just and reasonable basis”. Equally, where a provider provides two or more regulated services in the qualifying period, Ofcom proposes that the QWR is determined by adding together the amount of referable revenue for each regulated service.

Ofcom also addresses the situation where an entity within a group providing a regulated service is not the same entity within the group that receives all or any of the QWR relating to the regulated service. In such circumstances, it proposes that, when determining QWR, “revenues received by another group undertaking that are referable to the provider’s regulated service must be included in the calculation”.

Determining QWR for penalties

The test for determining QWR for calculating fees will be the same as that for calculating the maximum amount for a penalty that Ofcom may impose on a provider which has been found in breach of its duties.

However, where a provider and one or more of its group undertakings are found by Ofcom to be jointly and severally liable for breaches, Ofcom proposes that the maximum amount of the penalty should be calculated on the basis of “the worldwide revenues that the group generated in the most recent accounting period of the undertakings liable to pay the penalty (whether or not the revenues relate to regulated services)”.

The QWR Threshold

Ofcom proposes that the QWR threshold at or above which providers of regulated services will be required to pay fees should be set at £250 million.

It also proposes that providers of regulated services whose UK referable revenue (i.e. “revenue arising in connection with the provision of regulated services to UK users”) is less than £10 million should be exempt from the fees duties under the Act.

Qualifying Period

Ofcom proposes that the qualifying period for a charging year under the Act should be “the second calendar year preceding the one within which the charging year beings, i.e. the calendar year two years prior to the calendar year within which the charging year begins”. In other words, as Ofcom explains in an example, the qualifying period in respect of the charging year from 1 April 2026 – 31 March 2027 would be 1 January 2024 – 31 December 2024.

The consultation closes on 9 January 2025, and can be found here.