Determining the cost of online safety

At a glance:

• The Online Safety Act (‘the Act’) provides for Ofcom’s associated regulatory costs to be covered by providers of regulated services through a fees regime, and states that the calculation of fees should be based on providers' Qualifying Worldwide Revenue (‘QWR’).
• In summer 2025, Ofcom confirmed its approach to the Online Safety Fees and Penalties. This was followed in November 2025 by guidance, providing more detail on Ofcom’s expectations around calculating QWR and how to submit the required information to Ofcom.
• Ofcom has also confirmed that, subject to the Parliamentary process, the regime goes live on 11 December 2025. This means that firms with a UK referable revenue over £10m who meet the QWR threshold of £250m will need to notify Ofcom by 11 April 2026.
• Given the complexity and potential financial implications associated with the new fees and penalties regime, all online services within scope of the Act should start to prepare accordingly where the threshold indicates they may be liable for fees.
• In this blog, we set out details of how Ofcom intends the new regime to function, highlighting key strategic considerations for online services relevant to how fees will be calculated, using two hypothetical case studies to bring this to life.
• We then outline five key steps that online services can take to develop a robust QWR methodology, based on Ofcom’s confirmed approach. 

Understanding the fees regime and the role of QWR

The cost of regulation can be significant. According to Ofcom’s Tariff Tables, the budget associated with Ofcom’s Online Safety work reached £92m in FY 2025/2026, up from £71m in FY 2024/25. This ongoing cost, driven by regime implementation and enforcement, will ultimately be funded by regulated service providers.

Charging regulated companies to cover regulatory costs is not a new concept. Much of Ofcom’s funding already comes from fees paid by regulated telecoms, broadcast, and postal companies. Other regulators use similar models, including the FCA (periodic fees) and the ICO (tiered data protection fees). However, the QWR approach is novel, in part reflecting the global nature of regulated firms. This approach may also represent the regulatory direction of travel for future regimes, with QWR also referenced in the Media Act 2024 in relation to penalties.

This approach, while complex and novel, has a clear objective of proportionality. Put simply, it seeks to ensure service providers' contributions to the costs of the regime are proportional to the revenue generated from their regulated service(s), or regulated features within a service. This avoids a situation where a platform whose service is only partially regulated contributes as much as a platform with similar revenue whose core business is a regulated service. An overview of Ofcom’s approach is set out in Figure 1.

Figure 1: Overview of Ofcom’s approach to fees and penalties under the Act

With regulatory deadlines fast approaching, Figure 2 sets out the key timings that providers should have in mind.

Figure 2: Timeline for finalisation and implementation of the OSA fees & penalties regime

For the remainder of this blog, we focus on how firms can develop a defensible and robust methodology for calculating QWR.

Navigating the Challenges of QWR Calculation – Illustrative Examples

Where services are clearly in or out of scope of the OSA and revenues are easily attributable to specific services, calculating QWR can be simple, as set out in the hypothetical case study (‘SocialCorp’, a social media and gaming company) in Figure 3 below:

Figure 3: SocialCorp Case Study

Here, revenue from SocialCorp Engage is the sole determinant of QWR. Despite SocialCorp’s total revenue being over the £250m threshold, QWR is below the threshold, meaning SocialCorp is not liable for fees.

QWR calculation may be straightforward in cases such as the above. However, for many firms, its practical calculation can raise challenges. In particular:

• A service may be only partially in-scope. A given service may include a range of features, only some of which may be a ‘relevant part’ for the purposes of calculating QWR (i.e. a part of the service where regulated user-generated, search, or provider pornographic content may be encountered). In these cases, firms must first identify these relevant parts, before then apportioning revenue.
• Apportioning revenue to different parts of a service requires judgement. Even when the relevant parts are clear, determining how much of each revenue stream ‘arises in connection’ with these parts is not straightforward. Ofcom clarifies in its guidance that a key consideration is whether revenue would not have been earned without the relevant parts, not if the revenue source itself is in scope. For example, revenue associated with shipping and handling, though not an in-scope activity, should be considered as part of the QWR calculation if it would not have been earned in the absence of a relevant part, such as a user-to-user feature which led to a sale.
• The accuracy of QWR calculation hinges on the quality and completeness of data. Companies must have robust systems in place to collect, store, and analyse data related to revenue and its source, which may require further data on areas such as user activity and service usage. Incomplete or inaccurate data could skew QWR calculations, leading to either underestimation or overestimation, both of which carry potential consequences.
• For firms with high revenue but limited UK presence, calculating UK referable revenue to determine whether they qualify for an exemption poses an additional challenge.

Whilst each firm will have a unique set of challenges, we highlight some of this complexity in the hypothetical case study (‘VideoCorp’, a video platform), as set out in Figure 4 below:

Figure 4: VideoCorp Case Study

In this case, it is reasonable to assume that in the absence of a review and comment section, subscriber numbers may be impacted, as some may opt for an alternative service with better functionality, and advertising revenue may fall, due to reduced total time on the platform. Given Ofcom’s guidance, this suggests a portion of these revenue streams should be apportioned. However, it is not clear exactly what this impact would be, meaning that developing a just and reasonable approach to apportion revenue is not straightforward.

The ultimate calculation can have significant consequences. For example:

• If 3% of revenue (£150m) is apportioned, VideoCorp is not liable for any fees and faces maximum fines of £18m (as this is greater than 10% of QWR).
• If 6% of revenue (£300m) is apportioned, the firm is liable for ongoing fees (£90,000 per year assuming 0.03%), additional fees to cover the initial costs of setting up the online safety regime, and maximum fines of £30m.

Developing a Robust QWR Methodology

In developing a methodology, it is important to note there is no single correct way to calculate QWR; Ofcom acknowledges there may be multiple just and reasonable approaches, depending on the information available to the provider. Given this, developing a methodology that is justifiable and credible to Ofcom is critical. Ofcom has significant experience in determining whether allocations could be deemed as appropriate or not, derived from its existing responsibilities for the regulation of electronic communications markets.

This process will require significant cross-organisational working across Legal, Finance, Compliance, Product and Operations. Ofcom explicitly notes that “the QWR calculation will be a novel exercise for all providers and that it could require further effort to collect the necessary data and/or carry out the calculations. For some, particularly the providers of multiple regulated and non-regulated services, it may also be a relatively complex exercise.”

Throughout this process, firms should document all steps involved, including data sources, definitions, principles, methodologies and assumptions. Whilst details will vary by firm, the following steps will be helpful to gather the right information.

Conclusion

Calculating QWR is a necessary action for many firms in scope of the OSA. Failure to notify Ofcom or the provision of incomplete or inaccurate information may result in enforcement action. However, calculating QWR is not merely a compliance exercise; it has significant implications for fees and potential penalties. Overstating QWR due to a lack of analysis could unnecessarily inflate a company's financial obligations.

Now that Ofcom has confirmed its approach and the first deadline approaches, firms should begin actively developing their methodology. By starting early and embracing a proactive approach, firms can develop a robust methodology to navigate the complexities of the regulation, mitigate risks, and effectively manage their financial obligations.