My Lords, as set out in the Online Safety Act 2023, Ofcom is empowered to make regulations that define how the qualifying worldwide revenue—QWR—of a provider of a regulated service is to be determined, along with the relevant qualifying period. The Act requires Ofcom to send the draft regulations to the Secretary of State, whose role is to then lay them before Parliament. In accordance with this process, the Secretary of State for DSIT laid the draft QWR regulations on 26 June 2025.
Defining QWR is critical to establishing the fee regime whereby providers of regulated services pay a fee to Ofcom to fund the costs of online safety regulation. The regulations are also a key part of informing a penalties regime that will act as a suitable deterrent to non-compliance among providers in scope of the Online Safety Act.
The regulations define QWR in relation to fees as the total revenue of a provider referable to the provision of regulated services—that is, revenue generated from relevant parts of a service, including parts where user to user, search or certain pornographic content may be encountered from anywhere in the world.
The regulations account for the apportionment of qualifying revenue in cases where direct attribution to relevant parts is not possible. In these cases, providers must apportion revenue to relevant parts using a “just and reasonable” method.
The qualifying period for calculating QWR is defined in the regulations as the calendar year two years prior to the fee-charging year. For example, for the 2026-27 charging year, the qualifying period will be 1 January to 31 December 2024.
The Act empowers Ofcom to issue penalties to non-compliant providers up to £18 million or 10% of their qualifying worldwide revenue, whichever is higher. In cases where Ofcom has found joint and several liability for a contravention of the Act within a group of entities, the regulations define QWR as the total of all worldwide revenues received by the provider and its group undertakings, whether or not that revenue is referable to a regulated service. Ofcom’s view is that the approach set out in regard to penalties will act as a suitable deterrent to non-compliance.
For both fees and penalties, in defining QWR Ofcom’s view is that the use of worldwide revenue reflects the global nature of online services and ensures fairness across providers—and, further, that this is consistent with the Act, which applies to any service with links to the United Kingdom, regardless of whether the service in question is a UK company.
During the passage of the Act through Parliament, it was agreed that the taxpayer should not be liable for paying for online safety regulation but rather that the providers of regulated services in scope of the Act should fund the regulatory regime. Following a public consultation between October 2024 and January 2025, Ofcom has recommended that the Secretary of State consider setting the QWR threshold at £250 million. In practice, this means that providers whose QWR meets or exceeds the threshold will be liable to pay fees to Ofcom unless they are exempt. Ofcom believes that this recommendation balances proportionality and workability, while limiting the impact on SMEs. As set out in the Act, the Secretary of State must now consider this advice and set the final threshold in a separate statutory instrument later this year. Ofcom will then consult on guidance relating to its Statement of Charging Principles, publish the final statement and begin invoicing providers in the 2026-27 financial year.