UK Tech Regulator Warns of High Cost of Internet Bill Compliance for Small Business

The U.K. Online safety bill, a new law that will significantly increase the responsibilities of Big Tech firms for the content posted in their platforms, may raise costs for small businesses, said Gill Whitehead in an interview with the Financial Times.

Whitehead is the first head of the Digital Regulation Cooperation Forum (DRCF), a new group created in 2020 to coordinate four regulators: the Competition and Markets Authority, the Financial Conduct Authority, the Information Commissioner’s Office and Ofcom (the telecom regulator).

The bill passed a second reading in the parliament in April 19. The law focuses on illegal and harmful content posted online, such as bullying, child pornography, scams, hateful content, threat of violence, etc.

The law doesn’t specify how Big Tech firms will assess the risks of the types of legal harm or how they will deal with them in a consistent manner. Many of these details will be set out via secondary legislation, which is usually less scrutinized by members of parliament than the original bill. And this was one of the criticisms by the opposition during the debate, that legal but harmful content will be defined in secondary legislation sometime after the adoption of the main bill, offering limited protection to minors until this second piece of legislation is adopted.

Until now, all the attention has focused on Big Tech firms, as they are the main targets of the bill. But Whitehead warned that startups may also struggle with complying with the upcoming law, diminishing their ability to compete with incumbents.

“The Online Safety Bill could have an inherent tension with competition because there’s a cost to complying with the bill that might be prohibitive for smaller firms,” she said.

Additionally, the law could lead to higher costs for content moderation for Big Tech firms, who may also face hefty fines if they breach the rules. This could translate into higher prices for small firms and consumers.

“Unless we work through those things ahead of time, then we leave those tensions on the table and that slows things down for business. By working together, we can help accelerate.”

But not only small firms may face challenges due to rising costs. Regulators will need extra staff and resources to monitor the Big Tech companies. Ofcom said that it would require GBP44 million next year as well as 300 extra staff to fulfil its duties set out in the Online Safety Bill, something that Whitehead said presented a “hiring challenge” because of the talent shortage in the tech sector.

The European Union, which recently approved the Digital Services Act, faces a similar challenge to find extra resources to implement the new law. However, the EU shifted this burden to the companies that will oversee. Around 30 very large companies with more than 45 million users in Europe will have to pay a yearly fee of up to 0.05 percent of their global revenue to fund Brussel’s new regulatory role.

Read also: EU’s Deal on Online Content Bill Still Leaves Questions Unanswered

Whitehead, a former Google executive, also talked about emerging technologies like the metaverse, that will be covered by the Online Safety Bill. Whitehead said the DRCF was following closely the development of this technology to understand how to regulate a virtual world.

“It’s the mantra of tech is to be fast and break things,” she said. “Our role is to have a really good understanding of implications and effects of new technologies and then to ensure we are acting in a smart, effective and proportionate way. Because if you act too soon, the danger is you prevent important innovation from happening.”