SUMMARY
- The United Kingdom’s Online Safety act went into effect on July 25th.
- X has warned that the OSA, which allows the UK to fine American companies at 10 percent of their annual global revenue, threatens free speech worldwide.
- The OSA’s provisions allow the UK government to force a company’s business partners, including advertisers and payment processors, to boycott them.
- American employees of non-compliant tech companies to face criminal charge and up to two years in jail in the UK.
The Online Safety Act went into force in late July. Framed in the media as a child safety device, the is in fact far more sweeping, coming down on mis- and disinformation, “racially or religiously aggravated order offenses,” and content related to illegal immigration.
The legislation covers all internet companies, including social media platforms such as X and Meta as well as messaging services such as WhatsApp or Signal.
Under the enforcement section of the act, a platforms advertising, payment processing, and web hosting providers can be targeted too. Even if your company has no UK customers, it could still be targeted if it provides services for a company with a “significant number of UK users.”
The Online Safety Act does not stop at the shores of the British isles: its reach is global, with both large and small American companies likely to be targeted.
It is part of a wider pattern of foreign tech regulations that demand censorship of American platforms, including the European Union’s Digital Services Act, and the repeated attacks against American companies from Brazil’s judiciary.
In a recent post, X Global Government Affairs team warned that the aim’s of Brazil’s censorship orders is to “extend beyond its own jurisdiction and reach the world.” The free speech-friendly platform has similarly warned that the Online Safety Act “has a potential to set a precedent for global censorship, threatening privacy and free speech worldwide.”
Here are the ways in which Americans and American companies are impacted by the OSA:
1. Fines on global revenue
The legislation seeks to ensure compliance by levying onerous financial penalties onto non-compliant companies. The Online Safety Act empowers UK’s online regulator, Ofcom, to levy fines up to £18 million or 10 percent of worldwide revenue on non-compliant companies, whichever is higher, similar to the European Union’s Digital Services Act.
American companies including the free speech-friendly platform Gab and internet culture pillar 4chan are already facing threats and fines from Ofcom. 4chan has responded to threatened fines with a lawsuit filed in U.S. courts, arguing that the OSA violates speech rights in the U.S. and that foreign companies have no obligation to comply.
“Foreign governments, particularly those in Europe, which have not managed to build technology sectors of their own have, for the past half-decade or more, sought to control the American Internet, and hobble American competitiveness, through a range of legislative and non-legislative initiatives,” the suit said.
2. Criminal charges against senior managers
Senior managers at companies found to be non-compliant with the law are subject to criminal penalties, with a maximum prison sentence of two years. That means the UK has the power to jail American tech employees for refusing to censor First Amendment protected speech. Any senior manager who happens to visit the UK while their company is non-compliant runs the risk of arrest.
This provision puts the UK on par with Brazil, which has arrested Meta executives for non-compliance with judicial orders to release private data on WhatsApp users.
3. Penalizing a platform’s partners
You don’t have to be a social media platform to bear the brunt of the OSA’s provisions — if you merely work with a platform, by providing advertising, payment processing, web hosting, or some other service, you could face the same penalties as a platform. These include potential fines, criminal charges, and arrest. No matter how free speech friendly a platform is, the OSA can ensure it is only as strong as the weakest link in its digital supply chain.
A UK government explainer of the Act states, “In the most extreme cases, with the agreement of the courts, Ofcom will be able to require payment providers, advertisers and internet service providers to stop working with a site, preventing it from generating money or being accessed from the UK.”
In the legislative text, the bill states that Ofcom could apply to the court for a “service restriction order” to apply to a company that has “failed to comply with an enforceable requirement.”
The order stipulates that Ofcom will carry out its order to force a boycott of a service if the UK government believes that the company’s services would serve as a danger to UK citizens.
The Online Safety Act, according to Ofcom, provides four types of business disruption measures to ensure compliance. This includes:
- A service restriction order, ordering the boycott a non-compliant regulatory service
- An interim service restriction order, which requires one or more providers of ancillary services, to take steps to disrupt the business or revenue of a regulated service for a set period of time
- An access restriction order, which would require the providers of facilities that enable access to a service, such as internet access services or an app store, to bar access to the regulated service for UK users
- An interim access restriction order, which requires one or more providers of access facilities would take steps to impede access to a service for a set period of time
The legislation is not simply for UK businesses, the restriction order could apply to any company “all companies in scope, no matter where they are based, where services have relevant links with the UK.”
