Starting a high-tech company in the UK has become an unattractive prospect. The UK government’s recent addition to the Online Safety Bill (OSB) sends a clear message that startups are no longer welcomed in the country.
Previously, the OSB applied to “regulated services” that had to meet specific size or reach criteria. This meant that the OSB applied to established entities like Meta or Google but did not burden new innovative services originating from someone’s home in the UK. However, a last-minute amendment accepted by the UK government significantly broadened the Bill’s scope. The amendment introduced “functionalities and features” as potential criteria, implying that any small or medium enterprise (SME) or startup in the UK could now fall under the OSB’s regulatory framework, subjecting them to extensive compliance procedures. If the Secretary of State disapproves of a company’s feature set, it can be deemed within the OSB’s scope.
The question arises: why would anyone choose to establish an online business in the UK under these circumstances? Making a mistake buried within the extensive 300+ pages of the OSB could lead to criminal liability.
With this single decision, the UK has effectively signaled its withdrawal from the high-tech startup landscape, positioning itself as a follower rather than a leader compared to Europe, the USA, India, and other regions that foster innovation.
The government expresses its gratitude to Baroness Morgan of Cotes and my right hon. and learned Friend, the Member for Kenilworth and Southam (Sir Jeremy Wright), who, like many in the House, have consistently advocated for addressing the issue of small yet potentially risky online platforms. We have incorporated an amendment into the Bill that modifies the criteria for determining which services will be classified as category 1 or category 2B services, thereby subject to additional responsibilities. In the process of establishing the regulations that determine these classifications, the Secretary of State will now possess the discretion to choose whether to establish a threshold based on the number of users, the functionalities offered, or both factors combined. Previously, the Secretary of State was obliged to establish the threshold using a combination of both factors.
The amendment under discussion, which was ultimately passed, was #245. In 2022, prior to this broadening of scope, TechUK pointed out that more than 25,000 UK businesses would be affected by the bill. In the same article, it was mentioned that, at that time, due to the additional content, a business would have to review and comprehend over 550 pages of information
