US-UK Trade Deal - any negotiation around UK’s online safety laws must take into account the true costs of watering them down

Whilst the details of what’s on the table in US/UK trade negotiations aren’t in the public domain, it’s widely assumed that the US is seeking relaxations of regulation and taxation of Big Tech.  

Silicon Valley has significant influence over the Trump administration, and platform regulation has attracted public criticism from senior administration figures including JD Vance, who has suggested both EU and UK online safety laws are an attack on “free speech”. So it seems highly likely that the US will present demands for concessions to benefit these companies. 

It’s understandable why the UK government would feel some pressure to offer concessions to secure a deal. US tariffs are widely expected to have a negative impact on the UK economy, threatening jobs and living standards, and putting a dent in the chancellor’s growth plans and fiscal targets. If concessions for Big Tech are near the top of the US’s wish list, then many in government who are very aware of Silicon Valley’s failings may nonetheless feel concessions are a price worth paying.

However, a truly pragmatic approach, whilst accepting the need for trade-offs, does also need to take full and careful account of what it is that’s being traded off. It’s not pragmatic to see something as “a price worth paying” unless you’re clear what the price is. And watering down the UK’s recently enacted online safety laws has the potential to be very expensive indeed.

As it prepared to implement the Online Safety Act, the government made its own attempt at estimating the financial cost to the UK of the harm which the Act was seeking to prevent. It took what it termed a “very conservative approach” and considered only a subset of the forms of harm the Online Safety Act seeks to tackle. Despite being both conservative and partial, the estimated cost of harm was still an eye-watering £254,000 million over ten years.

That calculation was at 2019 prices, so allowing for inflation, the government’s own, conservative and partial estimate is over £30 billion per year. In other words that amounts each year to one and a half times the fiscal “black hole” about which we have heard so much.

Some of these costs are absorbed by individual victims. Others, for example the costs to the NHS and benefit system of harms to mental health, or the burden on the criminal justice system fall to the exchequer, to be met by taxpayers. A substantial portion hits other businesses - UK Finance reported that in 2023-24 UK banks suffered £287.3M of Automated Push Payment fraud in direct reimbursements, whilst billions more are diverted away from legitimate businesses. DSIT’s estimate of the costs of cyberstalking (£218,000M over ten years) includes emotional costs to victims, costs to health services, and costs in lost productivity.

In addition to reducing these costs, improving online safety can also create economic opportunities of its own. We have highlighted previously that our proposal for social media platforms to be required to offer their users options to verify their identity, could help drive uptake of digital identity products and services. Recent research commissioned by DSIT identified the digital identity sector as a significant success story, with “£2.05 billion annual revenue in 2023/2024, with £858 million Gross Value Added (GVA) and 10,813 full-time equivalent (FTE) employees”. Of the 270 firms operating in the UK digital identity market, 74% are headquartered in the UK. The companies that would benefit from a weakening of online safety laws are overwhelmingly US based, whereas it is UK-based online safety businesses whose growth could be stymied.

We’d therefore urge the government to be extremely cautious about making any deal with the US that sacrifices online safety for tariff relief – particularly with this capricious and unreliable trading partner.  Tariffs would doubtless have a significant negative impact on the economy, and by extension on the well-being of UK citizens. But unsafe social media has an even greater negative impact. Right now, the UK is shouldering unprecedented economic costs due to the unsafe practices of US-based social media companies. The Online Safety Act is our opportunity to reduce those costs. If the UK’s leaders decide to allow the pressure from the Trump administration to erode these hard-won protections, or their enforcement, the human and financial costs will be widely felt.