Unlocking the Goldmine: How the UK's Online Safety Act is Fueling a Digital Privacy Boom

The UK's Online Safety Act, now fully enforced as of July 25, 2025, is reshaping the digital landscape—and investors who recognize this seismic shift could be sitting on a goldmine. This landmark legislation mandates that platforms hosting adult or harmful content implement “highly effective” age verification systems to prevent underage access. The result? A surge in demand for identity verification, cybersecurity, and anti-circumvention technologies, creating a tailwind for a select group of firms poised to dominate this rapidly expanding sector.

The Regulatory Spark

The Online Safety Act's core provision requires platforms to verify users are 18+ before accessing content like pornography, self-harm material, or dangerous challenges. Ofcom, the UK's communications regulator, has outlawed self-declaration of age and instead mandated robust methods like facial age estimation, photo ID matching, and digital identity wallets. Platforms like Reddit, X, and Pornhub have already adopted solutions from firms like Persona and Yoti, while startups like Certn and Verifymy are scaling their services to meet demand.

The Act's enforcement isn't just about compliance—it's about creating a market. The UK's digital identity sector, led by the Office for Digital Identities and Attributes (OfDIA), now generates £2.1 billion in annual revenue, with 266 firms operating in the space. Of these, 57% of the largest 20 firms derive revenue from international markets, signaling a global opportunity.

Who's Winning?

The beneficiaries are clear:

1. Yoti (UK-based)
2. Market Position: A leader in AI-driven age verification, Yoti's facial analysis technology is used by platforms like OnlyFans and Instagram. Its zero-knowledge proof system ensures user data isn't stored, addressing privacy concerns.
3. Growth Drivers: The company's revenue has grown 300% YoY as it secures contracts with major platforms.

4. Investment Angle: Yoti is now eyeing expansion into EU markets under the Digital Services Act (DSA), offering cross-border scalability.

5. Persona (U.S.-based)

6. Market Position: Known for its selfie-and-ID verification tech, Persona powers Reddit's age checks and is expanding into healthcare and finance.
7. Growth Drivers: The firm's recent partnership with a major U.S. bank for digital onboarding could unlock a $500 million revenue stream.

8. Investment Angle: Persona's valuation has tripled in 2025, but its enterprise focus (e.g., B2B identity verification for banks) hints at untapped potential.

9. Thales Group (France)

10. Market Position: A cybersecurity giant, Thales is leveraging its cloud key management expertise to secure age verification data for platforms.
11. Growth Drivers: Its cloud security division is growing at 25% CAGR, fueled by demand for encrypted data storage under GDPR and UK GDPR.

12. Investment Angle: Thales's hybrid model—combining hardware and software—positions it to capture 15% of the EU's digital identity market by 2027.

13. Certn (Canada)

14. Market Position: A rising star in AI-powered KYC, Certn's biometric verification is gaining traction in the U.S. and UK.
15. Growth Drivers: The firm's recent acquisition of Trustmatic and BigBear.ai's AI tools has accelerated its product roadmap.
16. Investment Angle: With a $300 million valuation, Certn is undervalued relative to peers and could see a 200% upside as it targets the $20 billion global digital identity market.

The Hidden Risks and Innovations

While the sector is booming, challenges persist. Critics argue that AI-driven age checks could misidentify marginalized groups or be circumvented via VPNs. However, innovators are racing to solve these issues. For instance, IDEX Biometrics is developing biometric payment cards that integrate age verification, while Zero-Knowledge Proof (ZKP) startups like Pangiam are enabling platforms to confirm age without exposing sensitive data.

Meanwhile, the rise of anti-circumvention tools is another growth area. ProtonVPN and NordVPN have seen UK sign-ups spike by 1,000%+ as users seek to bypass age checks, prompting Ofcom to crack down on platforms hosting circumvention guides. This creates demand for cybersecurity firms specializing in anti-VPN detection—a niche where KONA I and Thales are emerging as leaders.

The Big Picture for Investors

The UK's regulatory push is a structural inflection point. As global regulators (e.g., EU's DSA, U.S. state laws) align with the UK's risk-based framework, the market for age verification and digital identity is set to expand at a 30%+ CAGR through 2030.

Action Plan for Investors:
- Short-Term (1–2 years): Position in Yoti and Certn for their rapid scaling and regulatory tailwinds.
- Long-Term (3+ years): Watch Thales and IDEX Biometrics for their diversified cybersecurity play in a world where digital identity is the new gold standard.
- Avoid: Over-leveraged startups without clear revenue models or regulatory partnerships.

The UK's Online Safety Act isn't just about protecting children—it's about building a $50 billion digital identity ecosystem. For investors who act now, the upside is as clear as the green checkmark on a verified ID.