The Malaysian Communications and Multimedia Commission (MCMC) recently, on 1 August 2024, introduced a new regulatory framework that brings social media and internet messaging services (Service Providers) under the Communications and Multimedia Act 1998 (CMA 1998) through a licensing requirement. According to MCMC, this is part of the efforts to address growing concerns over cybercrimes including online fraud, cyberbullying, and sexual crimes against children.
Mandatory Licensing Requirement
Prior to the introduction of the new regulatory framework, Service Providers were not required to be licensed. The Communications and Multimedia (Licensing) (Exemption) Order 2000 and the Communications and Multimedia (Licensing) Regulations 2000 have now been amended to require Service Providers with a user base of at least 8 million in Malaysia to obtain the Applications Services Provider Class (ASP(C)) license in accordance with the CMA 1998. Service Providers are given a 5-month grace period, from 1 August 2024 to 31 December 2024 to apply for the ASP(C) license and comply with the necessary licensing requirements.
Obligations Of Service Providers
As an ASP(C) licensee, Service Providers under the regulatory framework must adhere to the following requirements[1]:
(a) Compliance with the CMA 1998:
Service Providers must follow the directions issued by the MCMC as specified in Section 51 of the CMA 1998. This provision grants the MCMC authority to issue directions for compliance with the CMA 1998, its subsidiary legislation or any licence condition. Additionally, under Section 263 of the CMA 1998, Service Providers must also fulfil the general duties of licensees.
(b) Standard Licence Conditions[2]:
Service Providers with the ASP(C) license must adhere to the standard license conditions, including compliance with the CMA 1998, its subsidiary legislations, consumer codes, and any additional conditions set by the Minister.
(c) Data Protection:
Service Providers are required to comply with the provisions of the Personal Data Protection Act 2010.
During the grace period, the MCMC will establish guidelines detailing the conduct requirements and duties that Service Providers must observe while operating in Malaysia. Key proposed requirements[3] include implementing robust policies and measures to ensure user safety, simplifying user complaint procedures and moderating content to prevent online harm. Service Providers will also be expected to incorporate child safety measures and adopt strategies to address risks associated with deepfakes and artificial intelligence (AI) generated content.
Enforcement And Penalties
Service Providers operating without the ASP(C) license after the grace period, starting 1 January 2025, can be subject to actions under Section 126 of the CMA 1998. Convicted Service Providers shall be liable for a fine of up to RM500,000 and/or imprisonment for up to 5 years. Additionally, a daily fine of RM1,000 will be imposed for each day or part of a day that the offense continues after conviction. Licensed Service Providers that breach their obligations may face administrative actions, including warnings, fines or even suspension of their access to platforms in Malaysia.
Potential Impact And Considerations
While the framework is designed to create a safer online environment, it may pose challenges for Service Providers. The introduction of this new regulatory framework in Malaysia has sparked significant debate among economists and business leaders. Compliance with these regulations will require substantial investments in both technology and human resources. Service Providers will need to allocate funds for implementing advanced systems, age verification mechanisms and improved content moderation. These costs could strain their financial resources and impact profitability. The Center for Market Education has also expressed concerns that the stringent nature of these regulations might make Malaysia appear less welcoming to businesses, potentially deterring new market entrants and making the country less attractive to investors, who might choose to invest in neighbouring countries with more favourable regulatory environments.[4]
Despite these concerns, the MCMC has stated that it is committed to a consultative approach in developing and refining the regulatory framework. This process involves actively seeking and incorporating feedback from all stakeholders such as civil society organizations, non-governmental organizations, Service Providers, and the public. Through its collaborative approach, the MCMC aims to balance the need for improved online safety with the practical and economic challenges of the digital economy.
Conclusion
Malaysia's new social media regulatory framework indicates a significant milestone in the country's digital evolution, aligning with global best practices. The framework mirrors similar measures in other jurisdictions, aiming to prohibit harmful content online and ensuring that Service Providers have clear duties to protect their users. This regulatory shift is more than just a compliance exercise; it demonstrates a commitment to safeguarding user interests, promoting transparency and creating a more trusted and safer digital environment.
If you have any queries pertaining to the new licensing requirement, please contact our IP & TMT practice partners, Bahari Yeow or Lim Zhi Jian.
[1] Malaysian Communications and Multimedia Commission, ‘Frequently Asked Questions (FAQ) on The Regulatory Framework For Internet Messaging Service and Social Media Service Providers in Malaysia’ (1 August 2024) <https://www.mcmc.gov.my/skmmgovmy/media/General/pdf2/FAQ-for-Regulatory-Framework.pdf> accessed 23 August 2024.
[2] This Standard Licence Conditions are applicable to all existing licensees under the ASP (C) category which includes cloud service providers, Internet access service providers and public cellular services.
[3] Malaysian Communications and Multimedia Commission, ‘Frequently Asked Questions (FAQ) on The Regulatory Framework For Internet Messaging Service and Social Media Service Providers in Malaysia’ (1 August 2024) <https://www.mcmc.gov.my/skmmgovmy/media/General/pdf2/FAQ-for-Regulatory-Framework.pdf> accessed 23 August 2024.
[4] Free Malaysia Today, ‘Regulating Social Media Can Be Detrimental to Business, Say Economists’ (2 August 2024) <https://www.freemalaysiatoday.com/category/nation/2024/08/02/regulating-social-media-can-be-detrimental-to-business-say-economists/> accessed 23 August 2024
29 August 2024