Malaysia’s New Regulatory Framework for Internet Messaging Service and Social Media Service Providers

 

Introduction

The Malaysian Communications and Multimedia Commission (“MCMC”) has recently introduced a new regulatory framework for internet messaging and social media service providers (“Regulatory Framework”), which was gazetted on 1 August 2024. This landmark decision marks a significant shift in how social media and internet messaging platforms operate within the country. 

In line with this, the MCMC has released an Information Paper: Regulatory Framework for Internet Messaging Service and Social Media Service Providers (“Information Paper”) dated 1 August 2024^[1], along with a set of Frequently Asked Questions on the Regulatory Framework for Internet Messaging Service and Social Media Service Providers in Malaysia (“FAQs”)^[2], which irons out the key points on the structure of the Regulatory Framework. 

Rather than reproducing the entire framework, this article will highlight the scope and implementation, key provisions, and impact of this Regulatory Framework.

 

Scope and Implementation of the Regulatory Framework

The core of this Regulatory Framework is the licensing requirement for platforms with a substantial user base. Under the framework, social media and internet messaging service providers with at least eight million users in Malaysia (“Service Providers”) must obtain an Applications Service Providers Class (ASP(C)) Licence from the MCMC. 

Service Providers have a grace period of five (5) months from the date of the Gazettement (1 August 2024) to apply for the licence and comply with the licensing requirements, which will take effect on 1 January 2025.

 

Key Provisions of the Regulatory Framework 

This section sets out a summary of the key obligations of the Service Providers as extracted from the Information Paper and FAQs: –

1. User Safety and Protection
   Service Providers must prioritise users’ safety and data protection, particularly children. This includes implementing robust cybersecurity measures to safeguard user information and to safeguard users against online harm such as cyberbullying, online scams and sexual grooming.  Age verification and restrictions on underage access are mandatory, where users under the age of 13 will be restricted from accessing the Service Providers. These Service Providers are accountable for complying with Malaysian laws and conduct requirements and must implement simplified complaint procedures with timely responses. 
2. Content Moderation
   Additionally, Service Providers should introduce strict content moderation policies to address the spread of misleading advertisements and harmful content to minors. To further restrict scam-promoting advertisements, Service Providers must be transparent about their content moderation policies and advertising practices. To combat the spread of misinformation, Service Providers must proactively manage risks posed by deep fakes and harmful artificial intelligence (AI)- generated content. 
   

 

Impact of the Regulatory Framework

The objective of this new Regulatory Framework for Internet Messaging Services and Social Media Service Providers is to create a safer online environment for all Malaysians, especially children and those vulnerable to online harm.^[3] The rationale for this licensing was part of the government’s effort to address three core issues: scams, cyberbullying, and sexual crimes, particularly against children. 

The need for Service Providers to align with the framework presents challenges and opportunities, fundamentally altering the operational dynamics and strategic planning within the sector. While Communications Minister Fahmi Fadzil said social media platforms have responded positively to the need for licensing to ensure safer internet use by children and families, economists have expressed contrasting opinions, raising concerns about the potential economic and market impacts of these regulations. 

There have been views that this Regulatory Framework will have a negative impact on business growth as it is likely to create obstacles for businesses entering the market and restrict their ability to operate freely. Regulatory compliance often requires significant financial and human resources. The necessity to allocate funds towards compliance measures—such as enhanced data protection, content monitoring, and legal consultations, may divert resources away from growth initiatives like product development and market expansion.

There are also concerns that introducing the Regulatory Framework will deter investors. When regulations are designed to restrict user freedom, the platform becomes less attractive. Consequently, user numbers will decline, reducing the value to advertisers, this will eventually affect revenue and prompt service providers to relocate to regions with fewer restrictions. Given that Malaysia competes in a global digital market, such restrictions can make the local markets irrelevant to multi-billion dollar technology companies. “Technological innovation thrives in a free and open marketplace. Without this, investment will migrate elsewhere”.^[4]

Unsurprisingly, this move has also sparked debate within some civil society organisations – saying it is too heavy-handed and risks stifling freedom of speech and the freedom to criticise the government^[5]. “Above all else, the policy could hinder open discourse and stifle dissenting opinions, thus posing a significant risk to democratic principles”, “Requiring social media companies to register for licenses is a step that could limit the free exchange of ideas and opinions. We must be cautious of policies that could lead to over-reach and repression”.^[6] 

 

Conclusion 

While there are commentators who are concerned that this licensing requirement will have a negative impact on business growth and risks stifling freedom of speech, it’s essential to keep in mind the government’s primary objective – to address three core issues: scams, cyberbullying, and sexual crimes, and to create a safer online environment for all Internet messaging and social media users, particularly children and those vulnerable to online harm. 

Although these concerns may seem logical on the surface, they may not fully reflect the practical realities of the situation. The licensing requirement is a targeted measure that applies to and predominantly affects large, dominant players in the industry like Facebook, Facebook Messenger, Instagram, TikTok, WhatsApp, Telegram, WeChat, X, and YouTube – those with significant user bases and the capacity to exert considerable influence due to their extensive reach. Moreover, these large platforms are generally well-equipped to manage the costs and logistical challenges associated with compliance. 

To conclude, this Regulatory Framework will benefit social media and internet messaging users as the focus is to regulate Service Providers and to hold these large players accountable for maintaining a secure and responsible digital environment, and is not aimed at regulating end users, influencers or content creators. By implementing this Regulatory Framework, the government aims to ensure that the Service Providers operate responsibly and take the necessary steps to safeguard users from online harm.