Malaysia stands firm on requiring social media platforms to obtain licenses

The Malaysian government on Tuesday refused to back down on a new rule requiring large social media services to obtain an annual operating license, warning the multinationals running these platforms that they may be powerful but the country’s laws were unshakeable. 

A day earlier, an industry group that includes Google, X and Apple urged the government to halt the rule, which will take effect on Jan. 1, 2025, saying it was unclear and would deter innovation. The group said the companies would address issues such as online financial crimes, harassment and abuse of minors – platforms that fail to comply risk fines of up to 500,000 ringgit (U.S. $115,000).

“The government will not delay the framework. We’ve considered all aspects and Malaysia is open to discussions [with all social media platforms],” Communications Minister Fahmi Fadzil told reporters on Tuesday. 

“Big tech companies are big, but our laws are bigger. If they want to operate in Malaysia, they must respect and comply with our laws.”

The decision to proceed comes amid increasing concerns about cybercrime, online fraud, gambling and cyberbullying in Malaysia, particularly with regard to protecting children, the country’s internet regulator said. 

The Asia Internet Coalition (AIC), which represents tech giants such as Meta, Google and X (formerly Twitter), has been vocal in its criticism of the new framework. In an open letter to Malaysian Prime Minister Anwar Ibrahim on Monday, it warned that the regulation could stifle innovation and deter investment because of its complexity and high compliance costs.

The coalition also expressed concerns about the lack of industry consultation before the policy was announced, in addition to a five-month grace period from its Aug. 1 publication in the government gazette to apply for and comply with the license.

“We have sent a response letter and we are waiting for AIC to respond,” Fahmi said. “The Malaysian government remains steadfast in implementing a regulatory framework to ensure a safer internet for the people of Malaysia, especially for children and families.”

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The AIC criticized the licensing requirement for potentially imposing criminal liability on service providers for user-generated content and for mandating stringent content moderation obligations.

Of particular concern for the coalition is the requirement for social media platforms to obtain pre-approval from the Department of Islamic Development Malaysia for religious content, as well as the potential for broad content removal requests from the communication ministry “with unrealistic turnaround times.”

The AIC also criticized the framework for requiring service providers to contribute to Malaysia’s Universal Service Provision (USP) Fund, which aims to bridge the digital divide in the country.

These obligations could place undue financial burdens on companies and disrupt their operations, and could discourage foreign investment as well as weaken Malaysia’s competitiveness on the global stage, the coalition said.

The AIC removed an earlier version of the Aug. 23 letter from its website, which included company logos, after Grab Holdings, a Singapore-based multinational technology company, said it was not consulted. 

Responding on Tuesday, the Malaysian Communications and Multimedia Commission (MCMC) sent an eight-page letter refuting what it called “AIC’s allegations.”

The commission contends that the AIC had been duly engaged in discussions about the licensing framework, citing meetings and consultations with representatives from the AIC and individual tech companies prior to its policy announcement.

“MCMC categorically denies all of AIC’s allegations leveled against the licensing framework for online service providers under the Communications and Multimedia Act 1998,” the commission wrote.

“Public consultations are being planned as part of the process to refine and finalize the guidelines, ensuring that all concerns are addressed fairly and transparently.”

The MCMC said the grace period before the framework’s enforcement was reasonable and aligned with international best practices.

“This timeline was established to balance the urgent need to address cyber threats with the practical requirements for compliance by the OSPs,” it said, referring to online service providers.

The AIC did not immediately respond to a request from BenarNews for comment about the MCMC letter.

Earlier this month, Fahmi met with several social media companies in Singapore to discuss licensing issues. He reported a “positive outcome” from these discussions.

On another occasion, officials from Meta Asia were brought to Anwar’s office to seek clarification after the administration expressed disgust over Meta’s decision to take down a post offering condolences for Hamas political leader Ismail Haniyeh, who was killed in Tehran.

Benjamin Loh, a senior lecturer in media studies at Taylor’s University in Malaysia, noted that the ongoing dispute means increased tension between national regulators and tech giants.

“Yes, Malaysia is at odds with these tech firms. If they were having discussions, then this should have been kept behind closed doors,” Loh told BenarNews.