The Malaysian Communications and Multimedia Commission (MCMC) has announced a new regulatory framework aimed at enhancing online safety by regulating Internet messaging services and social media service providers with a large user base in Malaysia. Effective January 1, 2025, service providers with over eight million Malaysian users must obtain an Applications Service Provider Class Licence (ASP (C)).
Framework Overview
This regulatory initiative, grounded in the Communications and Multimedia Act 1998 (CMA 1998), responds to the rising tide of online harms, including graphic violence, child exploitation, online scams, gambling, and cyberbullying. The MCMC’s information paper highlights the need for stringent measures to ensure safer online environments for all Malaysians.
Objectives and Necessity
The framework’s primary goal is to create a safer online environment, especially for children and vulnerable individuals. Data from recent reports underscore the urgency:
- An ECPAT report (2022) revealed that 100,000 Malaysian children are at risk of online sexual exploitation and manipulation.
- A UNODC report (2024) indicated a near doubling of online gambling-related suspicious transaction reports in Malaysia from 2019 to 2022, with transaction volumes reaching RM26 billion.
- Cyberbullying affects 28% of Malaysian children, with MCMC receiving 9,483 cyberbullying reports from January 2022 to July 2024.
- Online fraud cases doubled from 17,668 in 2019 to 34,495 in 2023, causing RM1.4 billion in losses in the first half of 2024 alone.
Given these alarming trends, the regulatory framework aims to hold service providers accountable for managing illegal and harmful content and strengthening their systems to combat cybercrimes.
Regulatory Requirements
- Licensing: Service providers must apply for an ASP (C) licence, involving registration fees and detailed documentation. The licence is valid for one year, with annual renewals required.
- Local Incorporation: Providers must establish a locally incorporated entity, though the Minister may allow exceptions for foreign companies on a case-by-case basis.
- Compliance: Providers must adhere to CMA 1998, subsidiary legislations, and MCMC directions. They must implement robust content moderation policies, ensure user data protection, and address online harms such as cyberbullying, scams, and child exploitation.
- User Safety Measures: Specific measures include age assurances to restrict under-13 users, transparent advertising practices, and mechanisms to manage harmful AI-generated content.
Implementation Timeline
Service providers have a five-month grace period from August 1, 2024, to apply for the ASP (C) licence. During this period, they are expected to actively combat online harms on their platforms. The framework becomes fully effective on January 1, 2025.
Potential Impact on the Industry
The introduction of this regulatory framework is poised to have significant implications for the digital industry in Malaysia:
- Compliance Costs and Administrative Burden: Obtaining and renewing the ASP (C) licence annually will incur administrative and financial costs for service providers. This may be particularly challenging for smaller companies and new entrants to the market, potentially stifling innovation and reducing competition.
- Market Entry Barriers: The requirement for local incorporation and associated compliance measures could deter foreign companies from entering the Malaysian market, impacting the diversity of available online services.
- Operational Challenges: Implementing the mandated content moderation and user safety measures will require substantial technological investments and resources, particularly for platforms with large volumes of user-generated content.
- Legal and Administrative Recourse: While the framework includes mechanisms for service providers to appeal MCMC decisions, the associated legal processes can be time-consuming and costly.
Major Platforms Affected
The regulatory framework will impact major social media and messaging platforms including Facebook, Instagram, TikTok, WhatsApp, Telegram, and YouTube. These platforms will need to align with the new regulations to continue their operations in Malaysia.
Impact on Consumers
For Malaysian consumers, the regulatory framework promises enhanced online safety and a better user experience. Key benefits include:
- Safer Online Environment: With stricter content moderation and user safety measures, consumers, especially children and vulnerable individuals, are expected to face reduced risks of exposure to harmful content and online scams.
- Improved Accountability: The requirement for service providers to have a local presence and clear complaint channels ensures better accountability and recourse for users.
- Enhanced Data Protection: The emphasis on robust data protection policies aligns with global standards, potentially improving user trust in online services.
For more details, download the documents below:
