Joanne Kong and Daniel Wah discuss the recent changes to the MCMC licensing requirements for internet messaging and social media service providers.

The Malaysian Communications and Multimedia Commission (“MCMC“) has recently introduced and gazetted a new regulatory framework for internet messaging and social media service providers. To provide further guidance, MCMC has also published an Information Paper[1] and FAQ[2] on its website. This article seeks to outline the key provisions and requirements of the new regulatory framework.

Objectives

MCMC has noted a rise in online harm, including child exploitation, online scams, gambling and cyberbullying. Further, global reports have highlighted an increase in online sexual exploitation, gambling-related suspicious transactions and cyberbullying around the world. MCMC believes that online service providers must address illegal and harmful content, implement robust content moderation policies, enhance advertising transparency and protect minors. Consequently, a new regulatory framework has been introduced to address these issues.

Licensing Requirement

The key change under this new regulatory framework is a licensing mandate for service providers with a significant user base in Malaysia. Under the framework, MCMC now requires internet messaging and social media Service Providers with at least 8 million users in Malaysia (“Service Providers”) to obtain an Applications Service Provider Class (ASP(C)) Licence. The class licence will be valid for 1 year and Service Providers are required to re-apply each year. This will thus inevitably affect popular platforms such as WhatsApp, Telegram, Facebook, Instagram and TikTok.

The framework is being rolled out with a clear timeline, giving Service Providers a grace period of 5 months from the gazette date until 1 January 2025 to apply for a ASP(C) licence and comply with the relevant licensing requirements. The grace period is designed to give time for Service Providers to align their operations and policies with the new requirements. Non-compliance with the licensing requirements constitutes an offence and could lead to severe penalties, including a fine of up to RM500,000 (approx. USD121,000) and/or imprisonment for up to 5 years or both, along with additional daily fines for ongoing violations.

Key Obligations

Aside from having to comply with general requirements in relation to communications and multimedia laws as well as personal data protection laws, MCMC will introduce detailed conduct requirements and duties during the grace period which Service Providers must proactively observe.

As set out in the FAQ, the proposed key requirements will include Service Providers having robust:-

• Policies and measures for the protection of user data
• Child safety measures including age assurances to restrict users under 13 from accessing the platforms operated by the Service Providers
• Policies and measures to address online harm such as cyberbullying, online scams and sexual grooming activities
• Content moderation and policies
• Transparency in advertising and restriction of advertisements promoting scams
• Measures to safeguard minors from harmful content and misleading advertisements
• Measures to simplify complaint procedures for users and response time
• Measures to manage deepfakes and harmful AI-generated content
• Regular reporting measures on Service Providers’ compliance with Malaysian laws and the conduct requirements

Conclusion

The new regulatory framework by MCMC for Service Providers marks a significant step towards creating a safer online environment in Malaysia. Although it has ignited some debate and raised concerns about its potential impact on business growth and freedom of speech, a balance must be struck to hold Service Providers accountable for ensuring user safety. As the digital landscape continues to evolve, it will be essential to assess the impact of these regulations and make necessary adjustments to maintain this delicate balance.

Joanne is a Partner at Wong Jin Nee & Teo. Her practice predominantly focuses on trademark prosecution, media and advertising clearance, and other compliance matters.

 Daniel is an Associate at Wong Jin Nee & Teo. His practice focuses on IP litigation, enforcement and brand protection. He also advises on franchise, regulatory as well as media and advertising compliance.

[1] https://mcmc.gov.my/skmmgovmy/media/General/pdf2/Info-Paper-for-Regulatory-Framework.pdf

[2] https://mcmc.gov.my/skmmgovmy/media/General/pdf2/FAQ-for-Regulatory-Framework.pdf