The Asia Internet Coalition (AIC), a lobby group whose members include Google, Meta, Amazon, Twitter (aka X), LinkedIn, Apple and other major technology companies, has called on the Malaysian prime minister to reconsider laws that require social media and instant messaging service providers to obtain operating licenses.
The letter (PDF), signed by Jeff Paine, the executive director of the AIC, begins quite warmly: “I hope you are well,” it is addressed to Prime Minister Anwar Ibrahim.
The letter goes on to say that Malaysia’s future licensing system “will have an adverse impact on innovation by imposing undue burdens on companies.”
The AIC warns that the proposed directive will “hinder ongoing investment and prevent future investment due to the complexity and cost of compliance” and that its introduction “risks destabilising” the industry’s ecosystem.
The directive is also seen as a potential deterrent to foreign investment, as the establishment of a locally registered company is a prerequisite for obtaining a license.
The Malaysian license proposal was released on August 1 without formal public consultation, according to the trade body (PDF). The Malaysian Communications and Multimedia Commission (MCMC) said it had held “a series of discussions” with service providers, civil society organizations, NGOs, law enforcement agencies and other relevant stakeholders from January to July 2024.
The proposed regulation is set to come into force from January 2025 and targets internet messaging and social media service providers. It requires providers with over eight million users in Malaysia to apply for an Application Service Provider Class License.
The MCMC believes that the licensing requirement will enable it to achieve soft regulation “without hindering innovation” and ultimately curb online harms such as fraud, gambling, cyberbullying and the distribution of child sexual abuse material.
“MCMC followed the same approach in 2021 when licensing cloud service providers,” the Commission said.
This has apparently neither deterred investment nor hampered Malaysia’s digital economy: AWS opened a region there last week.
The collective license is only valid for one year, so service providers must reapply every year – assuming they have eight million Malaysian users. Failure to comply could result in fines of RM500,000 ($70,000), up to five years in prison, or both – and additional fines for each day the offence continues after conviction.
The AIC said it was also concerned about online harms, but that there was “not enough clarity” and that the five-month period was too short for the industry to “fully grasp the impact”. It suggested instead that a grace period of at least 12 months should be allowed.
The trade body claimed it had not received any guidelines on what conduct was required to retain the licence and said it was concerned that its members could be forced to remove religious content not approved by Malaysia’s Ministry of Islamic Development, and to do so within very short deadlines.
The AIC proposed a self-regulatory model instead – because who wouldn’t prefer that?
The Asian mouthpiece of major tech companies cited adaptability as one of the benefits of self-regulation – “as seen during the COVID-19 pandemic, when platforms rapidly updated their policies to combat health misinformation.”
As it happened, the day before the Malaysia letter was published, the founder of AIC member Meta, Mark Zuckerberg, sent another letter, this one addressed to U.S. House Judiciary Committee Chairman Jim Jordan, saying he believed it was wrong that his platform was pressured to remove misinformation about Covid-19 at the height of the pandemic. It also said Zuckerberg’s platforms would no longer downgrade potentially false posts or stories while awaiting a verdict from their fact-checking partners.
Further proof that self-regulation does not always produce good results can be seen with Twitter/X. After being acquired by Elon Musk, Twitter/X was found to have the highest level of disinformation among major social media platforms. X also failed to curb the spread of fake news, which is believed to have sparked the recent unrest in the UK. TikTok and Telegram have also been criticized for this incident.
Speaking of Telegram, its founder and CEO Pavel Durov was arrested in France because his company failed to comply with content moderation laws and failed to cooperate with criminal investigations. The platform is said to have facilitated organized crime, drug trafficking, fraud, and the distribution of child sexual abuse material (PDF).
Despite the AIC’s claims, Malaysia is no outsider in its efforts to regulate the industry.
The EU’s Digital Services Act introduced legal obligations for digital platforms to combat fake news and coordinated influence campaigns. “Beyond voluntary commitments, the fight against disinformation will be a legal obligation under the #DSA from 25 August,” promised EU Commissioner for Internal Market and Services Thierry Breton. Many other countries are also working on regulations to make social media operators more responsible for the content published on their platforms. ®
