Starting 1 August 2024, Malaysia is set to introduce a significant regulatory framework that will reshape the legal landscape for all companies providing social media and internet messaging services in the country. This article aims to outline the current status, highlight immediate actions for companies, and provide three key takeaways for general counsels, especially those from companies operating in Malaysia.
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Why does this matter?
Historically, platforms offering social media and internet messaging services have been exempt from specific licensing requirements. However, to create a safer online ecosystem and combat the rise of cybercrime, scams, online fraud, sexual crimes against children, and cyberbullying, the Malaysian Communications and Multimedia Commission (MCMC) will introduce a new regulatory framework on 1 August 2024. This framework mandates that companies providing these services with at least 8 million registered users in Malaysia must apply for a Class License for Application Service Providers under the Communications and Multimedia Act 1998.
The regulatory framework is set for introduction on 1 August 2024, with enforcement commencing on 1 January 2025. This provides a narrow window of not more than six months for companies to comply and apply for the Class License. Most crucially, failure to obtain the appropriate license by 1 January 2025 will be considered an offense, subjecting companies to potential legal action. The full details of the requirements will likely be released alongside the introduction of the regulatory framework on 1 August 2024.
The message is clear: for platforms operating social media and internet messaging services with at least 8 million registered users in Malaysia, compliance is mandatory, not optional. The timeframe for compliance is tight, so companies must act quickly.
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Here are three key takeaways for general counsels while awaiting the regulatory framework:
3 Key Takeaways for General Counsels
- 1. Evaluate the Business Nature of Your Company:
- Start by assessing whether your company provides social media services or internet messaging services within Malaysia. If the answer is yes, it’s time to sit up and take notice, as this new licensing requirement could have significant implications for your operations based on your user base in Malaysia. Given the definition of “messaging service” under existing regulation, “internet messaging service” is likely to cover any applications services that involves the storage or forwarding of message in multimedia form through internet services and/or applications. Unlike “messaging service”, “social media service” is not currently defined under existing regulation. It should however cover any online platforms where the users can interact with one another, whether through sharing of user generated content or leaving of comments on others’ content.
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- 2. Evaluate and Audit User Base:
- Once it is confirmed that your company offers these services, conduct an internal evaluation and audit of your registered users in Malaysia. If your platform has over eight million users, it meets the threshold for the new regulatory framework, indicating that you must prepare to apply for the Class License.
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- 3. Act Within a Tight Timeframe:
- If you confirm that your company’s platform hosts more than 8 million registered users in Malaysia, the time to act is now. With the framework being introduced on 1 August 2024 and enforcement beginning on 1 January 2025, general counsels are advised to promptly engage with external legal counsels who specialize in TMT and licensing requirements to strategize compliance and avoid potential legal pitfalls.
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Conclusion
This regulatory shift may have caught many by surprise, but the reality is clear: The clock is ticking, and there is absolutely no time to waste.
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Should you require assistance with obtaining the Class License, our team can help you navigate this regulatory environment with expert insight and strategic planning. We are well-versed in the nuances of Malaysian technology and communications law and can provide the guidance necessary to ensure your platform is fully compliant ahead of the deadline. We have an in-depth understanding of the technology regulatory requirements and are poised to assist in obtaining the requisite Class Licenses.
For further information on how we can assist you in this transition, please contact us directly.
About the authors
Ong Johnson
Partner
Head of Technology Practice Group
Transactions and Dispute Resolution, Technology,
Media & Telecommunications, Intellectual Property,
Fintech, Privacy and Cybersecurity
johnson.ong@hhq.com.my
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Lo Khai Yi
Partner
Co-Head of Technology Practice Group
Technology, Media & Telecommunications, Intellectual
Property, Corporate/M&A, Projects and Infrastructure,
Privacy and Cybersecurity
ky.lo@hhq.com.my.
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