US-based technology giants like Google, Meta Platforms, and X (formerly Twitter), have asked Malaysia to delay a proposed licensing requirement for social media platforms, citing concerns over the lack of clarity in the new regulations.
Malaysia, which has a population of 34 million, is a key market for most of the US-based technology companies. Social media is also a booming market in Malaysia. There is no data available on the size of the social media market in Malaysia. Malaysia’s digital economy GMV was $23 billion, with e-commerce contributing the majority. Hence, Google, Meta Platforms, and X want to grow more in Malaysia.
Malaysia has 33.59 million internet users in January 2024, according to latest reports. Malaysia’s internet penetration rate stood at 97.4 percent of the total population at the start of 2024.
Investment in 5G network is powering Internet and social media growth in Malaysia. For instance, 5G download speed in Malaysia is 451.79 Mbps. 5G availability in Malaysia has increased from 21 percent in Q1 to 27 percent in Q4 of 2023.
Asia Internet Coalition
The Asia Internet Coalition (AIC) issued an open letter urging the Malaysian government to reconsider the plan, warning that it could stifle innovation and place undue burdens on businesses, Reuters news report said. Google, Meta Platforms, X, Apple, Amazon, Grab, Yahoo, Rakuten, Snap, Shopify, Spotify, Pinterest, Line, among others, are some of the members of the Asia Internet Coalition (AIC).
The letter, addressed to Malaysian Prime Minister Anwar Ibrahim and dated last Friday, is available on the AIC’s website.
Asia Internet Coalition says Malaysia has become a digital hub, attracting investments in 2024. The digital economy is an engine of growth, contributing 23.2 percent to Malaysia’s GDP, with a projected rise to 25.5 percent by 2025, creating approximately 500,000 jobs.
In a separate statement, Grab, a member of the coalition, clarified that it had not been informed or consulted about the letter. The company emphasized that the Malaysian government’s licensing plan would not impact its operations, Reuters news report said.
Why stop new regulation
The proposed regulation, announced in July by Malaysia’s communications regulator, would require social media platforms with more than eight million users in the country to apply for a license starting this month. The move is part of a broader effort to combat cybercrime, and platforms that fail to comply by January 1, 2025, could face legal action.
In the letter, AIC Managing Director Jeff Paine described the licensing regime as “unworkable” and expressed concern that there had been no formal public consultations on the plan. He argued that the lack of clarity and the rushed timeline left the industry uncertain about the obligations that would be imposed on social media platforms.
“No platform can be expected to register under these conditions,” Paine wrote, adding that the regulations could potentially hamper Malaysia’s rapidly growing digital economy, which has seen significant investment this year.
The Malaysian government has reported a sharp increase in harmful social media content in recent months and has urged platforms like Meta and TikTok to enhance their monitoring efforts. Despite this, the AIC stressed that while it shares the government’s commitment to tackling online harms, the current approach lacks the necessary clarity and time for the industry to properly assess and comply with the new regulations.
Cost of excessive regulatory requirements
AIC says excessive regulatory requirements by the Government has been shown to be ineffective, costly and have generally had limited impact in addressing online harms.
AIC has released two research reports. Computer and Communications Industry Association (CCIA) said ex post cost-benefit analysis of Germany’s Network Enforcement Act found that an ineffective mandate resulted in only 5,138 incremental content takedowns across four major social media sites in 2022, despite these sites handling trillions of user-generated content annually.
CCIA said 84.4 percent of all reports were false positives, and 98.8 percent of the remaining reports were already addressed by the social media platforms’ community guidelines and standards.
The compliance regime required 441 staffers across the four social media sites, costing between $1,741 and $5,116 per incremental takedown. The cost to the German economy was estimated at $22.25 million per year, which is about $4,336 per incremental takedown, CCIA said.
Baburajan Kizhakedath
