Big Tech: Malaysia won't let us set our own rules and that's not fair and makes us grumpy

Asia Internet Coalition asks for rethink of social media licensing law with the old 'You'll scare away investors' line – a week after AWS opened a region

The Asia Internet Coalition (AIC), a lobby group whose members include Google, Meta, Amazon, Twitter (aka X), LinkedIn, Apple, and other Big Tech players, has called on the prime minister of Malaysia to rethink laws requiring social media and instant messaging providers to secure operating licenses.

The missive [PDF], signed by Jeff Paine, managing director of the AIC, opens cordially enough: "I hope this letter finds you well," it addresses prime minister Anwar Ibrahim.

The letter goes on to allege that Malaysia's upcoming licensing framework "will adversely impact innovation by placing undue burdens on businesses."

The AIC warns that the proposed policy will "hinder ongoing investments and deter future ones due to the complexity and cost of compliance" and its introduction "risks destabilizing" the industry ecosystem.

The policy is also labelled a potential deterrent of foreign investment, as establishment of a locally incorporated entity is a requirement for a license.

Malaysia's licensing proposal was released [PDF] on August 1, according to the trade org, without formal public consultation.The Malaysian Communications and Multimedia Commission (MCMC) has said it conducted "a series of engagements" with service providers, civil societies organisations, NGOs, law enforcement agencies, and other relevant stakeholders from January to July 2024.

The proposed regulation is expected to become effective from January 2025 and targets internet messaging and social media service providers. It requires those providers with over eight million users in Malaysia to apply for an Applications Service Provider Class Licence.

The MCMC reckons by requiring licenses, it can enact "light-touch" regulation "without stifling innovation" and ultimately reduce online harm – like scams, gambling, cyberbullying, and transmission of child sexual abuse material.

"The same approach was taken by MCMC for the licensing of cloud service providers in 2021," stated the commission.

Doing so does not appear to have scared away investment or hindered Malaysia's digital economy: AWS opened a region there last week.

The class license is only good for a year, so service providers will have to reapply annually – assuming they maintain eight million Malaysian users. Failure to comply can result in RM500,000 ($70,000) worth of fines, up to five years jail or both – and additional fines for every day during which the offence is continued after conviction.

The AIC's stance is that it cares about online harms too, but that there is "insufficient clarity" and the five-month notice is too short of a timeline for the industry to "fully grasp the implications." It proposed instead to be given a minimum of 12 months grace period.

The trade org claimed it had not received any guidelines regarding what conduct will be required to maintain the license. It professed to be worried its members could be forced to take down religious content that wasn't approved by Malaysia's Department of Islamic Development, and do so to very short deadlines.

The AIC suggested a self-regulation model instead – because who wouldn't prefer that?

Big Tech's Asian mouthpiece cited adaptability as one of the advantages of self-regulation – "as seen during the COVID-19 pandemic when platforms swiftly updated policies to combat health misinformation."

As fate would have it, the day before the Malaysia letter was issued, the founder of AIC member Meta, Mark Zuckerberg, sent another letter. That one was to US House Judiciary Committee Chairman Jim Jordan, stating that he felt it was wrong that his platform received pressure to take down Covid-19 misinformation at the height of the pandemic. It further declared that Zuckerberg's platforms would no longer demote potentially false posts or stories while it awaits a verdict from its fact-checking partners.

Further evidence that self-regulation does not always produce good outcomes can easily be seen on Twitter/X, which was found to have the highest ratio of disinformation among large social media platforms following its takeover by Elon Musk. X also failed to curtail the spread of fake news that is felt to have sparked recent riots in the UK. TikTok and Telegram also came in for criticism over that incident.

Speaking of Telegram, its founder and CEO Pavel Durov was arrested in France over his company's failure to follow content moderation laws and assist with criminal investigations. The platform allegedly has enabled [PDF] organized crime, drug trafficking, fraud, and the distribution of child sexual abuse material.

Despite the AIC's claims, Malaysia is not an outlier 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, fighting disinformation will be a legal obligation under #DSA as of August 25," European commissioner for internal market and services Thierry Breton has promised. Many other nations are also working on regulations to have social media operators take greater responsibility for content posted to their platforms. ®