Saudi Arabia's social media licensing may be a win-win for all, experts say

A new licensing system in Saudi Arabia aimed at regulating the country's growing content creator and influencer industry will be a win-win for all, experts said.

They said it will encourage more transparency and consumer protection in a largely unregulated young sector.

The move follows an announcement by the Middle Eastern country in June that if non-Saudi residents and visitors posted ads on social media without a license, they would face prison and a fine of up to $1.3 million.

Saudi Arabia is the latest to join the likes of the United States, the United Arab Emirates, the United Kingdom, South Korea, Singapore and Japan to take measures to regulate the industry in light of an ever increasing number of individuals and businesses transacting and sharing data online.

Starting in October, Saudi and non-Saudi content creators earning revenue through advertising on social media platforms are required to first apply for a permit through Saudi Arabia's General Commission for Audiovisual Media.

Arab News reported that for a fee of roughly $4,000, content creators will receive a permit, valid for three years, during which they can work with as many private entities as they like and promote products or services that do not run counter to Saudi's laws or values.

Joe Ghantous, founder of digital marketing agency Right Service in Riyadh, welcomed the new licensing system as it "will positively affect the growth of influencer marketing in the Kingdom of Saudi Arabia".

The license will regulate the industry and keep those who have a real and positive impact on society. "Still, it must be accompanied by supportive and developed regulations and measures that help these real influencers to grow their knowledge and (have a) positive impact on Saudi society and protect their rights," Ghantous said.

According to online market research and business intelligence portal Statista, the global influencer marketing platform market is expected to surpass $370 million in 2027.

Data from the Saudi Arabia Social Media Statistics published by digital marketing company Global Media Insight in June showed that almost 98 percent of people in Saudi Arabia use the internet and that 29.5 million are social media users.

Glenn Wijaya, an associate at Christian Teo & Partners and an expert on Indonesia's electronic and information laws, said this is good for transparency and consumer protection as regulators around the world are more and more concerned with the activities of social media influencers.

"Many social media users are sometimes confused whether or not an individual is giving an honest review of a product or service, or is endorsing a product or service. Social media users, who are prospective consumers, are not well protected against scams made by unruly social media influencers," Wijaya said.

"By requiring social media influencers to be registered, regulators could then track who endorses what brand. (The) liability of these influencers then can also be ascertained, and I think at the end of the day, it is a win-win situation for all, i.e. the brand owner, the influencer and the public or consumers."