The Iranian regime has gained notoriety in recent times for its stringent control over internet access, setting an alarming record in the first half of 2023 by leading the world in targeted internet shutdowns. According to data from Surfshark, Iran experienced a staggering 14 internet outages during this period, all concentrated in the Sistan and Baluchistan region. This wave of restrictions has raised concerns about the state of digital freedom and its profound consequences on Iran’s economy and society.
Surfshark’s statistics reveal that Iran, along with China and Russia, has emerged as one of the most enthusiastic advocates for internet censorship on a global scale. Beyond merely restricting access to popular platforms like Facebook (Meta), Twitter (X), YouTube, Telegram, Instagram, and WhatsApp, the Iranian regime has consistently tightened its grip on the digital realm since 2009. Such actions have led to the widespread use of VPNs by Iranian citizens, with reports suggesting that two-thirds of Iranians have resorted to various means of circumventing these restrictions.
The use of VPNs has become a significant point of contention. Mohammad Vahidi, a member of the Education Commission of the Islamic Council of Iran, has called on the Ministry of Communications to disclose any income generated from the sale of VPN services. Vahidi attributes the surge in VPN usage to the Ministry’s policies, stating that there is currently no logical basis for the Ministry’s decisions in this area. This situation has raised concerns about potential financial interests linked to the government’s expansion of internet filtering.
However, the impact of internet restrictions goes far beyond individual freedoms. The repercussions are felt keenly in Iran’s economy. The protests following the tragic death of Mahsa Amini triggered a series of restrictive decisions by the regime, particularly targeting the internet. These decisions disrupted various sectors and led to profound economic consequences.
NetBlocks, a non-governmental organization monitoring global internet conditions, released a report in 2022 titled ‘Internet Disruptions in Iran.’ The report indicated a deliberate disruption of the internet in Iran, with platforms like Instagram and WhatsApp, among the last international platforms accessible to Iranians, being restricted. As restrictions intensified in October and November of the same year, almost all foreign platforms, including Google Play and the App Store, became inaccessible.
These measures had severe economic ramifications. In a country already grappling with a 40% inflation rate and challenging economic conditions, internet disruptions further complicated the livelihoods of many citizens. In particular, digital businesses, a significant contributor to Iran’s economy, suffered the most. Issa Zarepour, the Minister of Communications and Information Technology, noted that the digital economy accounted for 2.7% of the GDP. However, the ongoing internet outages impeded the growth of this sector.
In fact, Iran ranked second globally in internet blackouts, trailing only Russia, in 2022. The Iranian regime cut off the internet for a staggering 7,171 hours, resulting in losses estimated at $773 million for the people, according to Statista. The state-run news agency ISNA reported that internet interruptions cost the Iranian economy $1.5 million per hour, equivalent to 45 billion tomans, totalling to over 1 trillion tomans in daily losses.
The impact on businesses was particularly severe. The Computer Trade Union Organization of Tehran reported that due to continued internet disruptions, approximately 53% of businesses suffered daily losses of 50 million tomans. Around 21% lost between 50 to 100 million tomans daily, and nearly 8% endured daily damages exceeding 500 million tomans.
One of the most notable aspects of the internet’s role in Iran’s economy is the reliance on digital transactions. Over 90% of purchases are made through card readers or internet portals, and internet outages often lead to canceled and disrupted transactions. The consequences of this extend even to large state and semi-state companies. Car registration processes by Iran Khodro and Saipa were hampered multiple times due to slow internet, demonstrating the widespread reach of these disruptions.
Furthermore, digital businesses suffered immense setbacks. Instagram, with approximately 40 million active users in Iran, played a pivotal role in the country’s economic landscape. Roughly 10 million out of 11 million online businesses used Instagram directly or indirectly to engage with customers. However, when the free exchange of information is curtailed, public trust erodes, and users resort to less secure messaging platforms and censorship circumvention tools.
The head of Tehran Chamber of Commerce’s Economic Innovation and Digital Transformation Commission, Farzin Fardis, estimated that 500,000 to 700,000 Instagram stores operated within the Persian space of the platform, providing direct employment for around one million people. Fardis believed that around eight million people were indirectly affected by the blocking of Instagram.
Despite the economic toll and widespread outcry, the regime’s promises to lift internet restrictions have remained unfulfilled. The regime’s president Ebrahim Raisi, in a bid to address the issue, ordered the creation of a working group comprising the National Center for Cyberspace and the Ministry of Communications and Information Technology. The goal was to provide a solution to the slow internet problem within a month. However, this promise also went unfulfilled, further fueling public frustration and surprisingly increasing and intensifying the internet restrictions, suggesting that now this institution is being used to further expand the restrictions.
The regime has suggested that people migrate to domestic platforms as a solution to circumvent these issues. However, claims about the acceptability of domestic platforms have faced skepticism. Some reports suggest that domestic platforms have yet to garner substantial user numbers compared to their foreign counterparts. Moreover, many individuals with identified incomes continue to be active on foreign platforms, emphasizing the importance of maintaining access to international social networks for economic reasons. And many people deny joining domestic platforms due to the heavy surveillance implemented by the regime’s Ministry of Intelligence.
In conclusion, Iran’s stringent internet restrictions, particularly in the context of the Mahsa Amini protests, have left a profound impact on the country’s economy and society. While the regime has made promises to resolve the issue, these commitments have thus far gone unfulfilled. The economic consequences, particularly for digital businesses, are significant, with widespread losses reported across various sectors. The struggle for a free and open internet in Iran persists, as citizens and businesses alike contend with the consequences of internet restrictions.
