Industries in Depth

Facebook may be banned in Iran – but it's not stalling the country’s digital revolution

Reuters and other foreign media are subject to Iranian restrictions on leaving the office to report, film or take pictures in Tehran. The Iranian flag is pictured before the opening of the 32nd Meeting of the Ministers of Foreign Affairs of G-15, at a Foreign ministry building in northern Tehran May 15, 2010. REUTERS/Morteza Nikoubazl (IRAN - Tags: POLITICS ENERGY) - RTR2DWLF

Image: REUTERS/Morteza Nikoubazl

Adam Jezard
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It took the use of social media during the 2017 Iranian election to bring global attention to the country’s restrictive policies regarding access to the internet.

During the run-up to the poll there was much comment about how the government banned the use of foreign social media platforms, including Facebook and Twitter (although Instagram is allowed).

However, in January it was reported that the Islamic Republic News Agency had been told by communications minister Mahmoud Vaezi that the number of mobile internet users had risen from 3.5 million to nearly 40 million (about half the population). He added that internet penetration had increased to about 50% of the country.

Some commentators were quick to point to the opportunities for e-commerce and social media “influencers” to make inroads in a country where 60% of the population is under 30.

A blog on the International Journalists’ Network quoted Tehran-based creative consultant Niki Aghaei, who said: “Three years ago, you would not have one billboard talking about a website, promoting a website, promoting anything digital. Now, I would say the traditional companies all have their websites up, all have their Instagram pages up on their billboards.”

About 27 million Iranians now use 3G and 4G services and there are plans to roll out 5G by 2020-21. But how much of an opportunity is Iran’s burgeoning digital network, and for whom?

Local apps

Last year Business Insider ran an article saying Iran’s e-commerce sector was booming, but pointed out that the main beneficiaries were local sites such as Bamilo and Digikala, rather than Amazon, which does not operate there.

Consumers could be winners, as they are more able to track the value of goods on websites than they can by going to shops that may operate opaque price structures, the article said.

Other beneficiaries are online retailers. Iran’s E-commerce Development Center said in September that 25,000 Iranian online shops had earned more than $18 billion in the past year.

The country has announced incentives to grow its e-commerce sector, including giving a free telecommunications operator licence, which costs €3 million ($355 million), to local apps that have more than five million users. Another statistic claims that, in the past four years, 100,000 Android apps have been created by 22,000 developer groups. This seems to be becoming the default operating system in Iran as Apple removes Iranian products from its app store because of US sanctions and its phones are not officially sold there.

When it comes to ride-hailing, the country boasts at least 20 apps, including local companies such as Snapp and Tap30, as well as foreign imports like Russia’s Maxim.

As TechRasa, a website that reports on Iran’s tech scene, says: “Tehran is a megacity [of] over 13.2 million ... With 18 million trips per day in Tehran, considering the 60% market share of public transportation system, we would have 7.2 million trips left for [taxi] and ride-hailing apps.”

Iranian ride-hailing app Snapp Image: Snapp

Telegram, a Russian messaging service and online platform, has become the main local social media outlet, with TechRasa reporting in January the company had generated $23 million via its channels: “In the past three years, Telegram has been experiencing an unbelievable traction in Iran to the point that people are making serious money on this platform. As the largest hub to host Farsi content, it’s no big news that the channels could generate this kind of revenue.”

Figures on tech sector investment are hard to find, but fDi Intelligence, a division of the Financial Times, reported that, after Egypt, Iran was the second-biggest destination for overall foreign investment in the Middle East and North Africa in 2016, attracting about £12 billion ($15.7 billion).

The removal of economic sanctions against the country after the 2015 Joint Comprehensive Plan of Action, under which Iran agreed to limit the scope of its nuclear ambitions, is credited with boosting interest in the country.

Germany and Spain were reported to be the biggest investors, at between $3 billion and $4 billion each.

However, renewed tension with the US may be a deterrent to future investments.

Meanwhile, Iranian companies are looking to connect to the digital world beyond its borders. Electronic payment system Shetab is integrating its services with Russian banks so its cards can be used in both countries.

Political gain

Also benefitting from Iran’s digital boom are the country’s ruling politicians who, despite the official bans, turned to Twitter and Facebook in an effort to boost their support in May’s national and local elections.

Although the so-called Arab Spring uprisings, which began in Egypt in 2010 and were partly attributed to young people using social media to communicate their feelings of frustration, have been linked by some to the banning of platforms in certain countries across the region, Facebook has been forbidden in Iran since about 2009.

Nonetheless, probably because of the country’s youth demographic and the pace at which digital communications have developed, Iran’s political leaders including its president, political moderate Hassan Rouhani, and his cabinet, opened Facebook accounts at least four years ago.

Foreign social media cannot officially be accessed from inside the country but they can be reached by using US-based proxy servers, though these too can be blocked.

Rouhani faced off in the election against hardliner Ebrahim Raisi to be re-elected for a second term with a landslide 57% of the vote.

He has in the past talked about giving greater digital freedom to his citizens, and in a memorable Twitter conversation with the platform’s founder Jack Dorsey in 2013 said Iranians had a “right” to internet access. Given the country’s hardline opposition and the current tensions with President Donald Trump, Rouhani may struggle to deliver that.

Image: Twitter
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