By Pishtaz | 2023-08-18

The Iranian regime's increasingly severe internet restrictions and disruptions have crushed the hopes of entrepreneurs and disabled their businesses, driving many abroad and accelerating a downward economic spiral, analysts said.

State-imposed internet restrictions are common in Iran, designed to combat the free flow of information and prevent Iranians from sharing the images of nationwide protests and the regime's resulting crackdown with the world.

But internet blackouts have been occurring with greater severity and more frequency of late, analysts and Iranian entrepreneurs told Pishtaz, noting that they exact a heavy toll on the national economy -- which is already in freefall.

Startups are leaving Iran as it has become the second-worst country in the world in terms of internet disruption, behind only Burma, and among the five worst for internet speed, Tehran's Electronic Business Chamber said in a new report.

In its report on the status of the internet, the chamber described the current condition of internet businesses in Iran as "critical."

The Iranian regime has cut off the internet connection or slowed it down significantly at times of protest in the past, but the recent protests -- over the death of a young woman in "morality police" custody, saw this intensify.

As the public protests dragged on for months, the regime introduced longer and more severe internet slowdowns and outages.

Iranian officials decided to cut off internet connection entirely on some days, and intermittently on others, and unlike after other protests in the past, did not stop the outages once the protests came to a gradual end.

Unreliable internet connection

Before the protests started, most internet users in Iran had been using virtual private networks (VPNs) to bypass filtering and access most websites.

Purchasing VPNs is still helpful to an extent, but frequent disruptions and outages have rendered Iran's nationwide internet connection largely unreliable.

In June, a 42-year-old pharmacist in the Iranian city of Kermanshah told Pishtaz he has to buy a new VPN "pretty much every month."

"The more expensive VPNs are much stronger, but I cannot afford to buy them every month," he said on condition of anonymity. "Sometimes, I have to buy more than one VPN a month, and I hop from one VPN to another."

For those whose work is entirely internet-based, the situation is more serious.

As the rate of unemployment has increased in the past decade, an increasing number of Iranians have been doing business over the internet, from crafting and selling various items online to coding and specialized computer services.

Intermittent internet outages, which at times persist for several days, have disrupted these businesses, resulting in thousands of Iranians steadily incurring major losses. Some have entirely lost their business.

The emergence over the last 15 years of startup technology companies in Iran has seen a number of highly educated young Iranians turning to this sector.

Some have even returned to their country after completing their graduate degrees overseas, in hopes of pursuing a business at home. But these hopes have been crushed as internet outages kneecap their businesses.

The resulting brain drain has seen a number of startup founders and entrepreneurs leave Iran and pursue their business elsewhere.

Accelerating brain drain

According to official statistics, at least 10,000 successful startup businesses are currently active in Iran in various sectors including service, science, production and technology.

Several lucrative startups have left Iran over the past several months, while others have remained in hopes that the situation will improve, sending their experts to run the businesses from abroad to shield themselves from loss.

In the last week of June, well-known Iranian entrepreneur Nazanin Daneshvar, who founded the successful startup "Takhfifan," left Iran.

Daneshvar, 35, is a highly regarded talent whose return to Iran after receiving her graduate degree overseas had made news.

Domestic media in June reported she left due to the continued state-ordered disruption of internet connection and increased filtering of the internet.

Just like her return to Iran several years ago, her departure was widely reported.

"The country is increasingly losing its talents. The regime hands out our natural resources to Russia and China at very low prices, and drives our invaluable human resources away," said an Iran-based technology startup founder.

"I love my country, my family and my employees," he told Pishtaz on condition on anonymity.

"Several families are counting on me for their paychecks every month. Every time I think of leaving, which happens very frequently these days, I push the idea aside because I think of my employees," he said.

"But I'm not sure how long I'll be able to maintain the business, as I've already incurred major loss," he said.

One-way ticket out of Iran

Tapsi, a lucrative Iranian startup, is a popular ride-sharing application.

Tapsi founder Milad Monshipour told Iranian media outlet Tejarat Online that "digital commerce, online businesses and technology startups are the future of Iran's economy, while internet restrictions are its huge obstacles".

In a panel covered by domestic economic dailies, Hamed Bidi, CEO of the successful Iranian startup "Karzar," shared a warning about the future.

"Just as power outages stop the industrial sector, internet disruption or slow-down stops digital business, which is a booming sector in Iran," he said.

An Iran-based software engineer who did not wish to be named told Pishtaz that several credible reports reveal some 1,200 technology specialists and startup employees have purchased one-way airplane tickets to leave Iran.

In recent months, these sought-after professionals have immigrated to a number of different countries, he said.

Iran's dismal economic status, the regime's restrictions and the lack of hope in the future "are among the most important reasons we all think of immigration," he said, referring to technology experts and startup founders.

"But the government couldn't care less about losing its talents, its useful young resources. That, to me, is the saddest part of it all," he said.