The past month saw the advance of a policy intended to secure government control over digital economy companies. By acquiring stocks and ownership rights in these companies, the government seeks greater ability to monitor and control with fewer obstacles from the private sector. With such tactics, the government now has a freer hand to access information and carry out extra-legal measures in matters where no clear laws exist for enforcing state demands.
Currently, illegal government commands may be met with resistance from private sector actors. Government access to information and control of content, though possible in existing law, is for now implemented inconsistently. In a coordinated effort, the government has tried to smooth the way for the passage of repressive internet laws and regulations, including by homogenizing institutions like the Secretariat of the Supreme Cyberspace Council and installing supporters of internet repression.
Simultaneously, the government has been preparing to counter any resistance from the private sector to policies that threaten access and freedom of expression. In terms of Iranians’ digital rights and internet access, this is significant because the government plans to achieve greater and more effective control over domestic internet services and platforms, as well as to sideline key private sector actors. The point of this campaign is to widen the grip of governmental institutions to carry out surveillance and control policies. However, this end goal may be complicated and opposed by a strong, influential private sector, especially if security bodies make their demands outside of formal legal and judicial channels.
What’s New? Public Talk of Pressure on Start-Ups
For several years, the government has aimed to encircle digital economy companies by exerting pressure on their employees through various means, including business closures, messages from security officials, arrests, interrogations, assaults by plainclothes agents, and cyberbullying. Filterwatch’s investigations of sources employed by startups inside Iran indicate that following the “Women, Life, Freedom” movement, these pressures increased greatly. Security bodies and the Ministry of Islamic Guidance began surveilling not only the compulsory hijab but also campaigns, content production, and even images of products from digital merchants. This surveillance was chiefly enforced through direct phone calls to management-level staff, rather than official correspondence.
In the most recent development, on April 27, Ruhollah Deghani Firouzabadi, the President’s Deputy for Science and Technology, referred to governmental pressure to acquire stock in these companies in a speech circulated by a governmental Twitter account.
Firouzabadi dismissed rumors of state pressure on digital economy companies to sell stock as “baseless,” saying “Regarding the transfer of stock in the company Digikala, we set only one condition. Our condition was that they undertake a moral commitment to invest money from stock sales in emerging areas like artificial intelligence.”
Digikala is an e-commerce website similar to Amazon . It is one of the biggest and most famous online stores in Iran. Firouzabadi was reacting to news published in mid-April regarding the sale of a portion of Digikala stock to Hamrah-e Aval. Hamid Mohammadi, the head Digikala’s Board of Directors, had confirmed the news, saying that negotiations were still underway and nothing had been finalized.
The negotiations took place just three months after the February 10 arrest of Masoud Tabatabaei, Digikala’s Managing Director, on charges of “insulting sanctities” in connection with the sale of drinking mugs.
Why Does the Government Want to Control Digital Companies?
As the law is written at present, security and judicial bodies may, where necessary, access user data controlled by major digital companies (e.g. data concerning sales, cloud infrastructure, internet services, and taxis). Government institutions stand to gain even greater opportunity to enforce their directives (both legal and extra-legal) with effective shares in these companies and perhaps seats on their corporate boards.
How Does the Government Force Companies to Collaborate?
Government forces use various tools in their campaign to acquire shares in the ownership and management of private internet startups.
- Legal Cases
The government initiates legal and security cases and summons and arrests directors of big internet startups. Through these actions, it pressures internet companies to resolve their legal woes by collaborating with government initiatives or transferring shares to state-aligned economic actors.
In an interview published by Shargh on March 24, Digikala Managing Director Masoud Tabatabaei said about his arrest: “I have no evidence to say a plot had been designed beforehand and this was part of a scheme to pressure Digikala to release shares, but at any rate, there are many such pressures on us. When you don’t know why such pressures exist and your plan is to build credibility, a person’s mind goes a thousand different directions, and one of them is that someone might be after your shares.”
- Blocking Independent Private Investment
In another tactic, government institutions set up obstacles to independent private investors, making it difficult or impossible for them to be active in the digital economy space. As a result, the independent private sector despairs and abandons the field, paving the way for state firms to get involved.
Since the beginning of 2018, reports have circulated that security actors pressured Sarava and its head, Said Rahmani, to cease investing in the startup ecosystem. However, none of these reports were confirmed by Sarava itself. For example, in August/September 2020, the site Peivast published a report which mentioned “pressure from certain institutions” on Sarvan Holdings (among the principal investors in Digikala) which led to Rahmani’s resignation and emigration (Rahmani was Managing Director of the company at the time). Peivast also reported that unknown individuals had attacked and vandalized Sarava’s offices in April/May 2018. Sarava staff did grant interviews about this incident.
In February/March 2023, Rahmani published a video entitled “Breaking the Silence” in which he confirmed the accuracy of previous reports, and said these pressures had forced him to leave the country. Rahmani said: “The reality is that Sarava had, practically speaking, no new investment after the spring of 2019, and even when I was in Iran [the prior year], there were all sorts of pressure on us to not undertake new investment so that Sarava wouldn’t grow and remain limited and small.”
- Problems in Public Stock Offerings
Major internet companies seeking to enter the stock market have also met big problems. In the spring of 2022, Tapsi became Iran’s first internet startup to go public. Three years later, it remains the only online platform listed on the stock market. In a Twitter thread, Tapsi’s former IPO director wrote of specialized, difficult, and complicated conditions and criteria for startups wanting to go public. These conditions effectively restrict startups from joining the stock market, leaving private sector investors with no choice but to abandon public offerings.
- Security Body Pressures
Filtewatch’s investigation of sources employed in digital economy companies in Iran indicate that security bodies are pressuring not just directors, but also ordinary staff and associates. One individual who works for a firm at a startup campus told Filterwatchthat after the “Women, Life, Freedom” movement, campus ideological enforcers (“Harassat”) started prioritizing employees’ hijab and personal matters to such an extent that a number of firms changed their office locations.
Crackdowns over the hiejab were one of the trends which intensified after the movement began. In many cases, these crackdowns are conducted by plainclothes forces, not by a definite, known institution with a legal order.
For example, the AzKi company, an insurance sales startup, saw its license suspended after publishing pictures of its female employees without a hijab. Online merchant Digikala and the e-reader platform Taghche faced shutterings and lawsuits in the summer of 2022.
An employee of one the companies said, “Plainclothes forces entered the business at an appointed time of day and said they wanted to come in and see how people were complying with the hijab.”
Furthermore, middle management at such companies has been pressured by the Ministry of Islamic Guidance and the Intelligence Organization of the Revolutionary Guards over content and campaigns.
In many startups, content production is overseen and controlled by government institutions. Filterwatch’s Investigations of a number of startups in Iran show the extent of this practice.
Important Policy Developments
The following are key developments in internet policymaking in Iran for the month of April 2024:
Policy Changes
Operators Forced to Use Inferior Domestic Modems
Digiato reported on April 22 that Mohammad Shanehsazzadeh, the founder and board chairman of the Shatel group, spoke critically of being forced to use low-quality domestic modems: “They halted modem imports, and we’re being forced to use low-quality modems.”
Filterwatch has been able to access letters (presented in a spring 2023 report) showing that the state is seeking to implement a similar registration plan for cellphones in order to trace and limit all hardware imports into the country.
Content, Apps, and Social Media Filtering
Security Response to Anti-Hejab and Pro-Israel Users
According to BBC reporting, on April 17 a group of social media users received a threatening message from the “Judiciary’s crime prevention deputy” for what was termed “activity in support of the Zionist regime.” The activity had been recorded by “surveillance systems,” the message said.
The Nour Plan: “Smartly” Countering Corruption and Obscenity
Khabar Online reported on April 23 that a scheme called “The Nur Plan” had been launched to “smartly counter corruption and obscenity.”
User Page Restricted for Showing a Woman’s Face
According to an April 15 report from Digiato, the domestic messaging app Ita restricted the page of a clothing retailer after it displayed a woman’s face.
Google Play Warns that “Bale” is Harmful
The site Taranji, which covers app and emerging technology news, wrote on April 1 that Google Play had issued a warning regarding unauthorized user data access by the domestic messaging app Bale.
Amin Tajamolian, the Deputy Director of Bale, told Digiato on April 8 that “Baleh’s access complies with the principles and policies of Google and Android, and access permission is requested from users whenever they begin to use a feature.”
Infrastructure
Launch of Second Data Center for Domestic Messaging Apps
ISNA reported that Minister of Communications Issah Zarehpour said on April 5 that a second data center for domestic messaging apps would be launched in the near future, with the aim of reducing disruptions in such apps.
