Internet Filtering in Iran Boosts VPN Business – Much of it Government-Owned

The lucrative nature of the VPN business has fed speculation about the involvement of influential people and institutions in Iran

By  Mohammad Salami

Almost since the introduction of the internet in Iran three decades ago, the government has sought to filter what Iranians can access. This has resulted in an explosion of Virtual Private Networks (VPNs); ironically, many are owned by institutions or individuals connected to the regime.

Four years ago, then Minister of Information and Communications Technology (ICT) Mohammad-Javad Azari Jahromi noted the contradiction when he said that “VPN is easily sold in the country. No action is taken [by the regime] with this business, and the reason is clear… [If the regime wants to, it can easily] reach the mafia [behind this] business.”

Almost all famous news and social media sites in Iran are officially blocked, among them Twitter, Facebook, Instagram, Telegram, WhatsApp, YouTube, Reddit, and the news sites of CNN, Fox News, BBC, and Deutsche Welle. Iranian users cannot access them without a VPN.

Iran is a young country, and the growth of internet users has been astounding.  At the beginning of 2023, Iran’s internet penetration rate reached 78.6 percent of the population or nearly 70 million people. There were 126.9 million cellular mobile connections in Iran and an estimated 48 million social network users, more than half the population. According to a survey in June 2022, 78.5 percent of Iranian citizens have used social media apps at least once. More than 70 percent used WhatsApp, more than 40 percent Instagram and more than 30 percent Telegram.

Iranians’ desire to reach blocked sites has led a large percentage of Internet users to employ VPNs. According to data gathered by VPN Gate, Iran is the second largest VPN user in the world after South Korea, where many users seek out VPNs to avoid revealing their identities, not because of government filtering.

In Iran, internet filters have caused widespread public anger and considerable damage to people’s pocketbooks and the private sector, which relies on online business. Government attempts to block these sites have negatively impacted the livelihoods of as many as one million Iranians, according to the Tehran Electronic Trade Association.

Anger has grown since the filtering of some social networks after the 2019–2020 protests and in particular, after last year’s “Woman, Life, Freedom” movement, which erupted in response to the death of a young woman in police custody, accused of wearing inadequate hijab. WhatsApp and Instagram were blocked after the 2022 protests, despite an outcry from civil society.

The widespread use of VPNs has made it easier for children to access banned sites, including pornographic ones. In addition, the use of free VPNs has caused personal information to be stolen and mobile phones to be infected with malware. Ahmad Alireza Begi, a member of the Iranian parliament, said in a recent interview that the widespread blocking of virtual space by the government was a sign of disrespect to the people’s “right to know.”

Jalal Rashidi Kouchi, another member of the Iranian parliament, said that the only achievement of filtering is “creating a cunning and profitable market for VPN business.” He added, “Filtering did not reduce the presence of people in foreign social networks, but only caused trouble and expense for people.”

Iranian mobile operators and Internet service providers have incurred huge losses due to filtering, according to information from Iran’s Communications Regulatory Authority revealed by the ZZI hacker group. Irancell, the second-largest mobile operator in the country, lost 8 trillion rials (about $16 million), Shuttle Company, another mobile operator, lost 60 percent of its traffic and 40 percent of its total revenue, and Mobin Net lost 100 billion rials (more than $200,000) per month.

The government does not disclose VPN usage statistics, but it is estimated that the value of VPNs reaches millions of dollars. Mohammad Hassan Asefari, a member of parliament, said recently that the income from the sale of VPNs is more than 500 trillion rials (more than $1 billion)  per year, and that VPN operators do not pay a single rial in tax.

The lucrative nature of the VPN business has fed speculation about the involvement of influential people and institutions. Former minister Jahromi prepared a list of 28 companies that were selling VPNs in Iran and sent it to the judiciary for investigation, but there has been no apparent follow-up. Asefari believes that “a government that is able to filter [cyberspace], how it cannot manage these companies? It seems that the filtering businessmen have influence in some [government] institutions, and I believe that this issue should be managed.”

Suspicion of government involvement is bolstered by the fact that the sites of some companies that advertise and sell VPNs are not blocked. In addition, users can easily pay for their services through government banks.  Some sites have “.ir” domains that can be easily tracked by the government and continue to operate even though they are ostensibly violating domestic laws.

Javad Javednia, the former head of cyberspace for the attorney general, said that government institutions have been slow to identify these companies because “a huge part of the technical information of VPN sellers and the amount of traffic consumed by them is at the disposal of the two ministries of ICT and Intelligence… Of course, the question remains that if the Ministry of ICT has detailed information about them, why has it not officially announced these matters so far?”

Mohammad Salami is a research associate at the International Institute for Global Strategic Analysis, an Islamabad-based think tank. His areas of expertise include politics and governance, security, and counterterrorism in the Middle East, especially the Persian Gulf. Follow him on Twitter @moh_salami.

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