Iranian Digital Economy Plunged into Crisis by Internet Shutdown
Mihail
2026-07-29
Read time
2 minutes
Roza Mojtahedzadeh, Vice Chair of the Iranian Virtual Businesses Association, stated that the restriction of international internet access in the country triggered a profound crisis across the digital economy. The fallout from this measure affected not only online platforms but also negatively impacted the investment climate, software development, digital infrastructure, and the tech labor market. In her view, the crisis damaged a wide range of market participants, including equipment suppliers and investors.
Impact on Various Business Segments
The most visible consequence was the halt of numerous online projects whose creators had spent years developing their companies. Some businesses were in the middle of securing funding or expanding their operations when the shutdown occurred, leading to forced downtime and severe financial losses. Entrepreneurs were left facing complete uncertainty regarding the future of their businesses.
Mojtahedzadeh divided the affected enterprises into three main categories. The first includes large digital platforms that managed to resume operations fastest due to administrative support and robust infrastructure. The second group consists of medium-sized businesses, some of which connected to the national internet network during the twelve-day conflict, though the authorization process was suspended after the active hostilities ended.
Small business owners suffered the most severe damage, particularly in provinces and smaller towns. Many of them abandoned their online ventures entirely and returned to traditional business models. Due to the lack of viable prospects, only a few medium-sized firms adapted to the new conditions, while most small startups effectively ceased to exist.
Challenges in Damage Assessment and Rising Costs
Accurate data on the financial losses of the digital sector are currently unavailable, as this requires long-term market research. Mojtahedzadeh emphasized that assessing the state of the industry must account not only for the number of closed companies but also for the brain drain of qualified specialists, including programmers who abandoned their careers. An additional obstacle was the rising cost of computer hardware driven by currency fluctuations, making it harder for young specialists to enter the profession.
Reliance on the Global Network and New Trends
Most of the Iranian digital sector remains critically dependent on the global network, and any recurring shutdown would lead to similarly severe consequences. After access was restored, it became clear that many companies' websites only started working again due to the return of the international internet, proving the lack of a viable domestic alternative. At the same time, new trends emerged: some companies began investing in business development in the Gulf countries, such as Oman, while the heightened threat of cyberattacks drove up demand for information security services.
Amid the crisis, domestic venture capital investors have grown extremely cautious. Many investment funds that had planned to finance early-stage tech startups suspended or completely canceled their projects due to a sharp decline in confidence in the sector.
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