Politics Overshadows U.S. Tech Firms' Hopes For Entering Iran

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Customers try out cellphones and tablets in a store in Tehran, in 2012. Financial sanctions make it difficult for U.S. firms to do business in Iran, analysts say. (AP)
Customers try out cellphones and tablets in a store in Tehran, in 2012. Financial sanctions make it difficult for U.S. firms to do business in Iran, analysts say. (AP)

Iran has the potential to be a boom market for American tech companies. The majority of the population is under 30 and well educated, and over half the country has access to the Internet.

Many businesses have to wait until more sanctions are lifted, but certain tech companies can already go into Iran legally because the U.S. has lifted sanctions on various communication technology. They just aren't sure they want to.

The rationale behind lifting the sanctions on the sale of certain technologies in Iran has its roots in the 2009 election protests. Hundreds of thousands of Iranians took to the streets because they believed the election had been fixed by conservative clerics.

Much of what the West learned about the demonstrations came from videos leaked by demonstrators to YouTube and messages they put on Twitter.

Collin Anderson is an independent researcher who consults with human rights organizations and tech companies about Internet censorship. He says that during the protests Iranians had access to American technology — like iPhones and Windows software — through black markets.

"There's been a recognition for the past five years or so that increasing access to technology in Iran for the Iranian public is a greater good," Anderson says.

So, last year the Obama administration lifted sanctions on American tech companies that sell personal communication technologies. "It is fully legal to sell cellphones, laptops, tablets, modems, Wi-Fi routers and most of the software that most people use every day," says Vivek Krishnamurthy, who teaches at Harvard Law School.

But, Krishnamurthy says, that hasn't meant that American tech companies have jumped into Iran — there's still no Apple Store there. "Doing business with Iran is extremely difficult today because of the comprehensive financial sanctions," he says. "It's really hard to get money in or out of the country."

But, doing financial transactions may get easier if the U.S. and Europe reach a deal to lift the sanctions. And American tech companies have a good reputation in Iran, says Fraidon Korangy, an Iranian-born tech entrepreneur. He started several companies in the U.S., but he now lives in Iran. Korangy says most young people in Iran want to grow up and be Steve Jobs — not Ayatollah Khomeini.

"There's a tremendous amount of pro-U.S. sympathy in Iran in terms of technologies and solutions," Korangy says

He says China and some European countries have left a bad impression.

"Especially the Chinese have taken advantage of them because of the sanction regime," Korangy says. "They've sort of said, 'OK. Nobody else will deal with you. We'll deal with you but at a significant premium.' "

He says that includes marked up prices and delays in completing projects.

Despite the ripe climate for business in Iran, American tech companies have been very quiet about their plans. NPR contacted Apple, Google, Cisco and other big players. The only company that would admit to plans to enter Iran was Netflix.

Internet researcher Collin Anderson cites the politics in the U.S. "If you are, for example, Apple, you certainly don't want to wake up tomorrow and have in the front page of a newspaper: 'Apple sells the Supreme Leader an iPhone,' " Anderson says. "That certainly is going to be perceived negatively in the United States despite whatever nuclear arrangement happens."

Yet, there are some 80 million Iranians and the country has top-ranking engineering schools. Iran has its own nascent startup culture. There's an Iranian version of Amazon, Groupon, and the beginnings of a streaming music service, says Hamid Biglari, an Iranian-American who runs a data analytics company. It's the perfect environment for U.S. tech firms, he says.

"From a purely rational business point of view, it would be insane for them not to want to access such a large market on a level playing field compared to the rest of the world," Biglari says.

He says the best technology doesn't always win in a market — sometimes it's about who gets there first. And on that front — the complex politics between the U.S. and Iran may put U.S. companies at a disadvantage.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

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Transcript

MELISSA BLOCK, HOST:

Iran has the potential to be a boom market for American tech companies. The majority of Iran's population is under 30, well-educated and over half the country has access to the Internet. NPR's Laura Sydell reports that certain tech companies can already go into Iran legally. They just aren't sure they want to do that.

LAURA SYDELL, BYLINE: Back in 2009, Iran exploded in protests. Iranians believed their elections had been fixed by the conservative clerics.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PEOPLE: (Chanting in foreign language).

SYDELL: This YouTube video of tens of thousands of protesters in the streets of Tehran was leaked out of the country. Tech savvy protesters found ways to use social media and cellphones to organize.

COLLIN ANDERSON: There's been a recognition for the past five years or so that increasing access to technology in Iran for the Iranian public is a greater good.

SYDELL: Collin Anderson is an independent researcher who consults with human rights organizations and tech companies about Internet censorship. During the protests, Iranians had access to American tech, like Iphones and Windows software, through black markets. The Obama administration saw how dissidents used that tech to communicate with the world, so last year, it lifted sanctions on American tech companies who sell personal communication technologies. Vivek Krishnamurthy teaches at Harvard Law School.

VIVEK KRISHNAMURTHY: It is fully legal to sell cellphones, laptops, tablets, modems, Wi-Fi routers and most of the software that most people use every day.

SYDELL: But Krishnamurthy says that hasn't meant that American tech companies have jumped into Iran. There's still no Apple Store.

KRISHNAMURTHY: Doing business with Iran is extremely difficult today because of the comprehensive financial sanctions. It's really hard to get money in or out of the country.

SYDELL: But doing financial transactions make get easier if the U.S. and Europe reach a deal to lift the sanctions. And American tech companies have a good reputation in Iran, says Fraidon Korangy, an Iranian-born tech entrepreneur. He started several companies in the U.S. and he now lives in Iran. Korangy says most young people in Iran want to grow up and be Steve Jobs, not Ayatollah Khomeini.

FRAIDON KORANGY: There's a tremendous amount of pro-U.S. sympathy in Iran in terms of technologies and solutions.

SYDELL: Korangy says the Chinese and some European countries have left a bad impression.

KORANGY: Especially the Chinese have taken advantage of them because of the sanction regime. They've sort of said, OK, nobody else will deal with you. We will deal with you but at a significant premium.

SYDELL: That includes marked up prices and delays in completing projects. Despite the ripe climate for business in Iran, American tech companies have been very quiet about their plans. NPR contacted Apple, Google, Cisco and other big players. The only company that would admit to plans to enter Iran was Netflix. Internet researcher Collin Anderson says it's the politics in the U.S.

ANDERSON: If you are, for example, Apple, you certainly don't want to wake up tomorrow and have in the front page of a newspaper Apple sells the supreme leader an iPhone. That certainly is going to be perceived negatively in the United States, despite whatever nuclear arrangement happens.

SYDELL: Yet, there are some 80 million Iranians and the country has top-ranking engineering schools. Iran has its own nascent startup culture. There's an Iranian version of Amazon, Groupon and the beginnings of a streaming music service, says Hamid Biglari, an Iranian-American who runs a data analytics company. It's the perfect environment for U.S. tech firms.

HAMID BIGLARI: From a purely rational business point of view, it would be insane for them not to want to access such a large market on a level playing field compared to the rest of the world.

SYDELL: Biglari says the best technology doesn't always win in a market. Sometimes it's about who gets there first. And on that front, the complex politics between the U.S. and Iran may put U.S. companies at a disadvantage. Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.