Apple Cuts Iran-Made Apps From Store Over Sanctions

(Bloomberg) -- On a Saturday in mid-August, Iranian entrepreneur Mehdi Nayebi received an email from Apple Inc.’s App Store Review stating that his application, AloPeyk, a delivery service in Tehran, had been removed due to sanctions put in place by the U.S. government.

He wasn’t the only one. About a dozen other Iran-focused apps, including Delion Foods, a meals delivery startup, online store Digikala, Bamilo, an e-commerce marketplace, and ride-hailing app Snapp, were also similarly removed, according to Nayebi, and Delion’s co-founder Mahdi Taghizadeh.

“We got removed from App Store overnight, without any sort of warning,” Nayebi said. “We had just published a new version with enormous improvements. When users woke up the next morning, they saw the app is not available anymore.”

AloPeyk tried to appeal the decision, but instead received an email from Apple, citing trade sanctions enforced by the U.S. Office of Foreign Assets Control, according to Nayebi.

Users can still access the apps on their phones, but cannot download or update from the App Store. Nayebi’s team scrambled to create a version for the iPhone’s web browser that would function similarly to an app, circumventing the removal.

“Under the U.S. sanctions regulations, the App Store cannot host, distribute, or do business with apps or developers connected to certain U.S. embargoed countries,” Apple said in its email to developers. “This area of law is complex and constantly changing. If the existing restrictions shift, we encourage you to resubmit your app for inclusion on the App Store.” An Apple spokesman confirmed the authenticity of the email, but had no further comment on the matter.

A follow-up email from Apple to Nayebi stated that the iPhone maker would re-consider his app if he obtains a letter from the U.S. Office of Foreign Assets Control confirming the release of the app from the U.S.’s restrictions. Digikala, Bamilo and Snapp didn’t respond to requests for comment. The U.S. Office of Foreign Assets Control, a part of the Treasury Department that enforces economic and trade sanctions, didn’t respond to a request for comment.

This is the latest example of new challenges Apple faces as it becomes more of a digital services and content provider, rather than just a designer of high-end consumer gadgets. The company’s services business, which includes its App Store and iTunes music and video offerings, has increased about 22 percent in the past year and is its second-largest unit behind the iPhone. That’s attractive to investors, but distributing more information online means more clashes with governments.

In July, the App Store faced another government-forced app removal situation. Virtual private networks applications, programs designed to circumvent internet restrictions, were removed from Apple’s China App Store at the request of the Chinese government. “We have been required to remove some VPN apps in China that do not meet the new regulations,” Apple said at the time.

Iran’s nuclear-related sanctions were lifted last year following its 2015 agreement with world powers, however some U.S. trade and banking sanctions remain, hindering business. While the deal reached under the Obama administration was seen as a milestone for Iran to join international markets and open its doors to foreign investment and technology, the U.S. under President Donald Trump has pushed for more sanctions against Iran.

“Companies incur costs to research, design and develop apps for Android and Apple phones,” said Mohammadreza Azali, chief executive officer of TechRasa, a Tehran-based startup and tech news website. “If their app is removed from Apple devices it means that half of the cost they have incurred is gone with the wind.”

“It’s also a hit in terms of business,” he added. “There is an estimated 7 million iPhone holders in the country and their purchasing power is considered as being higher than those of Android users and they have readiness to buy. It’s a problem if you can’t access that clientele.”

Iran has a history of blocking access to websites and networks it deems politically sensitive, such as Twitter Inc. and Facebook Inc. However, the approach has been softening, with President Hassan Rouhani and top members of his cabinet, including Foreign Minister Mohammad Javad Zarif, using the platforms to make statements. Iran’s new minister of communications has recently announced his intention to end the restrictions.

“We’re trying to raise our voice in international media,” Taghizadeh said. “We don’t have such issues with Android ecosystem,” referring to Google’s App Store. Taghizadeh, along with at least four others, have started a petition online. They are asking Apple’s Chief Executive Officer Tim Cook to help lift the ban.

To contact the reporters on this story: Nour Al Ali in Dubai at nalali1@bloomberg.net, Ladane Nasseri in Tehran at lnasseri@bloomberg.net, Mark Gurman in San Francisco at mgurman1@bloomberg.net.

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Mark Williams