Iran Ride-Hailing Apps Future at Stake

EghtesadOnline: In a strange turn of events, the head of Iran's IT Union says the organization has given the go-ahead for dismantling the popular ride-hailing startups Snapp and TAP30.

News ID: ۷۳۹۶۰۴

04 February 2017

The announcement of the impending closure of the ride-hailing services spread like wildfire among people who use the service and the technology industry as a whole.

"The executive order for this issue has been submitted in a letter to the Tehran Chamber of Commerce, Industries, Mines and Agriculture," Mehdi Mirmehdi was quoted by local telecoms website ITIran.com as saying.

According to the official the reason for the decision is that "the two startups have not obtained necessary permits [to operate taxi services]."

According to Financial Tribune, the TCCIMA had filed a request for the two startups to be shut down and the IT Union complied.

Both companies have permits for creating software but not for offering transportation services, he noted.

According to the official the chamber filed complaints against the two companies asking their work permits be revoked. Instead they gave suggested giving them license for e-business after which the companies can continue with their ride-hailing business.

The IT Union demanded that the two companies return their working permits (which had been obtained earlier) and refer to the chamber for the new permits.

Mirhmehdi claimed that for hitherto unknown reasons the two companies have ignored the procedure.

The IT Union is not against the development of startups, Mirmehdi said, and went on to say, "There are invisible hands who do not want the ride-hailing apps" in this business.

Hours after Mirmehdi's pronouncements, the reports were denied by several sources, namely the TCCIMA.

It said in a statement that they had not received any demand for shutting down Snapp and TAP30. "We are not opposed to such activities… In fact we support the growth of entrepreneurship, startups and knowledge-based firms."

Furthermore, according to a report published by Financial Tribune's sister publication, Donya-e-Eqtesad, the two startups had submitted requests for new permits but did not receive any response.

Rejecting Mirmehdi's claims, the CEOs of both companies said all the  legal steps have been taken but permits have not yet been issued.

Milad Monshipoor CEO of TAP30 said that despite the fact that the guild initially agreed to issue a permit, no official/legal permission had been given.

It is almost three months since TAP30 first filed a request to register as an Internet-based business, Monshipour told the Financial Tribune on phone.

Despite the confusion and commotion the company's credibility and services has not been undermined, he said adding that "the issue will be resolved soon."

Shahram Shahkar CEO of Snapp said that "it has been months since the company first put in a formal request with the guild to be registered as an e-commerce business but have not yet received any response."

Secretary General of Iran's Chamber of Guilds, Ali Avazpour acknowledged that both companies had indeed applied for permits.

Their requests are being reviewed and the Tehran Chamber of Commerce has been tasked with sorting out the matter.

Internet users say such imprudent decisions go against government claims about supporting and expanding the startup industry.

Reza Olfatnasab, secretary of the E-business Association is of the opinion that the Telecoms Ministry and Industries Ministry fully support the growth of Internet-based business because "it contributes to economic growth and development."

The Taxi Guild "is by no means eligible to sort out the affairs of Internet-based businesses."

Olfatnasab added that the IT Union too has no role in the decisions related to such companies.

Noting that it has been months since Snapp filed for a permit, he said that such permits are usually issued within two weeks.

Traditional taxi services have grown disconcerted as ride-hailing apps become popular and in the process challenge their monopoly and comfort zone.

Affordable fares and better accessibility are the main reasons why traditional taxi services have lost a substantial market share to the Internet-based ride-hailing services.