The impact of platform bans on Pakistan’s startup ecosystem

Online platforms are at the epicenter of communication and spearheading information in the modern technological world. Whereas in Pakistan internet penetration stands at 36.5% and a significant portion of the population are internet users (82.9 million in January 2022), there is a huge gap around the need for dialogue and advocacy for freedom of expression. Most recently, on the 4th of February, ‘Wikipedia’ was trending on Pakistani Twitter – albeit for all the wrong reasons. The platform, which gathers approximately 55 million views per month in the country, was banned by the Pakistan Telecommunication Authority (PTA) for hosting ‘sacrilegious content’. This, however, is not the first time such a blanket platform ban has been issued, in fact, as seen in the timeline below, our history is littered with similar ad-hoc suspensions.

History of Platform bans in pakistan

Where we stand

It comes as no surprise that the ‘Freedom on the Net Index’ ranks Pakistan as ‘Not Free’ (26/100). This is a weaker performance when contrasted with comparable ecosystems which are at least ranked as ‘Partly Free’ i.e. Bangladesh (43/100), Indonesia (49/100), Nigeria (57/100) and the Philippines (65/100). Similarly, Comparitech’s ‘Internet censorship’ metric (which considers variables such as blocks on torrents, political media, social media and VPNs) scores Pakistan an 8/11.

Ramifications for the startup ecosystem: 

Compared to banning selective content, blanket platform bans have significant ramifications for the Pakistani startup landscape. The ecosystem is currently experiencing a funding dry up, with a significant slowdown seen towards the end of 2022, particularly in terms of deals funded by international investors.

Damages investor confidence 

  • Despite international investment increasing 14-fold since 2019, Atif Awan (Founder and Managing Partner at Indus Valley Capital;) argues that arbitrary platform bans which result in global headlines and wide backlash, severe investor confidence in injecting capital into Pakistan’s digital landscape.
  • According to Mubariz Sidiqui (Founding Partner at Carbon Law), investors view an unregulated environment as a risk factor, which potentially points toward digital businesses halting operations at any point in time in the future.
  • At a time when the startup ecosystem is already experiencing a funding dry-up, Kalsoom Lakhani, (Founder i2i and GP at i2i Ventures) aptly states that the ‘banning of platforms act as a nail in the coffin’ as they act as a negative signal. This is particularly important when we consider the damaging impression it could leave on various notable first-time international investors entering the Pakistani market in 2022.

Dampens founder morale and opportunity 

  • The trend of platform bans ultimately reduces the space for creative freedom and expression among founders in the ecosystem. This can be particularly discouraging for the new breed of innovative founders that have been digitizing traditional sectors such as agriculture, logistics and financial services. Ultimately, the draconian laws build a discouraging narrative for founders looking to ride the wave of the digital future.
  • The bans also impact founders ability to leverage platforms such TikTok, Youtube, Instagram etc. for marketing. This could be quite damaging as social media platforms cater to an estimated 71.7 million users in the country.

While there are direct implications on investors and founders, platform bans also impact the economy as a whole, which naturally feeds into negative implications for the ecosystem and its players.

Impacts the flow of remittances 

Pakistani freelancers attracted remittances of approximately $400 million in fiscal year 2022. Speaking on the most recent Wikipedia ban, Mubariz Sidiqui argues that access to educational material is essential for freelancers. Especially since the pandemic, platforms such as Youtube (which has been repeatedly banned in the country) have emerged as top educational tools of choice as they provide a rich library of learning sources. Banning such platforms will therefore limit people’s ability to skill up and bring in remittances for the country.

Big companies have less incentive to set up shop in the country 

As we currently stand, especially after the introduction of the ‘Removal and Blocking of Unlawful Online Content Rules 2021’, the PTA has a strict set of compliance requirements, which from the get-go might deter tech giants such as ‘Facebook’ from setting up shop in the country. Digital rights activist and Director at Bolo Bhi, Usama Khilji, believes that big companies (who already have a high rate of compliance with the PTAs rules) should now be incentivized rather than pressured.

Is it just us? 

Evidently not, as the most recent news comes from Turkey, where amid growing criticism of the state’s response to the recent earthquake, the government restricted access to Twitter and various other websites. Nigeria, China, India, Iran, North Korea are all examples where internet censorship is practiced regularly in the name of regime protection, public order, safety and moral policing. Whereas in China, the startup ByteDance has taken the bull by the horns by creating local alternatives to Whatsapp and TikTok, in Pakistan the Draconian laws would not necessarily spell much success for local players looking to create alternatives. This is because the platforms are not banned because they are foreign, rather because they are seen as immoral. Therefore, founders would think twice before diving into such a precarious situation.

The regulator on platform bans startup ecosystem

Stay plugged in! 

Awareness and engaging in conversation are the first steps towards driving change. So we’ve compiled a list of inspiring digital activists below, who will surely keep you up to date:

While the most recent ban on Wikipedia was reversed in 3 days, following the Prime Minister’s directive, we are still far from solving the problem. In a country like Pakistan, with a bulk of the population under 30, internet platforms are the future and a clear structure around content standards, rather than outright censorship would not only help players maneuver the landscape but also aid investors in assessing the risk of investment. While the government is justified in the safety of its citizens, there is a fine line between censorship and security.

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