Over a million BlackBerry users face being cut off from key services in Saudi Arabia and the UAE after authorities stepped up demands on maker Research In Motion for access to encrypted messages sent on the smartphone.
BlackBerry's Messenger application has spread rapidly in the Gulf Arab region but because the data is encrypted and sent to offshore servers, it cannot be tracked locally.
"Certain BlackBerry services allow users to act without any legal accountability, causing judicial, social and national security concerns," the United Arab Emirates' Telecommunications Regulatory Authority (TRA) said in a statement.
The UAE said it would suspend BlackBerry Messenger, email and web browser services from October 11 until a fix was found while industry sources said Saudi Arabia had ordered local telecom firms to freeze Messenger this month.
Sunday's moves cap wrangling with regulators over the issue which began in 2007. India raised similar security concerns last week and Bahrain in April warned against using BlackBerry Messenger to distribute local news. As far back as 2007, France cautioned officials about using the services.
Indian security officials are concerned that BlackBerry's encrypted data could be used to coordinate acts against the state. They have clamped down on mobile phone operators in the wake of attacks on Mumbai in 2008 which killed 166 people.
The UAE, home to Gulf financial hub Dubai, said it would halt BlackBerry services until an "acceptable solution" is developed and applied.
Users of the device said that could mean disruptions for companies and individuals who rely on the services, including almost 700,000 in Saudi Arabia and some 500,,000 in the UAE.
"It's a final decision but we are continuing discussions with them," Mohammed Al Ghanem, director general of the UAE's TRA told Reuters.
"Censorship has got nothing to do with this," he said, calling it instead a suspension due to RIM's lack of compliance with UAE regulations.
Authorities noted there is no such problem with services on smartphones from Nokia. RIM officials were not immediately available for comment.
The Canadian firm has over 41 million BlackBerry subscribers, meaning the Gulf bans could affect less than 3 percent of its users.
In Saudi Arabia, BlackBerry handsets have become the must-have gizmo for Saudi youths, enabling them to connect with members of the opposite sex in a deeply conservative society.
"About 80 percent of Saudi-based BlackBerry users are individual users and 20 percent are enterprises, while these ratios are basically reversed in developing nations," said one industry source.
"This problem would not have emerged if the bulk of BlackBerry users were enterprises." The governor of Saudi Arabia's telecom regulator declined comment. An Interior Ministry spokesman could not immediately be reached comment.
In the UAE, which is slowly emerging from an economic slowdown brought about by the global financial crisis and Dubai's property crash, some worried the move was aimed at curbing free speech.
Wrangling over the issue included an incident last year in which a state-controlled local service provider, Emirates Telecommunications (Etisalat), introduced what it called a software upgrade. RIM said it was an unauthorised "telecommunications surveillance application".
"I think there will be such an uproar, it probably won't happen and a solution will be found," said Irfan Ellam, Al Mal Capital telecoms analyst, referring to the mooted BlackBerry services ban.
"BlackBerry is seen as essential by many companies, so if you want to attract business to your country it doesn't make much sense to ban these Blackberry services," said Ellam. He said RIM had been asked to set up a proxy server in India to allow the government there to monitor traffic from a security perspective and the same approach might resolve the issue in the UAE and elsewhere.
"The UAE is asking them to have a server here and they are offering solutions other than that," a UAE source familiar with the matter told Reuters.
"BlackBerry appears to be compliant in similar regulatory environments of other countries, which makes non-compliance in the UAE both disappointing and of great concern," UAE's regulator said.
RIM shares rose last week on speculation that it might unveil a new touchscreen BlackBerry 9800 this week to compete more effectively with the iPhone and models.