Yahoo buys Arabic internet portal

Yahoo has bought the largest Arabic-language web portal in a deal executives say reflects the company's intention to bet big on a more wired future for the developing world.

Yahoo said it was acquiring Maktoob, which has grown since it was founded in Jordan by Andersen Consulting veterans in 2000 as a free e-mail service to include news, financial information and other consumer services, reaching a combined 16.5m monthly users in the Middle East.

Terms were not disclosed, but sources said it was Yahoo's largest purchase under Carol Bartz, chief executive, who took the helm of the Silicon Valley group in January .

Internet advertising accounts for a tiny fraction of overall ad spending in the Middle East, but Yahoo and Maktoob said the potential was significant, citing a forecast of 30-40 per cent growth this year compared with a sharp fall in traditional media because of the financial crisis.

"When we started, the internet barely existed in the region, but now growth rates are tremendous," Samih Toukan, one of Maktoob's founders, told the Financial Times. "The internet is now part of everyday life and with the very young population, this is just the beginning."

Fewer than 50m of the world's 320m Arabic speakers are online, but that figure is growing more rapidly than the global figure, said Yahoo's Keith Nilsson,

senior vice-president for emerging markets.

The deal will allow Yahoo to offer its mail and other core functions in Arabic, even to those who do not access Maktoob . Yahoo mail has 20m users in the region.

Ms Bartz has stepped back from pouring money into a technology arms race with Google over search, last month striking a critical alliance to get indexed web results from Microsoft.

She has committed to increasing Yahoo's world audience and keeping them on the company's pages as long as possible in hopes of capturing more ad dollars as the economy recovers.

Emerging markets and new languages are a key part of that strategy. Acquisition costs are modest, and while advertising spending is too low for immediate payback, the medium-term prospects for significant growth are surer than in more mature markets.

The developing markets division, based in Singapore, has been spared from most of Yahoo's cutbacks, and Ms Bartz has adopted the view that the company is generally best served in less-wired geographies by buying locally owned and managed websites that overlap with Yahoo's core functions, as Maktoob does.

The idea is to become a part of the routine for early adopters, who will spread the word as broadband becomes more widely available.

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