Arabic language content makes up only one percent of the total data on the Internet, but after Yahoo Inc.’s purchase of Maktoob.com, the language spoken by 320 million worldwide may gain a larger slice of the World Wide Web.
On August 25, both parties announced that Yahoo would acquire the Jordanian Internet portal, marking the start of a division that Yahoo will call Yahoo Middle East.
The deal has been a long time in the making, since it has been more than three years since Maktoob co-founders Hussam Khoury and Samih Toukan first sat down with Yahoo’s vice president of emerging markets, Keith Nilsson. At the time acquisition was not on the table, but the synergistic nature of each company’s offerings, coupled with seemingly compatible management personnel, eventually nudged the negotiations in that direction.
“Since I first had a role in Maktoob in 2001, when somebody would ask me what Maktoob was, I’d say it was kind of like the Yahoo of the Middle East. Well, now we actually are the Yahoo of the Middle East,” said Maktoob General Manager Ahmed Nassef, in an interview posted on Maktoob Business.
An Arab portal’s rise
Maktoob began operating in 1999 as the first free Arabic language email service, from which it grew into one of the region’s most popular Internet portals. Today, it is the strongest brand name in the Arab world, according to Toukan.
In fact, Toukan admitted that Yahoo was not the only global Internet player of its size interested in Maktoob. “In the last few years, we’ve been approached by several global players,” he said in an interview with Executive, though he would not reveal the other interested parties.
The acquisition price has yet to be made official, as the deal will not close until mid-October. However, when the deal was announced most estimates ranged between $70 and $80 million. Two weeks later Jordan’s state-run Petra News Agency announced the deal was worth $175 million.
With such a large disparity in the estimates, the final number should prove an interesting indicator of the online Arabic language market, both in terms of Internet users and the potential for advertising growth.
Maktoob co-founder Samih Toukan is amused by the amount of speculation, but remains tight-lipped about the final figure.
“The range is now between $50 and $500,” said Toukan with a laugh. “But we have agreed with Yahoo that we are not going to disclose the amount, so there are a lot of rumors.”
The deal represents the first major stake into the Arab world by an American portal and represents a nod to the growth potential of the industry. That’s understandable, considering that there are 320 million Arabic-speakers the world over, with five percent of Internet users speaking Arabic but only some 1 percent of online data in Arabic. With the number of Middle East Internet users increasing ten fold since 2000, online content available in Arabic has significantly trailed its growth potential.
“Arabs are vastly underserved by today’s Internet offerings,” said Nilsson on Yahoo’s corporate blog.
Maktoob traffic by country (from 01/08/09 to 14/09/09)
“We see tremendous opportunity in the emerging markets, mostly because Internet penetration is in its infancy”
Global domain
Yahoo’s strategy toward emerging markets resembles a plan for world domination, but it reflects the potential that Nilsson sees in markets like the Middle East.
“We see tremendous opportunity in the emerging markets, mostly because Internet penetration is in its infancy [and] online ad penetration is extremely low and growing,” said Nilsson. “The criteria we look at to enter a market are… the potential online population, the size of the offline ad market and the potential for that to come online in the future.”
Yahoo already has operations in Southeast Asia, Latin America and the Indian subcontinent. The global portal seeks to take advantage of Maktoob’s 16.5 million unique users from all over the Middle East and North Africa and a plethora of Arabic language content offerings to dominate the region’s market.
“We don’t see any of the major technology players as focused on creating as deep of a local content experience in this region,” said Nilsson, who has also stressed the importance of Maktoob’s knowledge of cultural sensitivity and norms in the region.
What Maktoob brings to the table in content and know-how, Yahoo will bring in users.
“Yahoo has 20 million users in the Arab world and they are all using English services on Yahoo,” said Toukan. “People used to watch CNN, but then when Al Jazeera came, when Al Arabiya came, when you have good content in Arabic, people tend to use that,” said Toukan.
Yahoo will acquire Maktoob’s portal, its content, and a service for market research and consumer analytics under the name Maktoob Research. The deal also includes Maktoob’s offices in the UAE, Jordan, Kuwait, Egypt and Saudi Arabia.
Toukan said that the details of the deal were easy to work out, as it was obvious which parts of Maktoob would fit with the offerings of Yahoo. When the deal closes, Maktoob.com and Maktoob Research will be wholly owned by Yahoo. Ahmed Nassef will continue to manage the Maktoob team at Yahoo, while Toukan will run a new endeavor, the Jabbar Internet Group.
Jabbar will contain the pieces of Maktoob not sold to Yahoo, which include souq.com, an Ebay-like auction site, cashU.com, an online payment system, Tahadi.com, an online games site, Araby.com, the first Arabic search engine, and E-marketing, an Internet advertising network.
Abraaj Capital, the Dubai-based private equity company, purchased 40 percent of Maktoob in 2005 for $5.2 million. It was then sold to the American hedge fund Tiger Global Management in 2007, which will maintain its stake in Jabbar.
E-migration
In addition to content, Yahoo is also interested in the Arab advertising market, which experts predict will undergo a shift to online platforms in the coming months.
Online advertising spending is expected to grow by 35 to 40 percent in the region this year, according to Madar Research. AT Kearney, a global management consultant, values the pan-Arab media industry at $10 billion. Needless to say, expectations are high.
According to Toukan, with the details of the deal having been ironed out, the success of Yahoo Middle East will be the litmus for other global online names to invest in the region.
“Until now, no major Internet company has had a full service offering in the region,” said Toukan. “Some companies have a sales office, some have joint ventures, but Yahoo will be the first with everything from content to marketing, from sales to engineering.”
Bayt.com
Bayt.com, founded in 2000, is currently the number one job website in the Middle East. With more than 150,000 unique job seekers and 40,000 registered employers using the site, Bayt’s interface is available in English, French and Arabic, while posters may choose which of the three languages they wish to use. The site also just launched mobile capabilities, which allow users to post and update resumes and search for jobs via their mobile phones.
Ejabat.google.com
Global Internet giant Google has a host of services for Arabic language speakers, including an instantaneous translation service and a new user-generated question and answer service called “Ejabat,” where users can post questions and get answers from other Google users. Google also became a member of the Information Technology Association of Jordan as of September 1 this year.
Yamli.com
Though not a purveyor of Arabic content, Yamli.com does offer a unique service. Yamli.com is a search engine featuring a “smart Arabic keyboard.” Users type a transliterated Arabic word in English characters into the search engine and Yamli will search using the Arabic spelling, resulting in English content resulting from all possible transliterations. Effectively, the site takes out the inconsistencies of Arabic transliteration by searching all possibilities based on an Arabic search command. The site launched in October 2008 and is based in Boston.
Naqatube.com
Debuting in August 2009, Naqatube is Saudi Arabia’s answer to Youtube. This video search engine is free of explicit or seditious content and is mostly comprised of religious and children’s material. The creators of the site hope to one day compete with Youtube and offer content in languages other than Arabic to serve the global Muslim community.
Jeeran.com
Founded in Jordan in 2000, Jeeran originally offered simple website creation services for Arabic speakers. In 2005, the site added blogging capabilities and now hosts 140,000 blogs. Jeeran also has a social bookmarking website called “Kabbr,” which is similar to the popular Digg.com, though presently Kabbr has only 7,500 members. Jeeran also contains an expanded social network much like MySpace.
d1g.com
D1g.com features a question and answer service similar to Google’s Ejabat, a news portal, a site dedicated to media downloads for mobile phones, a video sharing site and a women’s site all in Arabic. The site was founded in 2006 and claims three million users. It closed its first round of financing in August. The site’s current executive chairman is a former Yahoo employee.
Ikbis.com
Ikbis, founded in 2005 by Saudi media company TootCorp, is a video and photo-sharing platform. Ikbis also inked a contract with Nokia in 2007 to allow users to upload photos and videos, and organize their Ikbis profiles from their Nokia phones.
