After almost 2 years of rumors about this deal, Yahoo! made a big move last week when it purchased the Arabic portal Maktoob for an estimated $85 million. This is certainly one of the biggest moves in the Middle East’s tech field, and with it Yahoo! has cemented their policy of focusing on emerging markets, and cashing in on the growth of those markets. After establishing presence in Southeast Asia, India and Latin America, Yahoo! now has a foot hold in one of the biggest untapped markets in the world.
The Arab speaking world is composed of about 320 million speakers, of which about 41 million are Internet users. In addition to that, the region has an impressive adoption rate of over a 1,000%. Previously, both Google and MSN took shy steps by establishing a presence in the UAE and Egypt and creating partnerships with local ISP’s and attempting to educate the market about online advertising, but Yahoo! blew their efforts out of the sand.
The Arab market is ripe for picking and, with this move, Yahoo! has taken the lead in that race and will remain there if they are able to cater to the market’s needs. The reality is that only 1% of Internet content is in Arabic, so there is a void and even hunger for Arabic content on the web. Yahoo! hopes to capitalize on this by their purchase of Maktoob, and extending their current portal by making it relevant to Arabic audience.
So who is Maktoob.com?
Maktoob.com was created to especially cater to the void tof Arabic content on the web. In 1999, Maktoob was established in Amman, Jordan by Samih Toukan and Husam Khouri with the aspiration of leaving an Arabic footprint on the web by establishing the first Arabic web-based email service. Throughout the years, Maktoob grew and kept on expanding and trying to tackle the local needs of the Arabic market. Currently, their services include a search engine (araby.com), social networking, blogging, a dating site, and about a dozen other services catering to the market. Their portal experienced an impressive growth in their number of visitors after they acquired several popular Arabic forums, and today the portal attracts over 16 million regular visitors ranking it amongst the top 10 for most Arabic speaking countries.
Where Will They Start and What Are The Prospects of Profit?
After the deal, Maktoob will re-brand to Yahoo! Maktoob still retaining its local charm. Initially, Yahoo! Maktoob will tackle the localization of Yahoo! Mail, Messenger, Search, and the Yahoo homepage and eventually move towards creating local versions of news, sports, and finance with a focus on relevance.
When it comes to Yahoo!’s bread and butter, online advertising, they hope that their combined audience of about 36 million users – with some overlap – will be a great challenger to Google AdSense in the region. Also, that will provide advertisers in the region with an unprecedented opportunity to reach and engage online consumers in the region and it’s expected that online advertisements revenue will grow about 35-40% during this year, according to Madar Research.
Any bumps along the road?
It will be interesting to view how Yahoo! Maktoob will evolve, but there are some concerns that will arise along the way that are not all that unfamiliar to Yahoo. First of all, how will Yahoo tackle issues of privacy and freedom of speech? Given that their policy in China came under fierce attack in recent years and it wasn’t the best way to handle the situation; there are doubts regarding how they will handle it in the Middle East. In a region that is well known for their lack of free press and gated societies, will Yahoo be able to maintain their integrity?
The second concern is that while the acquisition didn’t include all of Maktoob’s services – the remaining services including Souq.com an eBay-like auction site and Araby.com an Arabic search engine will operate under the Jabbar Internet Group – it did include forums like DVD4Arab.com, which is filled with pirated DVD’s, software, and music. This poses a legal problem for Yahoo! that might be a bit thorny since it’s one of the draws of service in its current form, will yahoo be able to resolve it without losing the current audience?
What I Think:
While opinions might differ about whether Yahoo! did the right thing to acquire Maktoob, or whether it paid too much for it, one thing is certain: it was a bold move by them to venture into a new market, and hopefully it will be a successful move that will encourage other big players to start shifting their focus into investing in those emerging markets and help bring some of that web goodness in flavors other than English only.
Maktoob in Arabic means either “letter“, “written, or “destined“, so is this relationship destined to succeed? What are your feelings about how the Internet is developing in emerging markets? Does the lack of any big European Internet corporations affect the Internet negatively or positively?