Yahoo moved to make its biggest geographic expansion in years Aug. 25 when it agreed to buy leading Arabic Web community Maktoob.com for an undisclosed sum.
The Yahoo of the Arab world, Maktoob boasts more than 16.5 million unique users, or a third of the total users in the Middle East, Yahoo said in a statement. Maktoob.com, which offers news, finance, research and sports content along with Web-based mail, search, payments, gaming and an auction site, is accessed by users in the United Arab Emirates, Jordan, Kuwait, Egypt and Saudi Arabia.
The acquisition bid does not include auction site Souq.com, payments platform cashU.com, search engine Araby.com, online ad network E-marketing and gaming destination Tahadi.com. These businesses will operate under a new entity called the Jabbar Internet Group, managed by Maktoob founder Samih Toukan. Yahoo will promote these Jabbar companies on the Maktoob.com portal.
Through Maktoob.com, Yahoo plans to offer Arabic versions of the Yahoo home page, Yahoo Search, Yahoo Messenger and Yahoo Mail, and eventually local versions of Yahoo News, Sports and Finance content and services, Keith Nilsson, senior vice president for emerging markets at Yahoo, said in a blog post.
Interestingly, the acquisition comes one day after Yahoo upgraded Yahoo Mail and Yahoo Messenger and began bucket testing its new Yahoo Search engine. The purchase also comes three weeks after Microsoft and Yahoo agreed to a 10-year search and search ad deal, with Bing powering Yahoo. Taken together, these moves underscore a reinvigorated Yahoo under CEO Carol Bartz.
"This acquisition will accelerate Yahoo's strategy of expanding in high-growth emerging markets where we believe Yahoo has unparalleled opportunity to become the destination of choice for consumers," Bartz said in a statement.
Yahoo said that while Internet usage in the Middle East has grown significantly in the last decade, most markets are still in the early stages of adoption. According to the World Bank, there are more than 320 million Arabic speakers worldwide, but less than 1 percent of all online content is in Arabic.
Yahoo, which needs to keep expanding and innovating to fend off Web audience-hungry Google, Microsoft, and Internet upstarts Facebook and Twitter, aims to tap that Arabic market for new streams of online advertising. Spending on online advertising in the Middle East is expected to grow by 35 to 40 percent this year in the region, according to Madar Research. Yahoo and Maktoob.com hope to attack that market together.
To wit, the deal is part of Yahoo's larger strategy to grow its business by tapping the world's emerging markets, Nilsson said. Based in Singapore, Yahoo's Emerging Markets unit targets growth opportunities in South East Asia, India, Latin America, Africa and the Middle East.
"In many countries, vast populations-and advertisers-are just starting to come online," Nilsson wrote. "The potential is tremendous. Yahoo has a large and growing audience in these markets today, and our acquisition of Maktoob represents the kind of investment we're making to cater to the needs of these promising regions."
Should the deal close in the fourth quarter as Yahoo expects, Maktoob.com will become a wholly owned subsidiary of Yahoo. Ahmed Nassef, the current general manager of Maktoob.com, will continue to lead the Maktoob.com teams and will report to Nilsson.