TECHNOLOGY & ENTERPRISE

The way to go

February 2010

The challenges facing the region as it seeks to build its presence online and in hi-tech industries

When Samih Toukan, founder and chief executive of Maktoob, the world’s largest Arabic language web portal, launched an Arabic email service in early 2000, months before the dot-com bubble burst, few thought it would be successful. Internet penetration in the region was low and early adopters tended to speak English. But, within a few months, the service had 16,000 users. By the end of the year, it had 115,000. Nine years on, Maktoob – which has expanded to include business news, financial information and consumer services – reaches 16.5 million users every month.

Late last month, the firm was acquired by internet giant Yahoo, marking the first deal of its kind in the region. Yahoo will become the first major internet company from the West to run a full online content business in the Middle East. Maktoob has, as a result, become an archetype for an anticipated transformation in the Middle East’s internet and wider technology industries.

“We believe Maktoob will be a turning point for the internet industry in the region,” says Toukan, who launched the company in Jordan, later moving much of the operation to Dubai. “This is a clear example of a start-up that has come out of the Arab world and has succeeded. It’s going to stir a lot of developments. After this, there will be a lot of movement in the market and more investment coming in from the region and abroad.”

Despite its relatively small size – industry estimates place the value of the deal at around $75 million – Maktoob is said to be the largest purchase under Carol Bartz, Yahoo’s chief executive who took over in January. As Yahoo has not been “awash with cash” recently it shows that the Middle East has become an “increasingly important” market, says Faisal Ghori, principal at Middle East Ventures, a Washington-based business strategy consultancy focused on the Middle East and North Africa.

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