A marriage of convenience

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Maktoob co-founder Samih Toukan will head Jabbar Internet, which will keep commercial ties with the Maktoob’s units that are now part of Yahoo.

“The one thing that’s standard across the board is that, especially in countries like Egypt, Morocco, Algeria and the Levant, there is a huge level of growth taking place from year to year in terms of internet penetration,” says Ahmed Nassef, general manager of Maktoob.com.

The region’s online advertising industry will grow around 25 to 30 percent this year, he believes.

“We are probably growing at twice the size of the market’s growth but the whole industry kind of came to a full stop towards last year. Things are picking up again. But even within that context there was growth.”

The Maktoob takeover sends an important signal to investors: exiting a technology investment in the Middle East is possible, even if initial public offerings (IPOs) are not an option.

“This is nothing short of a sea change for the region,” says Faisal Ghori, a principal at strategy consultancy Middle East Ventures.

That should spell more funding for Jordan’s growing number of internet entrepreneurs, and strengthen the country’s role as a regional tech hub.

Still, the typical investment in a technology start-up lasts around five years. For Maktoob, it took nearly twice as long.

Whilst emphasising that this is a positive story, Jawad of Arab Advisors also notes that the new company will face some challenges going forward.

“The main weakness of Maktoob is that in all the major online services — e-mail, messaging, e-commerce, social networking and search — it’s a very distant player in the region,” he says.

Others point out that the deal leaves out the region’s fledging e-commerce sector, which still has a long way to go.

“Yahoo doesn’t have any particular strength in e-commerce, so it’s not surprising that it has left these and gone for instant access to users. But this is the area where the region lags behind the most,” says Mark Sutton, group editor of Dubai-based publisher ITP’s technology group. (ITP Publishing Group is the publisher of Arabian Business and ArabianBusiness.com.)

“It is an interesting move to get users, but not revolutionary.”

In a region where many governments use highly sophisticated technologies to block any content that could offend local sensitivities, Yahoo will have to tread carefully, especially in Saudi Arabia, the largest Arab advertising market.

“The vast majority of its audience will come from Saudi,” says Austyn Allison, managing editor of Communicate, an advertising and marketing magazine.

“If Maktoob were to get itself banned in Saudi Arabia through some misguided story that it put on there, or a perception that it was offering too much online dating, it would obviously lose a lot of its value to Yahoo.”

The US company is unlikely to rock the boat. Four years ago, it was criticised by Amnesty International, Human Rights Watch and Reporters Without Borders for its complicity in the arrest of a Chinese journalist. Rival Google has been criticised for censoring, or omitting, search results from its Chinese search engine.

“Yahoo are going to have to listen a lot to the people behind Maktoob who have the regional expertise,” says Allison.

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