Yahoo buy spawns e-commerce giant

One of the Middle East's largest e-commerce companies has been created as a by-product of Yahoo's acquisition of Maktoob, the region's biggest internet portal. While the US technology giant has bought the core Maktoob web portal, a number of businesses previously under the umbrella of the Maktoob Group have been spun off into a new company, to be managed by its co-founder, Samih Toukan.

"We will operate in a similar way to the old Maktoob group but the focus will be different, looking more at e-commerce, transactional businesses, things that nobody is doing enough of in the region," Mr Toukan said. "We are not interested in competing with Yahoo Maktoob in the portal space but we really don't need to, because there are so many spaces on the web that are open for a good player from the region. What about travel? Nobody is doing it."

The new company, Jabbar Internet Group, has received a US$20 million (Dh73.4m) capital injection from its shareholders, the same group of investors who announced the sale of the Maktoob portal to Yahoo on Tuesday for a sum estimated to be more than $75m. Jabbar's prize assets include Souq.com, a Middle Eastern equivalant of the US eBay online auction site, and CashU, an internet payments system similar to PayPal, the payment service that eBay acquired for $1.5 billion in 2002.

Ronaldo Mouchawar, the chief executive of Souq.com, said the company would now begin an aggressive push into new countries and markets. "We have already been a trendsetter for e-commerce but with this deal and the capital injection, we can really push out to new markets, new features and a better experience," Mr Mouchawar said. "We already had big plans for expansion but this accelerates it" Other group companies to be rolled into the new business include Araby, an Arabic search engine, and Tahadi, a publisher of online games.

More significant is Jabbar's acquisition, announced alongside the Yahoo deal, of a successful Middle East online advertising network, E-Marketing MENA. Founded by a former Maktoob employee, the company became a successful reseller and distributor of online advertising, working on a similar syndication model to that of international market leaders such as Google, Microsoft and Yahoo. Before the Yahoo acquisition, Maktoob operated a similar system called Kalimat, which let advertisers submit text advertisements to be placed alongside content on various sites in the portal.

That system has been merged with the E-Marketing service, with the combined product rebranded as iKoo. It is expected to become a major force in the regional online advertising industry, although it was not clear whether iKoo will operate in collaboration or competition with Yahoo's own system for selling and distributing advertisements. Mr Toukan said he would like to see iKoo become a reseller and agent for Yahoo's own global advertising network, Right Media, in the Middle East.

"We will be looking at ways to co-operate and if Yahoo would like to partner its advertising efforts with iKoo we would love to do that," he said. "We agreed that there is potential for the two to work together, just like there is potential for a lot of our businesses to click with what Yahoo wants to do in the Arabic space." [e-mail]