By Damian Dovarganes News Focus Freeing Taxpayers The ruling NDP cut personal income and corporate taxes in half, but the emergency law is here to stay High Times Bankers expect higher interest rates to heat up the investment climate and cool inflation Mastering Law A new law program at the American University in Cairo seeks to get students serious about law Until the Cows Come Home Consumers are still waiting for Sudanese beef to hit the market AloAchoo! The next generation of viruses has hit mobile phones Star Power The 2004 Olympics created some unlikely national icons and a powerful lineup of marketing potential Below Par The World Bank says Egypt is handicapped by the high costs to start a business and the difficulty of firing people, to name a few Corporate Bonding Orascom Telecom and Telecom Egypt have made a splash in the bond market, but rising interest rates may damper enthusiasm Unmaking Monopolies Opposition MPs say changes to a proposed anti-trust law defy the purpose of the law by protecting monopolies On Topic The Euromoney conference put an exclamation point on the liberalization efforts of the government Investment Matchmakers Egypt Invest 2004 seeks to convince foreign investors that the country has finally turned a corner ’Dish’ing it Out Satellite TV stations are set to give the state-run channels a run for their advertising revenues during Ramadan Cargo Crunch As exporters complain about skyrocketing airfreight prices, the government seems to be turning an unsympathetic ear Star Power The 2004 Olympics created some unlikely national icons and a powerful lineup of marketing potential

By Andrew Raven

S ome analysts viewed Yahoo’s recent purchase of one of the Middle East’s most trafficked websites, Maktoob, as a coup. Others called it a tentative grab by a giant that has lost its place atop the internet.

Either way, the deal, which closed last month, has officials at Yahoo excited about the prospect of gaining ground in a region where they say web-based advertising has just scratched the surface of its potential. Egypt, they think, will be at the center of that growth.

“We believe this a country that can really lead the way,” Yahoo co-founder Jerry Yang said last month during a speech in Cairo following the close of the Maktoob deal. The merger was first announced in the fall.

The Jordan-based Maktoob is one of the region’s most popular Arabic web portals. The deal gives Yahoo, currently in a pitched battle with search-engine powerhouse Google for web supremacy, control over a website that has 18 million users. Yahoo says it has 22 million users in the region and 600 million worldwide.

The vice-president of the newly formed Yahoo Middle East, Ahmed Nassef, told bt that Maktoob’s content — which now includes everything from local news to travel tips — will be rolled into a new Yahoo homepage. The additions will join standbys like email, Yahoo’s instant messenger program and computer games.

The sale price was not officially announced, but Reuters reported it was roughly $75 million (LE 410 million).

Analysts said the merger will help Yahoo add new users in a region where internet use is skyrocketing, a crucial step because the company’s growth in developed countries is slowing.

There are 50 million internet users in Middle East and only a tiny fraction of the $5.5 billion (LE 30 billion) advertisers spend annually winds up online. But turning web traffic into revenue has always been a tricky proposition for internet entrepreneurs, who have, for the most part, been unable to convince advertisers that marketing on the web is as effective as traditional media.

Operating in the Middle East, Yang admitted, does present some challenges. Among them will be dealing with governments that are not always friendly to online criticism. (It will not be a new problem for the company; in 2004, Yahoo was blasted for handing over the account details ofa Chinese journalist to police.)

Yang said Yahoo has discussed the issue of online freedoms with the Egyptian government, which has a record of arresting and intimidating bloggers and other activists. Yang said officials have displayed an “open mindset” when it comes to personal freedoms.

Still, he said the company might hand over personal data if it faced pressure from police.

“If they don’t have a right to it, we won’t give it to them. [But] we are just like any other multi-national. We follow the laws that are applicable.”

Despite the diplomatic hurdles, Yang said Egypt remains a country with great potential. Almost 20% of the population has internet access, close to what Yang called a tipping point for the development of the internet.

Past experience suggests once countries pass that threshold, they experience an explosion of online content and benefit from cheaper web access and faster connection speeds.

He likened the climate in Egypt to that in China and India during the early part of the millennium. Both those countries have gone on to become powerhouses in information technology.

As the number of Egyptians who own computers is relatively low, Yang said Yahoo plans to push its mobile platforms. It’s banking on the hope that Egyptians and other Middle Easterners will soon flock to internet-friendly smart phones, which cost a fraction of the price of a home computer.

The push is part of the company’s bid to re-establish itself as a serious competitor to search engine Google, which in 2008 became the world’s number one entry point to the web.

Google’s market cap had long since surpassed Yahoo’s. In a bid to narrow the gap, Yahoo reached a limited deal with Microsoft this summer to partner in internet search and advertising.

“Google is bigger in search, but (the field) is still evolving,” Yang said.

He’s buoyed by the fact that the internet is extremely volatile and business models come and go like the seasons.

“We can still be innovative... and change the game,” he said. “The next 15 years will be (Yahoo’s) best.”

T he 41-year-old American founded Yahoo along with fellow university student David Filo in 1994. At the time, the internet was difficult to navigate and the pair’s portal, called “Jerry and Dave’s Guide to the WWW,” offered users searchable directory of websites, a revolutionary idea.

The name was later changed to Yahoo, a decision Yang jokingly called one of his best ever during a stopover last month in Cairo.

“We had a hunch it was going to be big,” he said after closing a deal to acquire one of the Middle East’s most popular Arabic-language websites, Maktoob.

Yahoo, thanks in large part to its pioneering mail and instant messaging programs, grew to become the web’s biggest property, though in recent years it has been eclipsed by Google.

In 2008, Forbes estimated Yang’s personal fortune at $2.3 billion, putting him at #524 on the list of the world’s richest people.

But his reign at Yahoo has not always been smooth. In 2008 he stepped down as the company’s CEO following a much-maligned decision to resist a takeover by Microsoft. Yang now calls himself Chief Yahoo, a position that, while murkily defined, sees him actively involved in the company.

“This is our baby,” he said. “It’s grown up and has a life of its own.”  bt