Reporting from Beirut — When Samih Toukan and Hussam Khoury started Maktoob.com as an Arabic e-mail service 10 years ago, they had a modest office in Amman, Jordan, and little support from friends and family who could not imagine anyone using the Internet in Arabic.
"We were a typical start-up; I remember the day we got air conditioning we had a party," Toukan recalled.
In August, Yahoo Inc. acquired Maktoob, now the largest Arabic portal, for a reported $80 million -- a milestone in the evolution of the Arabic Internet.
"When we started, there were barely a few thousand users," Toukan said. "Today we can say that the Internet has become a form of mass media with 50 to 60 million [Arabic speakers] online."
Though ubiquitous in the U.S. and many other parts of the world, the Internet has been slower to take hold in Arabic-speaking countries stymied by dictatorships, occupations and wars. Censorship, corruption, weak infrastructure and a scarcity of investors have also threatened to squash innovation and drive entrepreneurs away from the region.
Still, Arab start-ups are encouraged by the Yahoo-Maktoob deal. Investors seem to be taking notice as well, attracted by the relatively untapped market of some 300 million Arabic speakers who are increasingly logging on to the Internet but finding a dearth of content in their language.
The day after the Yahoo-Maktoob deal was announced, Habib Haddad, a Lebanese entrepreneur based in Boston, was contacted by four venture capital firms expressing interest in his transliterated Arabic search engine Yamli.
Yamli, which means "dictate" in Arabic, converts Latin letters into Arabic script. Queries can be entered in an alternative alphabet, made popular by mobile technology in the 1990s, of English letters with numbers and apostrophes standing in for Arabic letters that have no approximation in English. Search results include the keyword in Arabic or any possible English spelling.
For example, a search for Egyptian diva Oum Kalthoum in Arabic using Google’s Arabic search engine returns only pages containing her name in Arabic characters.
The same search using Yamli yields results in Arabic and English, neatly divided into two columns, including alternative spellings such as "2om Klthoum." (The "2" represents the Arabic character hamza, which indicates a glottal stop.)
"This is an example of innovation based on local culture, local understanding and local language. It's not a variation of western technologies," Haddad said. Still, he added, "you can have the smartest search engine in the world, but if you don't have content, it's useless."
Content is growing -- in proportion to popular interest, in some cases. Wikeez, a gossip site in English and Arabic, saw a huge spike in traffic after the death of Michael Jackson. Although most users searched for the pop superstar's name in English, Herve Cuviliez, the French venture capitalist overseeing the site, saw a chance to corner the Arabic market.
"You had a huge number of people who were looking for information on him in Arabic, so we really worked to fill that gap," Cuviliez said.
In addition to running Wikeez, Cuviliez is coordinating with France-based Euratechnologies to open Beirut Media City in Lebanon. The venture would provide office space and a support network for emerging IT companies.
Many challenges still face Internet entrepreneurs in the Arabic-speaking world. Funding structures are weak, and foreign investors are wary. Many countries lack the basic infrastructure to support local e-commerce, including a reliable Internet connection for electronic payment systems and a functioning door-to-door postal service. Corruption is endemic, and most Arab governments censor not only content but also services -- such as Skype, a program for making calls online -- that threaten a state monopoly.
But some Arab entrepreneurs are adapting and even flourishing despite tight government controls.
Saleh Al-Ziad, a 24-year-old Saudi programmer, said he created the popular URL-conversion service Untiny after the Saudi government blocked URL-shrinking site TinyURL.com, reportedly for security reasons. When given a shrunken Web address, Untiny retrieves the original so users can access it.
This kind of resourcefulness piqued the interest of Web entrepreneur Joichi Ito, chief executive of Creative Commons. Ito, an early investor in Internet start-ups including the Flickr photo-sharing site, recently moved his base of operations from Japan to Dubai, an Arab emirate.
"There is a lot of ingenuity and creativity in a resource-constrained environment, and that . . . can be tapped," he said. "There are businesses that can be created here that people in the U.S. or Japan would never think of."
Lutz is a special correspondent.
Times staff writer Jeffrey Fleishman in Cairo contributed to this report.